The overall luxury market fell during this recessionary dip. It dropped 10 percent in the U.S. and 8 percent worldwide in 2009. Trendy fashion houses such as Christian Lacroix went belly-up, meanwhile Hermès managed to increase sales by 8.5 percent, including an 11 percent bump in the final quarter and an astonishing 20 percent gain in the Americas. “Hermès isn’t about trendy,” said Bob AChavez, the CEO of Hermès’s American operation to the Luxury Institute. “It isn’t even a fashion house. We are a house of craftsmanship. We are committed to making products that have an enduring quality and are very versatile.”

Heritage, classics and enduring quality, as found in Hermes and Louis Vuitton products, are powerful selling points to during recessionary slumps — particularly to Gen X men and Gen Yers. “I believe the American male is largely uneducable. We need to focus on the segment of males that have real discerning taste, but I can also say that even the undiscerning American male is a smart consumer. That person is looking for a product that is durable, that is classic, that can stand the test of time,” says Lew Frankfort, Chairman and CEO of Coach. In general, classic and timeless value makes sense when considering men’s fashion versus women’s fashion.

Women’s fashion drastically ebbs and flows with the seasons whereas men’s fashion receives subtle adjustments on existing designs. For instance, slightly v-necked shirts or a small whale pattern or a royal blue instead of a faded blue or a European cut versus relaxed might be en vogue for several seasons. For the most part, men’s fashion remains constant and therefore investing in one product could last many more seasons than women’s uber-trendy drop-crotch trousers — reminiscent of Hammer-time.

Gucci drop-trousers might pique the interests of some young fashionistas, but for the most part, Gen Yers view luxury as an investment — and as such, have a discerning eye for the quality. Unlike its generational counterparts, Gen Y is less concerned with heritage than exceptional quality. Heritage brands might find it difficult to market its spot in history to turn on Gen Y. Instead, luxury brands need to dial-up the longevity, both in quality and style, of its products to make their brand a long-term investment.

Many high net worth individuals are savvy shoppers that buy less on impulse and think about purchases in a calculated, well-thought-out manner. As we’ve seen in 2009, trendy fashion houses are the first out the door due to their ephemeral designs while enduring quality prestige brands, such as Hermes and Louis Vuitton, thrive. Although the recovery is in the purview, high net worth individuals are still wary of spending superfluously but interested in investing in luxury.

To read more about luxury trends:

Nearly across the board, the luxury market has rebounded after a recessionary slump. Global luxury sales rose 15 percent in the first quarter of 2010, according to U.S. consultants Bain & Co. Nearly all categories are in the black. e-Commerce, luxury, jewelry and restaurants saw May sales rise 13.7 percent, 9.7 percent, 6.4 percent and 2.8 percent, respectively, reports Reuters. Bricks and mortar retailers are also up. Saks countered last year’s loss with record profits in the past quarter, with sales up 6.1 percent –  and an astounding 395 percent stock increase. Nordstrom shares skyrocketed 246 percent over last year’s bottom. Tiffany & Co’s global strategy benefited them with international sales up 17 percent in the most recent quarter and profit up nearly fourfold. How have prestige brands made such a comeback?

If the recession provided any key lessons, it’s the value of diversification. Those prestige brands with all of their eggs in one, American basket, suffered when the market bottomed in 2009. Milton Pedraza, CEO of the Luxury Institute, termed the strategy as a “self-imposed limitation.” He added that “overseas markets like China could be key growth engines for luxury players and also sees Japan as a ‘cash cow’ for those brands who can manage costs well.” Indeed, Chinese consumers account for nearly 25 percent of global luxury sales, followed by Americans, Europeans and Japanese, each taking around 20 percent of pie. Many large-sized luxury brands see the writing on the wall.

Taking Pedraza’s advice, historical luxury brands, such as Hermes and LVMH, have bumped up profits by entering the Asia market, writes Rob Lever of AFP. “Shiseido, Japan’s largest cosmetics firm, expects sales of its high-end cosmetics to grow up to 20 per cent a year in China over the near term, making it a key pillar of its global expansion plans,” reports the Economic Times. For prestige brands, all signs are pointing to Asia right now, but what should we expect for the future?

