Within the Current Climate What Is the Future for Luxury Brand Retailers?

The purpose of this report is to predict the future of luxury brand retailers. The current economic climate within the luxury retail industry will be examined and particular attention will be paid towards the adjustments made by luxury brands to adapt to changes within the economic climate.

What is a Luxury Brand?
Jackson and Haid (2002) proposed that luxury brands have a heightened status that affords a capability for their owners to charge premium prices. These brands obtain a desirability that exceeds their function and provides the user a distinguished status through ownership. Their appeal and desirability is a result of their constructed rarity in availability and associations with specific consumer segments (Danet et al 2008).
The brand, not the business, is the reason why consumers choose these goods and services. The brand dominates behavior rather than factors like distribution, functionality, and price (Danet 2008). While businesses commonly seek to maximize their profits within the shortest time frame to satisfy investors, luxury brands dispute the brand’s relationship in long-term.

Current Economic Climate
In marketing folklore, luxury brands were said to be exempt from economic downturns (Frampton 2008). As we move forward into a vague future, it is certain that no one is isolated from the present financial crisis (Heffes 2009). There is an economic fright in luxury goods companies regarding what will happen concerning the demand for their products and services.
Lenders to Valentino, an Italian fashion house, are trying to change the original terms of its debt (The Economist 2009), while Prada Holding reformed its €450 million debt in order to postpone payment to banks (Business Week 2009). The company is seeking an initial public offering to produce funds for the company through the stock market (Business Week 2009). As the global recession hits luxury brands their net profits are sinking. Max Mara’s net profit almost...