E-commerce sales and luxury sales are both experiencing strong year over year growth

MasterCard released their SpendingPulse macroeconomic report for July 2011, and the findings are a mixed bag for retailers. Luxury good sales are up 11.6% year over year, and e-commerce sales grew for the 24th straight month in every category except electronics. Combine that with the fact that many luxury brands have finally stopped fearing e-commerce, and it’s blue skies and sunshine for luxury good makers. Saks, who had to shutter some stores not so long ago, reports that same-store (stores open at least one year) revenue is up 15.6%, handily beating estimates of an 8.5% increase.

Then there’s Wal-Mart, whose same store traffic is down 2.6% year over year. Though they’ve attempted to up their style credibility, shoppers aren’t buying it and competitors like Target and traditional supermarkets are seeing foot traffic increase.

So what gives? Is the economy that far back on track that everyone’s trading up? Not exactly.

Surveys from Morgan Stanley and WSL Strategic retail found that shoppers actually don’t think Wal-Mart has the lowest prices anymore. Add to that, many are shopping less because they have less money to spend in the first place. {Bloomberg}

On the other side of the spending coin, luxury brands have been bumping up their prices on everything from 4-figure face creams to designer shoes and consumers are opening their wallets. Not at pre-recession levels, mind you, but enough to push sales up significantly for everyone from BMW and Mercedes Benz to Tiffany’s, LVMH and PPR (owner of Gucci and Yves Saint Laurent, whose luxury division recorded 23% sales growth). {NY Times}

Which makes it seem like the US retail sector is becoming a tale of two shoppers. In some ways, we hope that is the case, but aren’t sure that it is.

The recession happened for many reasons, but a significant one was consumers living beyond their means, spending money that they didn’t really have.  While we’d like to believe that all of the luxury sales are dormant affluent consumers reawakening their credit cards after gaining from the overall gains the stock market has made since it hit is recent lows, the reality is that “aspirational shoppers” have long sustained the mass luxury industry.

If those shoppers have been saving and are financially stable, we don’t see a problem with spending $1000 on one item rather than 10 or 20 less expensive items.

While there may be some careful saving and selection behind the jump in luxury sales though, another percentage stood out to us: 33. That’s how much MasterCard’s profit rose year over year. There are undoubtedly some affluent individuals driving the $608 billion in MasterCard/MaestroCard spending, but we’d be remiss to overlook the fact that we’re still largely talking about the spending of borrowed money.

We’re glad to see sales in any industry bounce back, but we’ll wait for more information on who’s leading the shopping recovery before getting too hopeful that it’s truly a sign of the economy getting back on the ball.

The New South China Mall has been almost completely empty for most of its 6 year existence. Many luxury flagship stores report a similar lack of foot traffic.

Many Western companies are excited about China’s rapidly growing middle class, and the consumer opportunity they present, but for luxury brands (not including luxury automobile makers) the most profitable path to capturing Chinese consumer spending power has been to market to the mainland, and sell abroad.

Why? For mainland China, import duties typically make the same goods 50-70% more expensive than they would be in cities outside of China. In France alone, a survey by Global Refund estimated that Chinese shoppers were responsible for nearly $1 billion in purchases. {Reuters} Perhaps in response to those type of statistics, China is preparing to reduce or eliminate the high import duties that drive consumers outside of mainland China for shopping.

Luxury Society covered some of the ins and outs of Chinese retail strategy for luxury brands. Essentially, flagship stores in mainland China are little more than street advertising to entice consumers to shop abroad, and on occasion private showrooms for a few high net worth shoppers who can keep the stores profitable with one or two spending sprees each year. The sales? Those are happening in places like Hong Kong, Singapore, Paris, London and New York.

In spite of the high taxes, and the fact that a good amount of Chinese luxury shopping is done outside of China, the country recently overtook Japan as the world’s second largest luxury market. Restrictions on luxury advertising in Beijing demonstrate the opposing views of communist capitalism, but China’s goal to increase domestic consumption and reduce their dependence on exports seems to be gaining ground over state sanctioned ideals.