Global luxury goods industry sales are expected to grow 4 percent in 2010 to $195 billion dollars after 8 percent decline in 2009, according to the consulting firm Bain & Company. Five to ten years out, Gen X will pick up the torch and lead luxury spending. As Baby Boomers conserve spending in retirement, Gen X will be the primary target for prestige brands. Some experts predict Gen X cannot support Baby Boomer’s historical spending. Gen X is simply not a big enough group to pick up the slack, writes Rob Lever of AFP. Lever suggests Gen Y will fill-in the gaps left by Gen X. “The luxury market is unlikely to regain its luster until around 2018 to 2020, when the Millennials born after 1997 start their spending sprees,” he writes.

If this generational shift occurs as Lever predicts, the short-term profits in 2010 will serve as only a slight uptick in struggling American market. Luxury brands will have to shift focus slightly away from the American market over the next decade to sustain growth. The recession could have been a wake-up call for luxury brands focused entirely on Western markets, and considering the imposing generational shift, they should look East for answers.

To read more about luxury trends:

“A year ago millions of people were rejoicing over the defeat of Bush’s hated Republicans and were looking for Obama to follow through on his promises of change,” writes SocialistAlternative.org. “Fast forward to today, and most people have enormous difficulty naming one clear change that he has enacted.” While we support the need for reform, many are growing apathetic as change is slow-coming. Banks are still receiving incredibly large bonuses, the public option is off the bargaining table, there is still petty partisan rivalry and the list goes on. What happened to the spark that ignited Obama’s rise to the top? What happened to real change and eliminating politics as usual?

Examples

Promise of Change — When Obama took office in 2008, there was hope for a better health care system, more job growth and serious Wall Street reform. Have we reached these milestones? Unfortunately, no. Consequently, Obama’s approval ratings have started to slip. According to Pollster.com, Obama’s job approval ratings have slipped from around 65% to 47.9% in the past year. Has this hope faded in the wake of little reform or recovery? Americans are growing skeptical of the much anticipated Obama change.

Recession — In retrospect, many economists believe the controversial Bush bank bailout did prevent us from slipping into a depression. However, the unemployment rate is continuing to climb. Currently, the unemployment rate is lingering at 10 percent — a less than 1 percent decrease from its peak in July 2009. While unemployment traditionally takes longer to recover than the economy, Americans need to see results. It is incredibly dispiriting to search and search for a job with little to no avail.

Social Media — At first, Twitter inspired a hope for many marketers and branding professionals. It was a way to create a megaphone that could speak to millions of users. But where is the ROI? Anil Dash, a social media blogger, has found that having ten times as many Twitter followers generates approximately zero times as much value. In a results-oriented world, Twitter has fallen short of many marketers expectations. While it might be an effective way to engage some fans and grow awareness, there are few brands (think Dell) making a meaningful impact on the microblogging site. For most, it’s an overcrowded marketplace where few can be heard.

Stats

• The unemployment rate is lingering at 10% as employers laid-off 85,000 jobs in December, reports NJ.com
• The U.S. consumer has 17% less influence from 15 years ago, according to Minyanville
• The White House estimates a $917 billion budget deficit in 2019, while the realistic estimate is around $2 trillion, according to The Heritage Foundation
• Banks paid $32.6 billion in bonuses amid U.S. bailout, according to Bloomberg.com
• According to Pollster.com, Obama’s job approval ratings have slipped from around 65% to 47.9% in the past year

Take Aways

• How can you illustrate your impact? In other words, how can you show results? For instance, Tide’s Loads of Hope initiative could advertise how many loads of laundry they wash per year. Or mention how many people they helped following the Katrina disaster.
• Inject positive impact into your brand through aspirational messages combined with tangible evidence.

Predictions

• As brands measure the true ROI of their social media efforts, they will dial down and re-prioritize their efforts.
• Obama will face harsh criticism during his 2012 campaign for under-delivering on the much anticipated change.
• The only real political reform will come from catastrophic economic disasters. Until then, there will be partisan disputes — or politics as usual.

