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It may not be a time to panic, but everyone agreed that the approach to attracting luxury consumers has changed over the past three years and that the true buying impetus must be emotional.
“[Luxury consumers] have the money, but they are holding back,” said Brioni chief Umberto Angeloni. “It’s a psychological phenomenon: We are selling the concept of pleasure, how long can people cut back on their own desires?”
The true challenge, panelists agreed, was bringing customers out of their communal depression.
“We can’t deal with what’s outside, but we can make our stores an outlet for joy,” said Ron Frasch, chief executive officer of Bergdorf Goodman.
Frasch, like others, said providing complete customer satisfaction while at the same time better understanding the consumer were top priorities. For Italians selling to the U.S., quality and innovation remain the undisputed building blocks, but retailers also urged them to increase the number of flash collections, decrease delivery time and personally visit the stores to better understand U.S. clients.
“Italians are the best in product innovation but they have to improve their ability to bring it to the market faster and deliver the merchandise more frequently,” said Christina Johnson, chief executive of Saks Fifth Avenue, who mentioned that 80 percent of Saks’ clients are women and the top tier of those clients visit the store on average twice a month. “If Italians were able to do that, our business would dramatically increase and so would theirs,” said Johnson.
Increases, however, will probably never be as robust as they were in the boom years of 1999 and 2000, according to research by Bain & Co. “There has to be acceptance of this shift from hectic growth to organic growth,” said Giovanni Cagnoli, chief executive of Bain & Co. Italy, forecasting that long-term profitability for luxury companies should average between 10 percent and 20 percent versus the 30-plus percent of years past.
“We overplayed both the positive figures from those years and the recent negative figures. Compared to other industries, such as autos, luxury goods is in good shape,” said Cagnoli.