Budget, not brand backlash

Conspicuous consumerism might be out, but luxury brands won’t suffer mass unit losses this year. 


Importantly the reasons behind high quality luxury brands remains one of price supporting quality. The adage, “you only question quality on the day you pay for it” is still as true in good times as bad.


When Melbourne comes alive under the global fashion spotlight this week, and fashionistas parade the glitz and glamour of new designer collections through Australia’s fashion capital, there’ll be no public backlash against this great show of conspicuous consumerism.


Why? Because emphasis will be quality and styles moving back to classic lines that last. Every girl should own a “Dior little black number” because it lasts, and quality never goes out of style.


While retailers will experience an increase in shopper footfall through Australia’s designer stores in the weeks following the festival, they just won’t see customers clamouring for the top-tier collection racks with their credit cards at the ready.


This is the year of budget conservatism, but not the year of brand backlash. The economic downturn has left consumers cautious about their pocket money, but not so much so that they’ll give up easily on their favourite luxury, and high quality brands. They will however modify their buying behaviour as they buy different products within those brands.


In the three strongholds of luxury retailing – jewellery, fashion and automobiles – we can expect to see consistent unit sales, but a distinct change in top sellers.  


  • Expect Rolex to sell more stainless steel lines, and less white and yellow gold.
  • Montblanc will sell fewer Chinese lacquer Meistertuck but more stainless steel Boheme.
  • Gucci will sacrifice couture shelf space for bigger stocks of accessories, as shoppers revert back to classic Gucci accessories.
  • And Mercedes will sell more fully specced C-Class, and fewer E-Class and S-Class models.

Luxury brand retailers will be planning their merchandising and promotions to reflect the shift in spending habits. And they’ll be optimistic that the end is not in sight as they’ve been here before.


At fashion week in Melbourne the big names might be anxious, but not desperate. They will maintain the flair in both the gowns and the glamour, creating a spectacle of quality and style. Not decadence and conspicuous consumption, that won’t sell the premium pieces this season, but will sell the “brand” and the notion of the objet du desir.


This building up of brand desire will keep the luxury market alive through the next year, whether it be fashion or automotives.

Sure some will fall – note the loss of Morrissey some weeks back – but the strongest brands and retailers will simply tighten their purse strings, promote their most affordable luxury items, and protect their bottom lines as much as possible without affecting the consumer experience.


And as I’ve said before, they’ll lure their best customers back into stores with amazing offers and exclusive experiences. Then they’ll display and sell the products most affordable. 


This is one of the best opportunities to appeal to a consumer in hard times. Present the perception of luxury, but position it as affordable quality; shift the price/quality ratio. Positioning less flashy models in premium merchandising positions – with no “sale” sign in sight – will maintain a luxury brand’s success. Be that pens, cufflinks, watches or wheels, customers still want the brand – they want to feel normal. 


Have you noticed Verve Cliquot promoting more actively in liquor stores lately?


This most coveted French champagne is a classic example. Suffering a post-Christmas hangover after frugal customers chose to not cut back on quantity, but opted for the cheaper alternative of good Australian pinot chardonnay, they’ve taken to in-store promotion to move the stock.


Marketing its more affordable non-vintage product with excellent promotional offers at the point of purchase, where 80% of the buying decisions are made, is a smart way to influence a buyer by engaging them in the “luxury” of the brand.


This is where consumers are at right now, part way into a challenging retail year. Beating the downturn by making a brand its most appealing – and affordable – is a sure way to success.


It’s halfway between the budget and the backlash, because quality always lasts.



In his role as CEO of CROSSMARK, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this insightful blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia, NZ, the US and Europe. His international career in sales and marketing has seen him responsible for business in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands. CROSSMARK Asia Pacific is Australasia’s largest provider of retail marketing services, consulting to and servicing some of Australasia’s biggest retailers and manufacturers.

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