Read all of the 2010 trends here. (PDF)

Image by Chris Baker from Stock.Xchng

By Tara Lane, Staff Writer

“The recession has been a painful ‘rite of passage‘ that has caused people to re-evaluate themselves and what they want out of life,” said Robbie Blinkoff, founder of the Baltimore-based Context-Based Research Group. Without question, the recession taught us early on that “less is more.” In our “want vs. need” world, we’re now focusing less on wants and more on needs – even if we have the means to get those “wants.” Individuals and businesses alike are maximizing their efforts through eliminating clutter, using digital tools to get the best bang for their buck and fitting more education into less time.

Examples

Three-Year Degrees – As college costs continue to rise in both the private and public sectors, many students are seeking a unique solution such as graduating college in three years or less. Though they sacrifice one less year of growth, education and friendships, students are saving tens of thousands of dollars by opting out of a fourth year and pushing themselves harder in the time they do have on campus. In the end, students are able to get their foot in the door at an earlier age, or take some extra time off for travel or graduate school preparation. “It’s not just another year they don’t have to pay; it’s also another year to earn,” said Barbara Brittingham, director of the higher education commission for the New England Association of Schools and Colleges told the Boston Globe. Colleges and universities are making this easier, offering specific programs and graduation plans for students seeking this route.

Comparison Shopping – Electronics giant Best Buy is well known for its Price Match Guarantee Policy. Best Buy matches the price of competitors if it is less than offered by the big box store. Now, more stores are offering similar deals; Sears, Lowes, Walmart and Staples are just a few examples of other retailers with price matching policies. These retailers help consumers be maximizers, and encourage them to do their homework to find the best deals. Online sites such as Snipi and NexTag help consumers find the best online deals, so nobody has to visit hundreds of sites to find the lowest price. Snipi has a convenient iPhone app, for easier decision-making wherever you are.

Beyond Clutter — We are so consumed by stuff. Before MP3 players, we had hundreds of CDs, tapes and for some, records. More and more consumers are buying experiences more than just stuff. For instance, Lala.com offers an alternative to buying tons of CDs, or the Kindle offers a clutter-free alternative to books. In many ways, de-cluttering is cathartic and liberating as we seek to maximize the space around us.

Stats

• More than 17 million people per month use NexTag to research, compare, and save on products and services online
• A recent survey done by Harris Interactive found that 37 percent of adults say they will increase their use of coupons in a recessionary period.
• Pay-as-you-go cell phone provider Boost Mobile recently began to offer an unlimited plan with a flat monthly fee; the change brought in more than 600,000 customers in less than three months.

Take Aways

Luxury is not always about price. Sometimes luxury can be about freedom; freedom from clutter. It can be about a free shared experience instead of status bling. For instance, the music site last.fm provides free radio with premium music coupled with community sharing. Users can discover new music and share opinions about it with other like-minded aficionados.

Now, we get more joy in saving the money we have than in spending it. Consumers have become more in tune with the state of the economy and their personal economies as well. Brand strategist Matt Sinacori, “The biggest mainstream trend I see is Sustained Frugality. Coming out of the recession, the notion of doing more with less is no longer a short-term survival mechanism, but a sustainable mantra for most. As Americans try to pay down their ‘personal balance sheets,’ you’ll see fewer displays of overt overindulgence … hip-hop stars raving about their bling, yachts, and private jets will lose their appeal. Even the affluent will be more pragmatic with their personal spending in an era where it’s socially acceptable for anyone of any means to be seen shopping at Walmart or driving a Hyundai Sonata.” The recession has made “value” fashionable. Consider Target’s ad targeted towards “frugalistas.”

Predictions

• Craigslist expands beyond local communities and connects buyers and sellers from around the country
• Walmart, known for its low prices will team with well-known brands to offer luxury products at discounted prices
• Retail stores will offer convenient in-store comparison shopping stations, challenging all stores to lower prices and become more competitive

Who’s On Trend

• Best Buy
• Walmart
• Target
• Aldi
• Skype
• Ikea

Read all of the 2010 trends here. (PDF)

Image by Tanya from Stock.Xchng

By Tara Lane, Staff Writer

The current recession has brought about many buzzwords in the media; recession-proof, recessionista, and the great recession are just some of the many words that have been thrown around in news stories and blogs over the past year. Countless articles have been published inquiring about what people are doing now, when the job market is at its worst. Some people continue their schooling, others stay locked into jobs they can’t stand. One topic that hasn’t been explored as widely during this time is that of entrepreneurship. As the economy continues to rollercoaster, there are many who seem immune to it, building a business from the ground up despite advice warning against it.

