The higher-end luxury brands have seen low profits in certain areas like watches and jewelry, but nonetheless have been able to pull through the recessed economy without being severely hit. A few of these upscale brands have even successfully expanded their empires across the globe in spite of the hard times in the market – Gucci, Cartier and Armani opened their stores in different regions across the globe. The French group Hermes, on the other hand, kept their expansion plans on hold. Hermes Chief Executive Patrick Thomas told the Reuters Global Luxury Summit in Paris, “In my opinion, turbulence will last rather long, maybe two years.” Thomas added, “watches and jewelry will take at least two years to recover from the current luxury spending downturn but fashion sales could pick up faster.” In fact, the demand for certain exotic-skin Hermes bags is running waiting lists for several years. And, to cope with the demand Hermes has resorted to breeding its own crocodiles on farms in Australia. “It can take three to four crocodiles to make one of our bags so we are now breeding our own crocodiles on our own farms, mainly in Australia.” The French luxury house already faces a major challenge producing 3,000 crocodile bags a year, Thomas said, adding: “The world is not full of crocodiles, except the stock exchange!” Hermes leather goods account for 40 percent of its business, and have been the most robust in the downturn. The wealthy consumers are spending less in the recession, but that does not have any effect on their loyalties towards these luxury brands, as they are now putting even more thought into their purchases, which only these brands can fulfill.
Via: Reuters
