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Article
Consumers Returning to Luxury Items and Big-name Brands

One sign that the recovery may have legs is growth in luxury and national brands. What does this augur about consumer sentiment, tastes, and the 2010 product mix?


Full Article Below

The Times They Are a-Changin'... (and So Are Consumers' Tastes)

When the Great Recession hit, consumer sentiment and shopping habits changed dramatically. Discount stores and products maintained or gained business at the expense of the high end of retail. We are now starting to see a reversal of those trends. 

For example, big name brands took a beating last year with consumers preferring lower-cost private label brands. But now the national brands are starting to come back. Luxury sales, which took a nose-dive in the early part of 2009, have started to return to growth in the past few months. Nieman Marcus reported that sales at the chain's 77 stores increased 2.1 percent to $1.1 billion from $1.08 billion a year earlier. Abercrombie & Fitch reported that same-store sales were up 8 percent, its first increase for 20 months, in spite of teenage unemployment at about 26 percent. France's cognac trade association (BNIC) said that US sales of cognac jumped 19 percent during the fourth quarter compared with the same period a year earlier. 

Estée Lauder's CEO, Fabrizio Freda, reflecting on the fact that during November and December sales of its beauty products at prestige stores grew faster than at mass drugstores and discounters, said "We view this as a return of the aspirational consumer."

These changes impact the product mix of many, many companies, as well as their marketing campaigns. Product managers, forecasters, merchandisers, and brand managers will do well to stay on top of these trends and factor them into their planning equations.


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