Nation’s wealthiest have kept spending
Related stories Luxury shopping sector starting to bounce back, Saks exec says (5 4 2011)The lineup of retailers at Crystals luxury mall at CityCenter reads like a who’s who of posh celebrities. Louis Vuitton. Roberto Cavalli. Harry Winston. Christian Dior. Then there are the brands too obscure or expensive to be high quality designer replica handbags wholesale household names: Assouline (rare book store) or Kiki de Montparnasse (racy lingerie). If you haven’t heard of them, you’re not their clientele.
When MGM Resorts International put together its wish list of retailers for the mall inside its $8.5 billion CityCenter resort complex, Crystals was the place to be and be seen for the most coveted luxury retail brands. When Louis Vuitton heard Gucci was going to be down the hall, it had to be there, too. And when Tiffany Co. found out there was an opportunity for a flagship store at the mall, the company opened its third Las Vegas location.
Every day at Crystals seems like a red carpet affair. Sparkly gowns adorn well proportioned mannequins and passers by drool over pricey baubles in the windows of Van Cleef Arpels.
But few of those window shoppers have bags in hand while strolling through Crystals and other luxury retail malls throughout Las Vegas, which begs the question: Who’s buying? Billions were spent on luxury retail in 2010. Surprisingly, people are doing a whole lot more than browsing.
The luxury sector of the retail market was one of the hardest Discount Replica Louis Vuitton Bags hit after the economic panic of 2008, with all important credit lines shrinking or evaporating for many of its well heeled customers. But for retailers desperately seeking a silver lining to this most catastrophic of recessions, here it is: The nation’s wealthiest 2 percent have kept spending. A lot.
The other 98 percent simply stopped purchasing the occasional $300 pair of Chanel fake designer bags sunglasses or $900 Movado watch and the sector felt it. This aspirational though decidedly middle class customer, who fueled the growth of the luxury retail market in the early 2000s, isn’t buying. So most luxury retailers have turned their focus back to their core high quality replica handbags china customers those who had no problem dropping $20,000 on a designer bag pre recession and still don’t. Perfect Quality Louis Vuitton Replica These customers are more concerned with the cost of fueling up their private planes than any price fluctuations at the pump. That small but critical 2 percent of shoppers have been the lifeline that the luxury market has clung to through the powerful economic storm. “Gone is the aspirational buyer, who was an upper middle class buyer who from time to time splurges on a luxury good. That customer has not rebounded. When we’re talking about the ber luxury brands, we’re talking about people whose buying patterns weren’t affected by the recession. They were consistent.”
Ring says even luxury purchasers have become more cognizant of value and are buying in a more deliberate manner. They aren’t purchasing in the quantities they have in the past and are sticking with brands they’ve been loyal to for years. They’re not the customers who would be seen carrying their own bags through the mall, anyway. They’re shopping in stores’ private rooms while sipping chilled champagne from elegant glass flutes, or having stacks of couture delivered to their hotel rooms high above the Strip, or sending their personal shoppers to the stores hours before the elegant retailers open. Those private transactions drove double digit sales increases for some of the world’s top luxury brands in 2010.
“It’s more about what you’re not seeing in these malls than what you are,” Ring says.
Louis Vuitton Moet Hennessy, the world’s largest luxury conglomerate and owner of brands such as Marc Jacobs, Bulgari and Donna Karan, recorded a profit increase of more than 19 percent from 2009 to 2010 and surpassed its 2008 profits. The company saw revenue increase from $25.3 billion in 2009 to $30.1 billion in 2010 with 25 percent of its revenue coming from purchases made in Asia a testament to the buying power of the international market.
Tiffany Co., arguably the most recognizable luxury jeweler in the world, saw growth in every major market in the past year. The jeweler saw its net sales increase by 14 percent in 2010 to $3.1 billion. Even in a downturn there are special occasions to be celebrated and proposals to be made.
“We saw increases in 2010 for the same reason we saw rebounds all over the country replica louis vuitton bags ,” says Mark Aaron, vice president of investor relations for Tiffany Co. “The core Tiffany customer was more confident about their wealth, which leads to a great willingness to spend on luxury. With our Las Vegas stores, travel picked up, which helped. The company plans to open 21 more stores in 2011, including a fourth Las Vegas store at Fashion Show Mall this fall.
