Walpole, the trade body that represents more than 100 British luxury companies, has warned that the premium market will soon be hit by the full force of the credit crunch and slowdown in consumer spending.
Walpole deputy chairman Guy Salter told Drapers that warning bells began ringing last October and that luxury com--panies that ignored them were “doing the industry a disservice”.
He said: “Luxury will be affected and the situation will get tougher.”
At the launch of Walpole’s Christmas press day, which took place at department store Liberty in London last week, and where members showed their forthcoming ranges, Salter said members were surprised that they hadn’t been hit yet.
He said: “There was a faint air of bewilderment that the axe hadn’t fallen in the same way as it has on the high street.”
Last week, sales at Chloé were down by mid-single digits for the three months to June 30, despite an overall rise in sales at parent company Richemont. However, second quarter sales at French luxury goods group Hermès continued to rise, up 12.1% to €398 million (£315m).
Salter conceded that luxury brands could ride out the storm if they continued to offer value for money. He said: “When people have less money, they choose to spend on products that will last. Therefore, brands that have cut corners or gone too trend-led could suffer.”
Salter advised brands to focus on new markets: “Not enough luxury brands have taken China seriously or developed an online channel to market. We will see winners and losers across brands, categories and markets.”
Brands at the Walpole event were in good spirits, but not complacent about trade.
Justin Packshaw, managing director of cashmere label De Roemer, said he was focusing on the Middle East. “In a downturn, you need to move your markets around. We’re targeting retailers in Dubai and Kuwait.”
Robert Ettinger, owner of luxury accessories label Ettinger, said: “We’ve seen a decline in the US, but the UK is OK.”