When news of a market downturn first started making headlines a few years ago, few people gave it much thought. But when reality hit, few knew what to do. For those who had a vision and the ambition to do so, they employed themselves by doing something they loved. Although a bad economy may not seem like the best time to be a small business owner, it has actually been good news for many. In a piece for Harvard Business Publishing, New Mountain Ventures founders Christopher Gergen and Gregg Vanourek write,

“Many people assume that entrepreneurs are allergic to recessions. It turns out that downturns can be times of tremendous opportunity–and, yes, profit–for entrepreneurs. But only if they play their cards right.”

The entrepreneurial spirit has taken hold among people all over the country looking to break out of the everyday and be their own boss. Entrepreneurship inspires creativity, allows someone to become incredibly passionate, and bring something new to the world. Those who recognize the potential in a recession—most important being decreased barriers to entry and the need for new businesses—will reap the rewards.

CNN recently published a piece on a history of businesses born during economic downturns, citing examples of Proctor and Gamble, FedEx, and IBM. Obviously, these are some of the most recognizable brand names today. The Gergen and Vanourek piece also cites successful recession ventures such as Cliff Bar and Chipotle. What would have happened if these entrepreneurs had not had the courage to start their businesses? Although these companies have had their ups and downs, they are able to weather the storm even better because of the foundation they were started on.

Although the odds seem to be against entrepreneurs, with banks tight on financing options and decreased consumer confidence, the odds may just be in their favor. Even as unemployment continues to rise, the number of self-employed business owners and small businesses continues to be on the rise. It takes a certain kind of person to be an entrepreneur. Having a unique idea to bring to the table, and the drive and willingness to follow through with it, are key to a successful entrepreneur. With the right tools and a solid business plan and the willingness to fight the odds, an entrepreneur’s dream can become a reality—and a success.

Photo by Raja R from Stock.Xchng

Photo by Renxx Gmdr from Stock.Xchng

By David Capece, Managing Partner

Unemployment continues to surge, with expectations of surpassing 10% later this year.  While employers are in a great position to identify and lure great talent, the lack of economic visibility makes it difficult for many employers to commit to a long-term talent acquisition binge.

Savvy executives will find ways to take advantage of available talent to push their business forward.  If you don’t want to commit to hiring someone full-time, why not explore alternatives.  Interns, freelancers, and contract-to-hire enable the employer to dip into the talent pool while retaining maximum flexibility.

Interns: Interns are typically thought of as green college students who can handle the grunt work but not much more.  However, with the surge of continued education and higher education, interns now include students getting their MBAs and other masters degrees which can be quite valuable.  With a difficult job market, these students are seeing fewer opportunities and the oversupply works to your advantage.  Plus, if they do a great job, then you can consider them for hire in a year from now when they are graduating, and perhaps the economy is great.  You can recruit interns in your area by posting on Craigslist, or you can target specific schools through their career services department which would gladly accept postings for jobs and internships.

Freelancers: In the past, companies have turned to consultants and agencies to lead projects.  Of course, many of these organizations charge high premiums that are difficult to swallow in today’s economy.  Given all the layoffs, there are many talented leaders available with outstanding experience.  You can hire freelancers for a project, or even on an hourly basis.  You’ll find that they typically charge less than ½ the rate of a comparable consultancy or agency and they can often integrate into your team more quickly.  There are a number of sites to find freelancers including ELance, RFPDB.com, Guru.com, and of course Craigslist.