After all, even though the current economic boom can create jobs building malls and flagship stores,  if doesn’t matter if none of that money makes its way back into the store.

A few words to describe the experience at Savage Beauty: Alexander McQueen at the Metropolitan Museum of Art this weekend: Hot. Crowded. Worth the trip, no matter what.

Vogue UK is reporting this morning that the McQueen exhibit is the Costume Instituteâ€s most popular ever at the MET with 5,100 people showing up on opening day, and @WorldMcQueen tweeted that the MET reported a record 43,000+ visitors to the exhibit in less than a week. We certainly believe it.

We got to the museum around 3:30 p.m. on Saturday and headed straight for the special exhibit, which was unveiled at the Costume Institute Gala last Monday and opened to the public May 4, making this the first weekend ordinary folks could visit it. On reaching the entrance the crowding was apparent, but there was no line. However, upon exiting the Savage Beauty exhibit about 90 minutes later, a 45 minute-long line had formed and was snaking its way throughout the European paintings.

Savage Beauty will remain at the MET until July 31, so if youâ€re really not into the idea of a potential long wait, holding off for a few weeks might be a good idea. Weâ€re of the opinion, however, that this special exhibit is worth the 45 minute line.

McQueenâ€s pieces possess a certain magic, and being in the presence of his work had a goose-bump inducing effect, particularly in one of the multiple rooms of the exhibit which contained mounted television screens running clips of some of McQueenâ€s most memorable shows like “What a Merry Go Round” and, our personal favorite, “Itâ€s Only a Game.” Seeing the “Armadillo” shoes and several looks from “Platoâ€s Atlantis” was also amazing. You can truly appreciate McQueenâ€s attention to detail and perfect execution when viewing his work in person. We couldâ€ve stared at some of the pieces for hours without becoming bored.

The exit from the exhibit included a Savage Beauty gift shop with all of the expected memorabilia including Savage Beauty T-shirts and wall calendars. Also available was a catalogue by Andrew Bolton, which can also be purchased online in addition to a commemorative skull scarf (for $495, of course).

If we had one gripe regarding Savage Beauty, it would be the banshee music in the second room. The exhibit consisted of multiple rooms, and in each the different music was appropriately haunting and set the tone perfectly. In room two, however, the music consisted of a repeated banshee howl, which was actually a bit corny and somewhat annoying as movement through the exhibit slowed with the growing crowd. One other minor inconvenience: no pictures are allowed. It’s an understandable rule, but still disappointing that the museum docents were strict about enforcing it.

Surprisingly, the large number of visitors to the exhibit doesnâ€t fall into the category of pitfalls. Though the crowd had its annoyances, it was actually an additional fascination. So many different types of people were there, from fashion types to mothers and their kids, groups of girlfriends and a few older groups. It was at once surprising and refreshing to see such varied and large interest in a fashion exhibit, since it often seems widespread interest in fashion is restricted to shopping.

Bottom line: no matter who you are or how much knowledge of or interest in fashion you have, Savage Beauty is worth the trip to the MET. Get yourself there. ASAP.

Exhibition renderings by Joseph Bennett via the Metropolitan Museum of Art Blog

You may have never imagined a place where couture dresses are intermixed with Motor City inspired denim designed by Agatha Blois, mirrored tables and Shinya Kimura motorcycles all in a single retail environment  (that most would call an architectural masterpiece), but thatâ€s what youâ€ll find at DEVON.

Last month, Scott Devon made a mark on Los Angeles by opening DEVON, his first flagship store located in the iconic Beverly Hills Rodeo Drive area, with an event benefiting the LA Museum of Contemporary Art . The 10,000 square foot boutique and event space, located just off of Wilshire Boulevard  and Canon Drive, is the latest in a series of retail locations opening store doors and gradually starting to thrive in the luxury retail area of Beverly Hills.

