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Did Luxury Ever Go Away?

Many reports are signaling the return of the mysterious, coveted and ever-evolving luxury consumer, and luxury brands from Chanel to Armani are celebrating in their post-holiday growth.  Interestingly, most luxury brands achieved over 11% growth in 2010 with some brands reporting sales close to pre-recession figures. According to Women’s Wear Daily, 2010 was a successful year for couture in which American clients, many of whom retreated during economically hard times have since returned. The luxury market in 2011 can be categorized by a remarkable trend toward growth—especially in emerging markets in the Middle East and others like China, Korea, Taiwan and Singapore.

Despite the economic crisis, the Wall Street bail-out and the bed bug scare, the luxury market in the U.S. seems to be showing signs of rejuvenation and a new, almost unrecognizable, luxury consumer is emerging from the chaos.

Pre-recession luxury with all of its conspicuous consumption is over. Luxury has become something more meaningful, even more accessible and likeable. Luxury consumers are looking for an authentic connection to the brands they purchase and they want to share their experience with others.

While the pre-recession consumer preferred the in-store experience, the new luxury consumer is technologically savvy, more likely to shop online or on their smartphone and expects greater, more personalized customer experience through social media and online communities.

You could even call the new luxury consumer somewhat value-driven. They are more aware of their choices, more selective and pay more attention to the quality of the product and the price they are paying. Flash sales, for example, have become increasingly popular, offering consumers luxury items for intensely discounted prices, but only for a short duration of time.

While demographically, luxury consumers are now older and leading more active lives, luxury brands are also increasing their communication to a younger class of consumers. It will be interesting to see how this trend impacts the market throughout 2011 and if the luxury consumer makes the comeback it is predicted to make. If this does happen, what does it mean for the middle class? Are they back to spending again as well?

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