Smile In The Face Of Luxury

If you thought the luxury market has seen its best days, think again. The $63 billion global market is making a comeback, with fashion houses keener than ever to put the sparkle back into our ordinary lives. From New York to Milan to Paris, the big brands enticed spectators with their most desirable accessories. As Domenico De Sole, chief executive of Gucci Group, recently quipped: "The stakes for this season's big bag are very high. Whoever gets the bag gets the fashion momentum."

That would explain why Louis Vuitton prepared 300 sample bags for last Sunday's show, and why Chanel models turned their wrists on the catwalk to better show off their watches. Louis Vuitton, the world's No. 1 luxury company, sees 60 per cent of its operating profit generated from leather goods and accessories. At Gucci, this margin is even higher. Only 30 per cent of their income comes from clothing, the rest is accessories.

Recent sales of accessories have taken a leap from a slow start to the year and post-war sales slumps. Tourism, too, is beginning to recover and the pent-up demand for luxury is exercising its way to the shops. That is not to say that all is running smoothly: the market in Europe, and especially France, is still questionable, in particular due to the lack of American tourists. Similarly, the Japanese seem to have less ardour for luxury goods than in the boom years of the late 90s.

But, if the trend is anything to go by, American analysts say luxury is making a come-back, and top-end stores like Neiman Marcus and Ralph Lauren reported increases in sales for September. No wonder the world's most luxurious brands were competing for the spotlight during the shows. If single bag or pair of shoes can cause that much furore, the possibilities are endless. As are the profits...