The purpose of creating and opening DEVON was to enable a customer to find “any product in any category to make their heart beat faster.” This goal translates into a uniquely engineered store that offers everything from minimalistic motorcycles complimented by intricate menâ€s timepieces, to futuristic TRON-inspired jewelry that can be paired with premium denim that hugs a womanâ€s curves like nothing else.

The eclectic DEVON brand serves as a constant runway of luxury and modern masterpieces, ranging from world-record breaking super cars and motorcycles, to celebrity favorite rock-ready denim and leather, and flawless ready-to-wear and couture clothing, timepieces and jewelry. To gain better insight into the brand, I sat down with Scott Devon for an interview:

Devon is a design lab dedicated to creating innovative luxury products that exemplify the American spirit. How did your roots in the Los Angeles creative community inspire or influence the opening of your flagship store in Southern California?

Devon: Los Angeles, itâ€s always had certain energy about the city. Because LA is home to multiple industries – fashion, entertainment, music – it allowed me to launch a full lifestyle brand.  In the 60â€s, I was working with Jason Wilbur on a few automotive projects that involved a 1960s AC Cobra, and that project represented the birth of brand with the development of the DEVON GTX racecar.  Jason then showed me some sketches for a watch idea and in the true American entrepreneurial spirit we went and explored options to make these ideas come to life—we actually ended up finding an aerospace firm that could engineer the DEVON Tread1 timepiece.   We are in a place where everything is possible, and creativity and ideas are truly nurtured and allowed to grow into special products.

It seems DEVON is the culmination of all your experience with in luxury – from automotive to architecture to art – how did you use your knowledge and expertise to design the retail environment?

Devon: I had partners. Branding expert Peter Arnell and I developed the concept in Tokyo. We actually used images and products we found there to add an Asian influence to work we produced in Los Angeles.  When it came to the apparel team, I developed a creative team that could combine the style of modernism and industrial design into apparel.  I personally design the Couture, Ready To Wear, jewelry, and furniture, working with a great team including former Ralph Lauren designer Keith Lissner, legendary leather and denim designer Agatha Blois, and Amy Meadow Hochfelder, whoâ€s worked at Donna Karan and Rachel Roy. The overall DEVON vision is rooted in my passions in architecture, travel experiences as well as American and global cultures, which are reflected  closely in the design of all apparel and accessories found in the collection.

All of the apparel sold in DEVON is manufactured and produced in the US; what other models of sustainability and ethical production practices are incorporated into the store and its products?

Devon: Everything was designed with sustainability in mind, I want to amplify environments, not pollute them. The furniture is eco-friendly and designed from recycled aluminum from automobiles. Everything is manufactured in the US to maintain the highest quality standards process, and so my team and I can be as close as possible to the entire production process.  Productions cost are not an issue for me; quality is an issue for me, and having a eye and hand in the entire process allows DEVON to maintain quality assurance in every capacity.

The Southern California market is very unique in regards to permanent and visiting shoppers. When developing a luxury retail environment in California, what advice would you offer designer or retailers?

Spaces need to accentuate and reflect the product. Remember when Judith Lieber started to design her clutches? They were designed to sit on a table, they were meant to be focal points and conversation pieces, they were not meant to be set on the floor or on the side of chair. To this day, she maintains that.  I view the retail space as a product extension of DEVON itself—it should aesthetically and viscerally represent the DEVON brand. The retail environment should be a manifestation of your brand; the DEVON store serves as another avenue to translate my technical understanding of form, space, and aesthetic into all elements of my brand.

What are your fashion favorite brands? What online sites do you read on a daily basis?

I love Balmain, Alexander McQueen and Christian Lacroix – designers who arenâ€t afraid to take risks. I love shopping at Maxfieldâ€s and for reading, Fashionising and Womenâ€s Wear Daily online.

