CULTURAL MAGAZINE

Article from Newsweek 

Luxury companies that stayed true to their roots didn't merely survive the recession,
they thrivedhanno prosperato.

Feb. 9 seemed like an oddstrana night for a party. New York City was locked in the jawsstretta nella morsa (lett. fauci) of one of the coldest winters on record, and the economy was in deep freeze. Yet few of the guests at the Park Avenue Armory, sippingche sorseggiano French champagne and munchingche masticano, sgranocchiano on Wagyu beef sliders, seemed to notice. They were there for a gala thrown by Hermès, the 173-year-old French bag maker and fashion house. The pretext for the party was the next-day opening of Hermès's new 278-square-meter men's store, in a jewel-box Madison Avenue townhouse. The store would be the company's 24th in the United States and its 250th in the world, but the first anywhere dedicated exclusively to men.

If that was the ostensible cause for the gala, however, Hermès had more profound reasons to celebrate. The company is one of a handful of luxury brands that have not only
weatheredsuperato (la crisi) the global financial crisis but thrived. Most fashion houses slumpedhanno subito un crollo delle vendite last year: according to Bain & Company, the overall luxury market fell for the first time ever during this recession, dropping 10 percent in the U.S. and 8 percent worldwide in 2009. But Hermès managed to increase sales by 8.5 percent, including an 11 percent bumpbalzo, aumento in the final quarter (and a whopping 20 percent gain in the Americas). Its secret? Rather than slashtagliare prices, follow fashion, or go downmarket, Hermès decided to focus on what it does best: produce expensive but timeless classics with unimpeachable quality that will last a lifetime.
Call it the end of the trend: as the experience of Hermès and a few other deft brands shows, the crisis hasn't killed the luxury market. Buyers have just become more discriminating, "moving away from conspicuous consumption, fat logos, and lively colors," says HSBC analyst Erwan Rambourg, toward tried-and-true stalwarts. As Bernard Arnault, the chairmanpresidente of LVMH - which saw sales by its flagshipfiore all’occhiello, Louis Vuitton, grow by double digits last year - puts it, "with the crisis,
bling blinggioielli ed ornamenti eccessivamente elaborati is passé."

Something similar is happening in the hotel industry, where trusted old firms like Ritz-Carlton are holding steadysalde and Asian companies such as Raffles and Shangri-La are expanding by carefully replicating their traditional look and feel in new places. In the car business, Bentley - which traces its lineage back to the '20s - has just introduced a superpowered new model that gestures back in time even as it roars forward. And the airline industry is trying to get in on the act, with its highest-end carriers introducing first-class air suites that harken backriportano, hanno il sapore di to Victorian rail carriages and the luxe golden age of air travel.
All these firms seem to have recognized that during downturnsflessione, fasi negative, people - especially at the high end - don't stop spending, but they do become much more conservative. A woman who, during the boom, might have bought five expensive handbags a year may now purchase only one or two - but those are even more likely to come from brands known for quality and timelessness. "People are looking to be reassured," says Rambourg. So they are turning to products, like Louis Vuitton luggage, that isn't "just a nice bag, but an inherently precious object, almost a piece of art," says Solca - something "investment grade," in the words of Tod's chairman Diego Della Valle. This process favors big, established companies that stand outside seasonal fashion. Milton Pedraza of the New York - based market research firm the Luxury Institute says that at a time like this, successful firms can be "trendy along the edges, but they don't bet the whole brand on something
too edgynervoso, rigido. People are not going to buy Versace."

There are two reasons to expect more trendiness and glitzsfarzo in our future. One is our baser instincts. Scott Galloway, an NYU professor who studies luxury marketing, expects conspicuous consumption to resume as soon as people have money in their pockets again. "As long as men feel the need to spread their DNA to the four corners of the earth, they're going to buy Porsches," he says. "And as long as women look for as many offers for matingaccoppiamento as possible, they're going to keep buying Manolo Blahnik shoes."

Even if sex appeal doesn't drive us back to flash in Manhattan, it probably will in Beijing. Retailers are already enjoying a huge boom in emerging markets like China, India, and Brazil, all of which
scarcelyappena, scarsamente suffered from the downturn and have exploding middle classes and nouveaux riches. While these countries currently represent only about 20 percent of the global luxury market, Bain predicts that will soon shift as high-wealth individuals in these countries up their luxury spending by 20 to 35 percent in the next five years. The message for Hermès and other luxury brands, in other words, is that they're unlikely to sell many $8,500 baseball mitts in the States. But a soccer ball in Rio - that may be a whole other story.