Contract-to-Hire: If you are thinking about a long-term full-timer, but just aren’t ready to make the commitment, than contract-to-hire is the way to go.  You get all the benefits of a full-time employee with the flexibility to remove the person from your payroll if they don’t live up to expectations or if your business changes.  Better yet, if they do a great job (and they likely will try as hard as possible since they are interviewing for their job everyday), and your business improves, than you can add you can quickly add this full-time person and have them hit the ground running immediately.  While you can try Craigslist for contract-to-hire, we’d suggest using more traditional job sites such as Monster and HotJobs or ones that are more specific to your industry / region.

These are all low-risk, high return opportunities to engage talent to help your business.  Take advantage of the downturn to get an infusion of talent at low cost.

United we Stand

By Ethan Lyon, Senior Writer

Definition
What does it mean to be an American? As a nation, our sacrifice, spirit, ambition and innovation are all links in a chain that pulls our country forward. With strong leadership and spirit, we can wade through the hard times of today and those ahead. As in our history, the links in our chain become stronger with the weight we carry. To pull ourselves out of this economic rut, our expectation and goals require renewed national enthusiasm.

Spin
Leadership—As we are all important in strengthening the integrity of country, it’s new, fresh leadership that dictates our social, economic and political direction. New thought and insight on all levels—from community-based all the way to the Oval Office—are the driving forces that move and inspire us to create a better country.
Sacrifice—To join as a country, there has to be a consensus—everyone has to be on the same page. Our acceptance of collective sacrifice is paramount to the unity and success of our country.
Pride—As we face to each other for help in these trying times, we are re-discovering our identity as a country. As we redefine what it means to be an American, we are adopting a feeling of hope, pride and dignity from within.

Examples
Ballot of Hope—Barack Obama has been a symbol of hope and change for many Americans struggling today. His unique and insightful perspective has truly inspired a nationalistic spirit that yells out, We can do it—we will prevail!
Helping Hands—Over 60 million Americans volunteered through an organization in 2007, according to the Bureau of Labor Statistics. Though volunteerism, in recent years, has faded, given the radically different economic, social and political environment, more Americans will make that sacrifice for the greater good.
300,000 Applications—If there is any indicator of patriotism, the 300,000 applications received by the Obama administration is it. Compared to the 44,000 George W. Bush received during his first term, the Obama administration has become a symbol of Americas pride in its future.
Made in America—Product origins will mean much more to Americans as our economy continues to slump. Products made in the US don’t just signify jobs; it’s a stamp of quality. Many third world nations, and even developing nations, turnout products that have zero quality control. In America, with government entities like the FDA, when consumers buy homemade products, they’re also buying peace-of-mind.

Key Words
Hope, Sacrifice, Leadership, Unity, Pride

Download the Emerging Trend Report in PDF format

Consider the concept of mashups for a moment: particularly now, in an economic downturn, mashups are a life raft for large and small companies and entrepreneurs trying to stay afloat. Borrowing the technology and functionality of another company and integrating it into an existing business model is a trend that is becoming evermore prevalent in the digital age. Not only is it cost-efficient, it aggregates information in new and interesting ways that are re-shaping the way we get our news and entertainment.

We comprised a list of our top 5 favorite mashups that are interesting, creative, and meaningful solutions:

1. Google Maps + Amazon.com= JungleThingy

Let’s say you’re taking a vacation to Madrid, Spain. You know little about the culture but you’re curious and want to read-up on it before making the complete emersion. JungleThingy is at your service. In a three-step process you can find the location you would like to learn more about in a simple, visual way. This is an example of a company that used two existing services and integrated them into each other to create a new business.

2. LinkedIn +  CNBC=Connection for Success

This mashup is the marriage between news and social (“professional”) media–a deal that is quite coveted by traditional news mediums struggling to adapt to the digital medium. But for CNBC, the trasition from TV to Web 2.0 isn’t too far of a stretch. The two are quite a match–as CNBC could use the social networking credibility while providing a news service for LinkedIn users. CNBC will borrow the consumer-generated content from LinkedIn while making it easier for LinkedIn users to share and discuss CNBC content.

3. CNN + Facebook=The CNN Stream

Type CNBC or NY Times into the Facebook search tool and you’re likely to get groups where users can join and talk about the news organizations. Type CNN into the search bar and you’re likely to get some different results. CNN launched its mashup with Facebook for the Obama inauguration, where Facebook users could comment on the event in real time using CNN’s Facebook page.  Now users become a fan of CNN and receive links to stories that they can then comment in within the Facebook community.

