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The frill is gone.
Excess, it seems, is so two years ago. While luxury companies benefited greatly from the economic boom before the fall 2008 stock market crash, with sales of million-dollar diamond-encrusted watches (Chopard) and nearly $80,000 crocodile shoppers (Bottega Veneta), the year ahead presents luxury accessories and fine jewelry firms with a challenge to reignite the desire for such products.
Marco Giacometti, chief executive officer of Tod's USA, said 2010 is all about reeducating the consumer on the essence of luxury. "At the end of 2008, people were looking for crazy bargains, they weren't looking for lasting value," he said. "In 2009, we were able to educate people that it's important to pay for the value of the merchandise. Let's get back to the real value of the brand, that's what we're trying to tell our customers."
Piaget, which is owned by Compagnie Financière Richemont, is keen on keeping its quality and heritage as a fine watchmaker and jeweler, but is introducing more accessibly priced styles. This year, the firm is pushing a new collection of titanium and steel watches with prices from $11,000 to $17,000 for a chronograph. Piaget's average price point was previously $35,000 for a gold watch.
"We know that we have to get out of such a [situation] with a strong collection," said Larry Boland, president of Piaget in North America. "That's the only way for us and the retailers to emerge from this crisis."
The venerable Swiss watch firm Patek Philippe didn't oversaturate the market with its timepieces and was sensitive to retailers' qualms over lack of sales and traffic in the first half of 2009. The company produces just 40,000 watches each year, which are distributed to retailers across the globe. Calling 2009 "a difficult year," Thierry Stern, president and owner of Patek Philippe, said the 171-year-old firm was "quite vigilant with our brand," which has survived numerous traumatic economic declines. "It's not easy for a retailer to handle a recession. We only delivered watches they needed, as opposed to pushing watches."
Graff America president and chief executive officer Henri Barguirdjian has said the Graff business changed tremendously in the past year. Clients are looking for large rare stones and top pieces, while the middle has dissipated. "Luxury has changed in the sense that the consumer is beginning to really [understand] the difference of what is luxury and what is not," he said. "One of the grave errors of so-called luxury companies is to make [luxury] sound so trivial and ordinary. A luxury product has to be something that's very rare. It cannot be for everyone."