US luxury market still holds potential despite crisis
Although the crisis altered slightly consumer perceptions of luxury in many markets, the dramatic changes that some predicted were not seen, according to Catherine Jubin from the Luxury Business Association.
Jubin, who gave a presentation at the recent Luxe Pack show in New York, explained that luxury is still more valued in the US post-crisis, than it is in other international markets.
Referencing data from a recent survey run in conjunction with Ipsos, she said that although the value of luxury dropped slightly in the US, from 7.2 to 6.8 on a scale of 1-10, it was still higher than the global average (6.5) which includes five European countries, the US and Japan.
Negative associations with luxury did increase slightly after the crisis; more consumers questioned in the survey agreed with statements such as ‘luxury is a frivolous expense’ or ‘luxury is a superficial way to live’ but these are still far from the top of the list of things associated with luxury.
“It will obviously be interesting to see how these slight changes are borne out in the future. My prediction is that not much will change in the long term, values take a long, long time to change,” she told CosmeticsDesign.com USA.
Untapped potential of US market
For Jubin, although markets like China and Brazil do hold significant potential for the luxury market, the US still has untapped potential for brands operating in this sector.
To succeed in this market and to unlock this potential relies on very specific marketing strategies that recognise the fact that the US is not one homogenous market, she explained.
“The different cultures and regions, as well as the different ethnic groups, mean that one strategy for the ‘North American’ market is unlikely to succeed.”
BRIC – often a bias for local
She also had a word of warning for brands looking to the BRIC markets for growth.
“Brands need to watch out for local competition,” she said. In India for example, there is a local luxury sector already fairly well established, and in many markets there is a strong bias for local brands.
In addition, for the moment the BRIC markets in general are growing; but, if this growth rate slows their capacity to support the luxury market may fall, she said.