Somber environment for luxury industry
By Patricia Reaney
NEW YORK (Reuters Life!) - Even the world's mega-rich are feeling the effects of the worst recession in seven decades.
Luxury isn't what it used to be. Conspicuous consumption is frowned upon and greed has been replaced by a new frugality, according to research on the spending habits of the wealthy.
"Across the board, at every level of wealth, we have seen a significant, if not dramatic (hit)," said Milton Pedraza, the CEO of the Luxury Institute, which provides insights in the world of the wealthy.
Wealthy individuals worth $100 million have seen their fortune slump to $60 million. Someone with a $1 billion fortune, is now probably worth $600 million, he added.
"It is a somber environment out there in terms of luxury because of the lack of money and the failure of the luxury industry to deliver on what consumers see as the fundamentals," he said, citing superior quality, craftsmanship, design, exclusivity, brand heritage and customer service.
"Those are the worst that they are not delivering on," he added.
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A survey of more than 400 wealthy consumers with six-figure plus incomes and high net worth showed 42 percent are spending less on luxury items since the beginning of the year. Continued...