Old money is giving way to young luxury. Images from Burberry's Art of the Trench

A study by American Express Business Insights found a few interesting patterns emerging from data on Amex cardholder spending.

• Pre-recession, the wealthiest 10% of luxury consumers accounted for 68% of luxury spending
• Post recession, they accounted for just 38%
• Aspirational shoppers (those who aren’t considered wealthy, but trade up for luxury goods) represented 70% of pre-recession luxury consumers and accounted for 12% of luxury spending
• Post recession, they accounted for 13%
• A new group called “Newcomers” falls into the bottom 90% of spenders, but are an increasing portion of the consumers who are spending on luxury items
• Most Newcomers are women, and while a third are part of the older Baby Boom generation, a third fall into the Generation X category and 10% are in the Generation Y category

In other words, the very wealthy aren’t the ones leading the rebound in luxury spending. The question then turns to why? After all, unemployment is still stubbornly high, particularly for younger and middle class Americans.

It’s important to keep in mind that when things got bad for luxury retailers they got really bad. Bad enough that even luxury merchandise was being marked down by as much as 70%. While luxury spending is rebounding, it’s coming off of some pretty deep lows.

As far as total dollars spent, the current luxury category is likely still smaller than it was pre-recession. Just to attach a random number, if consumers spent $10 billion on luxury items in 2007, $4 billion in 2008, $4.5 billion in 2009 and $5 billion in 2010, spending is up but still has a way to go before wiping out recession period losses. Which means that even if the percentage of younger, less affluent luxury shoppers is increasing, the total dollar amount they’re spending is probably still lower than what the very wealthy were contributing. Since so much of the pre-recessionary spending was based on bubbles and debt, that may not be a bad thing.

During that period websites like Gilt, who offered discounts on luxury items, saw massive growth selling luxury items at 50, 60 or even 70% off. E-commerce and online spending weren’t hit as deeply as brick and mortar stores during the recession and both have had pretty amazing growth over the past holiday season – up to $1 billion per day during certain pre-Christmas shopping days.

It’s not impossible that these sites are introducing new customers to luxury brands at a more affordable price point, and some of those customers continue to buy from the brands after the initial discount. Or, that they’re learning to wait for the next sale and do their luxury shopping at a discount.

Finally, continuing in the online vein there’s the rise of social media. A significant number of fashion and luxury brands finally stopped ignoring the internet in 2010. Not just that, but a few actually moved past tolerance to full fledged involvement. It wasn’t universal, but a number of brands were interacting with fans on Twitter and Facebook, creating their own networks and content, engaging bloggers and communities.

Who are the people spending the most time and money online? We’d bet they have a profile very similar to the luxury Newcomers. They may not have the dollar for dollar spending power of the wealthiest 10%, but at a time when shopper for shopper the rich prefer Macy’s to Neiman Marcus, Newcomers are likely to remain luxury’s best hope for growth.

Barneyâ€s has not, however, ousted Doonan. According to a press release, Doonan will remain with the company in a new role, as Creative Ambassador at Large.

“Mr. Doonan will continue to be a key media spokesperson for the company, will continue to contribute to special window projects, will host special events with customers and media, and will serve as roving ambassador with links to all creative and communication areas including social media,” the release said.

Initially, we thought this was a carefully masked demotion of Doonan, but it really might be a brilliant move. Creative Ambassador at Large sounds like a lesser position than creative director, much like the editor at large position at a magazine is not as prestigious as being the editor in chief. Doonan, however, is the most public figure Barneyâ€s has, and the luxury fashion retailer may simply be trying to create closer ties with the public by expanding Doonanâ€s role as its most visible employee. When fashion retailers attempt to become more relatable to consumers, it is always commendable. Weâ€re also very impressed that Barneyâ€s appears to be taking social media into consideration.

