An adman's certitude during economic uncertainty

In an interview published on December 1^st in the Quebec business publication Les Affaires, Patrick Beauduin, Cossette’s head of convergent creative, was asked if luxury goods would be a casualty of the economic crisis. His definitive answer surprised me.

“Not at all” said Mr. Beauduin. “The customer base for luxury goods does not change. Someone earning three million dollars annually will maintain the same lifestyle, even if he or she loses a few hundred thousand dollars.” (The translation is mine.)

A nuanced answer may have been more appropriate. Particularly since there were already many signs a  month ago that typically recession-proof luxury brands were under pressure.

Contrast Mr. Beauduin’s prediction with Globe & Mail columnist Eric Reguly’s assessment. “So much for the theory of the recession-proof industry. Luxury-goods companies had always been somewhat immune to economic downturns. Not this one.”

In his column "Bling goes from status symbol to stigma." Reguly quotes the head of Italy’s fashion industry lobby group; "The rich people do not want to spend money. They're not in the right mood." So it has little to do with earning three million dollars and losing some of it to the market meltdown. It’s about the psychology of the crisis. And it’s affecting luxury brands.

According to a survey by Bain & Co. commissioned by Altagamma, the Italian association of Italian luxury goods companies, the growth of global luxury goods sales will slow sharply, to grow 3.0 percent in 2008 to 175 billion euros (220 billion dollars). The slower growth rate stands in stark contrast to the 9.0 percent growth in 2006 and the 6.5 percent advance in 2007.

Quebeckers and prestige brands

PMB 2008 asked Canadians whether or not they agreed with the statement “It’s important to me that people admire the things I own”. 18% of French-speaking Quebeckers agreed (113 index) compared to 15% of English-Canadians in the ROC (96 index).

This is consistent with findings from the Yanklovich Monitor ten years ago;

• Agreement with the statement “I like to buy brands that make me feel I’ve made it.” – French Quebec 45%, English Canada 26%.
• Agreement with the statement “I tend to choose brands that let people know I’ve made it.” – French Quebec 23%, Englosh Canada 16%

Comments

[Allison Hunt, HATCH Research Intelligence Inc.]

I don't know what a "head of convergent creative" does but surely it has nothing to do with consumer insight. Beauduin's comment is so naive and ridiculous.

[Lianne from Montreal]

Interesting post Erik. I think all of us, rich or poor, Quebecois or not, are going through similar stages in dealing with this unprecedented (in our lifetime) recession and surrounding media frenzy. I have outlined these stages in a recent blog entry - Shock, Assessment, Plan, Support and Rebuild (hopefully we will get to this stage soon) http://marketinghive.wordpress.com/