Bling, bling…Part I

The big picture

According to Bain & Co Consultants, the global luxury sector declined 15 percent and 20 percent in Q1 2009 and Q2 2009, respectively, shrinking from $220 billion to $198 billion. It forecasts an overall decline of 10 percent in 2009. Since the beginning of the crisis, HNWIs have lost nearly $10 trillion. The impact has been enormous. Everyone is now cautious.

“The three-year view is a bit better but the bad news is it is not that much better,” said Tony Poulter, global head of consulting at PwC. “The message is: there is a long term but we are not going to see it dawning immediately.”

Unchecked spending has been checked. Imagine losing $400 million overnight. Financial consequences aside, the emotional shake-up will have left scars. Except in BRIC. The Russians and Chinese are itching to show off their wealth. For them, designer brands say “We have arrived”. No wonder Louis Vuitton and Ermenegildo Zegna are preparing to open up shop in Ulan Bator next month, while Gucci earlier this year planted flags in both Azerbaijan and Russia.

Abdul Karim is the strategy director at Luciola, a Dubai-based telecom branding agency.

First seen in Gulf Marketing Review magazine.