“This exciting evolution of my role at Barneys is brilliant,” Doonan was quoted as saying in the press release. “Change has always been integral to the strength and vibrancy of the Barneys brand. I am delighted to be part of this new chapter.”

Brilliant, indeed, but Doonan may still be taking one for the team.

Simon Doonan at Barneys Co-Op in Brooklyn

This week, Barneys celebrated the opening of its first Brooklyn Co-op on Atlantic Avenue in the Cobble Hill section of town. The doors opened at 10 a.m. without a line of anxiously waiting shoppers, but a large crowd eventually made its way through the doors once they were open. {Racked NY}

Much has been made of what the reaction among Brooklyn residents will be to the high-end retailerâ€s presence in their neck of the woods. Brooklyn has become a hot spot for luxury fashion labels in the past few months, as brands like Swarovski Crystal and Anthropologie have been reportedly scouting out locations there, but it has been smaller, trendy shops like Jonathan Adler and Urban Outfitters that have actually been cropping up along Atlantic Avenue of late. {New York Post}

It is still too early to tell exactly what the lasting impact of the Barneys†presence among these admittedly cooler, more laid-back shops will be, but Barneys Creative Director Simon Doonan seems confident it will be a success.

“The Co-op has always had a certain edgy sensibility. The fit with Brooklyn is a natural one,” he said. {New York Post}

Doonan also told Racked NY that the store made no adjustments to its aesthetic for the Brooklyn Co-op, which carries all the designer brands like Alexander Wang, Richard Chai Love, Helmut Lang and Rag & Bone that you would expect to find at any other Barneys.

Apparently Doonan was quite an active presence at the opening as well, chatting with shoppers and even helping to carry baby strollers down the staircase to the storeâ€s lower level. {Racked NY} He also tried easing the minds of skeptical area residents who worry that the store will bring with it a pretentiousness, telling the New York Post, “”It’s not like we’re opening a Chanel.”

We previously reported that Cobble Hillâ€s economics are not actually that far off from the more notoriously wealthy Upper East Side and Upper West Side Manhattan neighborhoods, and a Barneys should not be impossible to sustain in the area, though the state of the economy will likely create challenges even with wealthy shoppers living close by. Today, we feel there is one more barrier to success for Barneys: Cobble Hill may have the wealth for a Barneys, but does it have the right vibe? Just because a certain demographic has money does not mean they want to spend it on luxury fashion, and we wonder if people in Brooklyn even want to shop at Barneys.

Success at the Barneys Brooklyn Co-op will likely prove to be somewhat of a challenge. Doonan and Co. should be up for it, but only time will tell how they fare. We actually applaud Barneys for taking a risk in a time when the economy has many retailers in a panic – because taking chances on new ventures will probably be necessary to remain sustainable into the future for fashion retailers. Someone has to lead the way, and Barneys should be commended for stepping up.

Additional photos at Racked NY

We have had quite a love affair for years now, darling. Your commitment to creating only the highest quality shoes at equally high prices has brought on the admiration and worship you so deserve as one of the most iconic shoemakers in the world.

But, dear Jimmy, we must say itâ€s time to go our separate ways. Itâ€s not us. Itâ€s you.

It seems youâ€ve been caught dabbling with the annoying, wannabe-shoe-idol mistress of footwear. Ugg Australia.

Love the look... from the ankles up

No offense, Jim, but Uggs are, well, Ugg-ly. And kind of tacky. Talk about a way to ruin any outfit with the Ugg bootâ€s shapeless, bulky form. We donâ€t care how warm and fuzzy your new little gold-digging tartlet makes you feel.

You see, when you team up with the Ugg brand to create a limited edition collection of studded, fringed and animal print Jimmy Choo Ugg boots (which, BTW, one could make oneself with a BeDazzler), we just lose a lot of respect for such a prestigious shoemaker as yourself.