“We don’t make decisions based on short time economic cycles,” Aaron says. “Our company is 174 years old so it’s weathered lots and lots of downturns. We’ve got to think long term. When we feel we got the right location and right market, we proceed.”
But to say that the luxury retail industry has been unharmed through the storm would be unfair and incomplete. Like most Americans, retailers have tightened their belts, operating with smaller staffs and less overhead. Luxury brand retailers changed the way they do business to match new buyers during the Great Recession, getting creative with ways to maintain current customers and gain new ones.
“What we think has happened to great degree is that they (luxury retailers) were really scared when the recession hit,” says Leslie Hand, research director at IDC Retail Insights, a market and research firm. “They’ve taken a really hard look at how they go to market and how they engage the consumer and what technology they need to be customer centric. In the old days, luxury retail was about the Rolodex and face to face, one to one interactions. These days, even in the luxury segment, customers expect a range of technical capabilities from retailers.”
Hand says luxury retailers invested less in technology than general retailers before the recession but are now making serious investments in it. Retailers have deployed both mobile technology and in store intelligence like Nordstrom did with its store to store ordering system, allowing shoppers to have something shipped from another store for free. And along with everyone else, these retailers are jumping on the social media bandwagon. Tiffany Co., Versace and Van Cleef Arpels all joined Twitter mid recession. In 2010, 156 year old luxury brand Louis Vuitton did, too, re branding its Facebook page to broadcast its Spring/Summer 2011 fashion show.
“They need to engage the customers better because everybody else is, so in order to maintain that customer contact, they need to leverage technology,” Hand says.
Hermes, the maker of one of the most coveted (and recognizable) status symbols the $20,000 Birkin bag focused on improving upon customer service during the recession dolabuy , hiring more than 300 high quality designer replica handbags in 2010. The company continued with its mission to produce high quality staples such as leather purses, 1:1 replica handbags silk scarves and ties, Hermes CEO Robert Chavez says. Hermes’ sales were up 31 percent worldwide in 2010 and increased by 24 percent in the US alone. Leather accessories, which include some of its bags priced as high as $150,000, fared the best in 2010 for the brand with a healthy 21 percent increase in sales.
Hermes USA President and CEO Robert Chavez stands in front of the Hermes store at CityCenter’s Crystals Las Vegas on Thursday, Jan. 7, 2010.
“Our sales never dipped in 2008 or 2009 so our growth in 2010 and 2011 is on top of all the way back through 2007,” Chavez says. “We were lucky and we never had that dip. Maybe we lost some of the traffic coming into the stores if people weren’t shopping and traveling as much, but during the recession, our core customers stuck with us.”
Hermes opened 13 branches in 2010, replica louis vuitton including its location at Crystals, which Chavez says has performed so well, the company made the decision to open a third Las Vegas outlet in the prime location of the Bellagio lobby. It’s expected to open in November, just in time for the holiday shopping season and the flood of international visitors who come for Chinese New Year during January and February.
“Our business is very healthy and vibrant in Las Vegas,” Chavez says. “Our store over at Wynn and Encore has continued to do very well. Steve Wynn has done a tremendous job in bringing the right client base into the resort. We moved into Crystals last January and business has just gotten better and better for us as the center has filled up. Seeing the success of two stores in market, we think there’s fake designer bags room for a new store there.”
Alan Feldman, senior vice president of public affairs for MGM Resorts, says the company is hearing similar success stories from Crystals retailers. aaa replica designer handbags Occupancy is near 80 percent, which Feldman says is on track with what the company was anticipating. The retail center reported $11.7 million in earnings in its first full year of operation.
“Things have been going quite well replica louis vuitton bags ,” Feldman says. “There are some retailers that have had a harder time, and there are others who have just had amazing sales. Some of these brands have withstood recessions through decades, even centuries. Crystals is proving itself to be highly, highly successful very quickly and replica designer handbags it’s all the more surprising because it’s happened in during a recession.”
Executives of the Forum Shops at Caesars also say business is rebounding in its luxury sector. Maureen Crampton, the shops’ vice president of marketing and business development, says the center’s luxury categories have experienced double digit increases in sales in the first quarter of 2011. Crampton says that compared with the first quarter 2008, sales are still up. In coming months, the mall will add retailers to the high end brands around the Fountain of Gods area. This summer, high end women’s shoe designer Christian Louboutin and elegant men’s watchmaker Hublot will open stores.