4. Google Maps + Twitter + iPhone App=Twitterific

This description is going to be a bit of a consumer review, as I’ve used it for my iPhone. This past week, I went to Philadelphia for a vacation and on my way there, I downloaded the “lite” version of Twitterific. While on the road, I was able to use the application to take photos, write about them, and give the exact coordinates of my location and post them to my Twitter feed. So, if anyone wanted to re-trace my adventure or if they wanted to see any of my pit-stops, they could look it up on Google Maps. This might seem creepy and a bit big-brother, but it’s completely in the users control, so if they do not wish to have their location published on their Twitter feed, they can opt-out.

5. DHL + Facebook + FedEx + Twitter + UPS + US + Postal Service=Track This

Wow. Comprehensive mashup. TrackThis needs to be if they’re going to track your packages (with any number of carriers) to your preferred social network. Traditionally, you might have gotten an e-mail with a tracking code and a link to the carrier. That system doesn’t work if you want your friends to be keyed-in on your purchase adventure (from provider to your doorstep). Simply put your tracking number, name of package, carrier and means of notification and you’re set. Simple, easy and interesting.

As we’ve found with this list of mashups, there are entire businesses created from existing APIs. So really, it’s about taking a new approach to finding business solutions.  Instead of creating everything in-house, why not mix and match–finding that right combination that makes sense. For example, if your company is lacking on the social networking end, instead of creating your own virtual village, you can leverage an established community. Whatever the combination or functionality of the API mashup, businesses are latching onto the concept as it is a practical way to leverage and build your business in a recessionary environment.

Related Posts:

Top 5: Virtual Villages

Top 5: February Funding

With the recession in full swing, companies have buttoned down the hatches, reducing all non-essential and some essential expenses. By now, many companies are onto their 2nd and 3rd round of layoffs. We all know that consumer psychology is changing as price-conscious consumers reject high priced clothing (Saks down 90% to $2 per share), jewelry (Tiffany’s down over 60%), and art (Sotheby’s down over 80%).  That same mindshift is now taking hold in the workplace.  While many of the stocks haven’t broken yet (Accenture and IBM are each down only 25%), the risks are high.

I had two revealing conversations yesterday. The first with a highly qualified recent MBA grad who is looking for a job in strategy, consulting, or an agency.  His plight: nobody is hiring so if he says he wants a job, nobody will talk to him.  He has given up looking for jobs and instead is resorting to heavy duty networking and offering his services for free.  The most common responses from insiders at consulting firms and agencies have been, “I can’t meet with you because I need to save my job and can’t be seen wasting any time on non-core activities.”  Or, “work is completely dead. All of our high priced projects are gone.”  Working at a services firm is great for MBAs during good times because you typically get exposure to many projects while getting paid well.  But the storm clouds are strong right now, and the near-term outlook is gloomy.

My second conversation was with a digital consulting firm owner.  I have known his organization as a sharp boutique with a good client roster.  Revenues have plummeted over the last year and they are operating in the red.  To secure the future in our certain world, he is now seeking outside capital (which is a dicey proposition in the consulting world).  His investor is low-balling him, so he wants to get creative on deal structure.  The challenge is that valuations have come down across the board (in many cases falling below 1x revenue for the first time in years), and it turns out that the investor has a pretty good case.  The owner will have a difficult decision to accept unattractive terms, or to risk it and hope for another investor or an uptick in business.  He’ll have to compete with his peers in attracting capital.  There’s a host of consulting businesses for sale or seeking capital, most of which also seem to be “hoping” for 2007 valuations.

It’s not to say that all firms are shriveling in the face of crisis.  There will be strong companies that survive, as well as niche experts that deliver outstanding value at more affordable prices.  Performance will be a key driver (directly contributing to the bottom line is still valuable).  The real winner of the contraction in the consulting industry will be business executives who will have access to talent at more affordable rates either through direct hire or through negotiation of better deals with their service providers.