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How are luxury consumers different this holiday season?
They were more skittish last year. Retailers were looking for ways to drive traffic. That was their biggest concern. Now that traffic has started to pick up, they have to have a product that the customer feels is an investment and not a fleeting trend. That's the only way to get them to spend any significant money.
How do you do that?
With a heritage brand or a collaboration. We're seeing Timex reissue a classic men's watch for $150, or we're seeing Uggs and Jimmy Choo collaborate on a designer Ugg [boot]. They put a great deal of hardware and studs on them, and they're selling for $495 to $695. And it's a limited time. At the very high end, Hermès continues to increase their sales because the luxury consumer, instead of buying a trendy handbag or two, would rather splurge on something they are going to have for a long time.
Does that mean smaller inventory?
Yes. As opposed to [merchants] saying orange is the hot color or pink is the hot color and then owning a huge inventory you can't move, they're going with proven classics.
So, it's a very conservative market?
Yes, but the flip side is, if you're too conservative, you're not going to motivate people to part with their money.
Is there hope for brands that don't already have name recognition?
It's not impossible. You have to have a really outstanding product. It's become harder and harder. Those are brands that have gotten squeezed.