Luxury Brands Relying On Demand From BRIC Countries To Get Them Through Economic Crisis
The growing economic clout of the BRIC countries – Brazil, Russia, China, and India – continues to buoy luxury brands, helping to counteract the drop in demand from more established global markets. As luxury brands report their earnings from the first four months of 2009, we can clearly see that the plummeting demand in North America, Europe, and Japan has been somewhat devastating.
However, bright spots remain in emerging economies, where economic growth continues — albeit more slowly — and consumer confidence remains comparatively high. Although the near-term demand for luxury products in developed markets remains somewhat grim, the Middle East and Asia represent the best hope for sustainable growth in the coming years for luxury retailers.
As the New York Times writes today, luxury companies like Richemont, the Swiss maker of Cartier watches and Montblanc pens, and Dunhill are looking East as traditional sources of revenue hold onto their wallets:
Only the Middle East and parts of the Asia-Pacific region continue to show resilience [in the luxury markets].
“I’m not sure that we’re going to see the same extravagance that we saw in the last decade for a while,” Mr. Rupert said. “Luckily we’re well represented in countries — Brazil, Russia, China and India — where we’re still seeing growth.”
Among the company’s businesses, he said the men’s clothier Alfred Dunhill was doing well, especially in China, while Cartier had a record year. The company is benefiting from the 256 stores it has opened in China and Hong Kong in recent years, he said, and it has great hopes for Indian consumers.