It is ever confusing for any consumer of news over the past few months as to the status of the financial crisis. As it is changing day by day, everyone naturally has an opinion of how serious this economic crisis is and particularly the effects on retail and some of their own hypothesis. A lot of it is not hyperbole as many US retailers have slashed staff, prices and some have had to liquidate so it is reality and as we saw in the last week of December, the mighty Chanel, a bastion of luxury has announced they are cancelled further Mobile Art exhibitions and reducing at least 200 of their head office Paris staff. There are signs of weakness across both commercial and high end retail. The big question is for how long and what core elements are needed for survival.
In an article in today's WWD titled "The Coming Fallout: Who's Vulnerable", Ron Frasch, president and chief merchandising officer of Saks, recently explained to analysts: “We must make the hard decisions on a brand-by-brand basis. Those brands that are nice to have can’t exist in the new environment. Each brand must lend both financial and strategic [value] to the company.” Already Saks has revealed plans to shutter 16 of its 18 bridal salons — affecting bridal lines including Amsale, Carolina Herrera, Reem Acra, Monique Lhuillier and Oscar de la Renta — to make room for higher-growth categories.
In separate conversations, Frasch told WWD that brands with a strong consumer resonance, such as Cartier, Graff and Chopard, will weather the financial storm. Jim Gold, president and ceo of Bergdorf Goodman, pointed to collections such as Chanel, Bottega Veneta and Nancy Gonzalez. Brands at high price points lacking a connection with consumers are more vulnerable.