Our love affair will effectively end Oct. 21, when the Ugg and Jimmy Choo boots hit Jimmy Choo and Ugg Stores in addition to a selection of other shops. {Fashion United} We werenâ€t  speaking to you yesterday, when a sample set of the Jimmy Choo and Ugg collection began touring Jimmy Choo boutiques and was officially made available for pre-order for a 24-hour period. {Stylelist}

And would you kindly tell Supermodel Amber Valletta sheâ€s looking pretty hot in this unfortunate collaborationâ€s ad campaign, but no actual, self-respecting, motorcycle-riding, badass biker chick would actually be caught dead wearing the collectionâ€s gold and silver-studded black Mandah boots.

We loved the cheap thrill of your fling with H&M, but on this tawdry dalliance, we have to part ways.

With sincere regrets,

Signature9

We’ve seen $1400 collectible toys for adults. If you thought the $3,000 price tag on T-shirts that popped up in Valentinoâ€s Rodeo Drive, Los Angeles boutique this summer was ridiculous, get this: following strong second quarter sales, Hermès now offers a childrenâ€s coloring book going for $130. {The Cut}

Thatâ€s $130 for something a toddler is likely to draw all over in disarray. If a parent handed this pricey art toy to their youngster, the pages would likely be torn out and hung on a refrigerator before inevitably fading and being tossed out. Not to mention that in this economy many shoppers are unwilling to pay that much for clothes, much less temporary entertainment for their kids.

Parents can also score a $600 pull-along wooden horse from Hermès for their little ones. A wooden horse is at least a bigger item with more longevity, but similar ones are available for much lower prices at Toys ‘R Us. In fact, a better-looking, pink and green horse can be purchased for $26.99 at toysrus.com.

Hermès†collection of pricey kid toys does not stop there, though. The luxury brand also offers a $390 plush horse, a $405 silver-plated music box and a $435 sterling silver rattle. The rattle and music box are nice decorative pieces, but is anyone really going to give their newborn a sterling silver rattle to play with? The weirdest part of all is that children inevitably grow out of their baby toys, so itâ€s not as if the price tags can be justified with the potential for lifetime use.

Is there something weâ€re missing here? Let us know in the comments if thereâ€s ever a convincing reason to spend so much money on childrens toys!

Last week, the luxury fragrance house sent five perfumed taxi cabs out into central London to serve patrons the same way any other London black taxi would with a few exceptions. Each cab smells like either the brandâ€s Artemisia, Blenheim Bouquet, Endymion, Malabah or Orange Blossom perfume, and each oneâ€s driver is specially trained to discuss Penhaligonâ€s fragrances and answer any questions about the brand. Passengers will receive a 10 percent voucher for purchases at penhaligons.com and in Penhaligonâ€s boutiques at the conclusion of their ride. {InStyle UK}

Londoners will easily be able to spot the cabs†outer Penhaligonâ€s branding, and the cost of each trip will run the same as any regular black cab ride. {London Beauty Review} Anyone who spies a Penhaligonâ€s cab but doesnâ€t take a trip in it can still participate in the promotion by snapping a picture of the car and posting it to their Facebook page with Penhaligonâ€s tagged for a chance to win a 100ml fragrance of choice. {Fashion Foie Gras}

Penhaligonâ€s is not the first company to embrace the taxi as a marketing tool. Last month, Revlon offered Londoners who photographed the turquoise taxi they sent around the city and tagged Revlon in the picture on Facebook a chance to try the brandâ€s latest mascara before it hit shelves. {London Beauty Review} In addition, Fashion Foie Gras says tons of major retail outlets have used the taxi cab in one promotional form or another.

We wonder just who it was that was sitting at their cubicle one day and thought “taxis! That’s how to sell products.” In this economy, we suppose itâ€s smart to get creative with promotions, and the incorporation of Facebook is a good move. We wonder, though, what may be the result if a passenger who is allergic to perfumes steps into one of Penhaligonâ€s cabs unknowingly. Comment and let us know if you think cab marketing is a good idea!