Warren Buffett’s aphorism “It’s only when the tide goes out that you learn who’s been swimming naked” has been used a lot recently in the financial pages. What is also becoming apparent is that, for many people, being spotted in Roberto Cavalli swimwear or grabbing a Missoni beach towel – or, frankly, simply being seen anywhere on a beach – would be an equally humiliating experience. 


While many people are white-knuckle scared about losing their jobs, their pensions and their homes, survivors of the financial meltdown have a new source of agony: judging precisely what the limits of acceptable consumerism are in 2009. Announcing vacation plans or the acquisition of an expensive new watch has become the epitome of bad taste. “The era of conspicuous consumption, at least for the foreseeable future, has come to a close,” pronounces Paco Underhill, the author of Why We Buy, a book exploring the psychology of retail. “Consumption will still happen. It’s just not going to be as public.” 


Indeed, a Harrison Group/American Express poll among Americans with household incomes above $100,000 found that while 83% of respondents said they were in “good shape to endure this economic climate,” those who agreed that “a few luxuries are important in tough times” slipped to 50% from 61% from June to September. This in a country where shopping through recession is deemed an act of patriotism. Jim Taylor, a Harrison senior analyst says: “There is a desire to not stand out. If you’re laying people off, you don’t want to buy a Ferrari.”


‘Subtle’, ‘discreet’ and ‘stealth wealth’ are the words the luxury industry is bandying about most in the coming months as a tsunami of guilt engulfs the still-employed. Reach Advisors reports that consumers are more frequently saying that they wouldn’t recommend certain high-end goods or services as they don’t want to flaunt their good fortune.


The high-end market is already reflecting this. Although Gucci’s turnover rose by 6.8% over the first nine months of 2008, compared to the same period in 2007, its less ostentatious siblings saw a much bigger increase for holding company PPR. Defiantly understated Bottega Veneta saw a 20% rise in turnover for the same period and low-key Yves Saint Laurent saw turnover rise by a pleasing 26.6%.


All signs suggest that visual branding or anything that screams “look at me” is already falling out of favour to be replaced with products that promise longer durability (rather than seasonality) or mix luxury with practicality.


Julien Tornare, the US president of the Swiss luxury watchmaker Vacheron Constantin told the New York Times that he expects the watch industry to move toward a period of ‘subtle luxury’. “I think people are going to go with more conservative, not ostentatious – something more discreet that only the connoisseur would know and appreciate, not the bling bling,” he said.


Richemont’s best performers in the six months to 30 September 2008 – during the luxury giant’s slowest profit growth in three years - were Cartier and Van Cleef & Arpels. Sales at Cartier were driven by fine jewellery and jewellery watches, particularly the classic Ballon Bleu watch collection. Meanwhile, far flashier Italian sibling Bulgari recently reported a 44% slump in third-quarter net profit to €23m and refused to even offer a forecast of performance in 2009.


Even eyewear, the dazzling entry-level star of the accessory market, is toning down. The Silmo eyewear trade show at Porte de Versailles in November heralded a return to the retro look, brushed rather than shiny metal finishes and classic colours, particularly tortoiseshell and browns. The new anti-bling era means far subtler logos, discreetly positioned.


Similarly the past decade’s other big growth area, luggage, is becoming more subdued. Business is reported to be brisk for Tumi’s ballistic nylon Regent carry-on case, which costs €1,000, and for Bill Amberg’s €1,200 leather but ultra-discreet Rolls Trolley for those still turning left as they board a plane. Another sign of the times is the €38,000 Smart car bedecked in an Hermes interior comprising leather and canvas, although if you’re still feeling bright, Hermes orange can be specified.


If the urge to splurge rather than purge becomes overwhelming, there is always online. An overwhelming 95% of those with an income of $1m (€800,000) or more have bought their last luxury item online, according to a survey by Google.


Nevertheless, even online luxury sales are not immune from wealth guilt. In a recent interview on the Business of Fashion blog, Net-A-Porter founder Nathalie Massenet discussed the new discreet packaging option which replaced the online retailer’s distinctive black and white packaging which had become a status symbol in its own right. While the new packaging was introduced for reasons unrelated to the economic climate, Massenet acknowledged that the timing could not have been better. 

the changing 


face of the 


watch business

“There is no luxury brand doing well at the moment, whatever they tell you,” says Angelo Bonati, chief executive of Italian-Swiss watchmaker Panerai, part of Richemont’s luxury empire. Indeed Panerai’s long-planned Swiss production facility expansion has now been postponed for “one or two years”. 


Panerai caused amazement by opening full-service boutiques in New York, Tokyo, Madrid and Dubai late last year but Bonati does not think the company was being recklessly optimistic. “I don’t think it’s a mistake, but when the boutiques were begun we didn’t have this financial crisis on the drawing board.” 


Total Swiss watch exports racked up annualised growth of 12% in the first nine months of 2008 according to the Swiss Watch Federation. Analysts’ predictions for this year, with much of Wall Street decimated, range from a 10-20% drop in sales to low-single-digit growth. 


The cultivated world of luxury watchmaking is furious that such a conservative industry has been brought down by “gamblers and money-grabbing fund operators,” as Nicholas Hayek, chairman of the Swatch Group, recently suggested.


“Imagine if you are Rolex,” sighs Bonati. “A 20% decline in sales equates 160,000 watches out of a total yearly output of 800,000, and perhaps a thousand jobs.” The pain of job losses, if they come, will be undoubtedly traumatic in this highly specialised industry where watchmakers are valued for their specialist skills and often a life time of unswerving service to a single brand.


Panerai is confident it will however avoid the worst. This well established, even ‘cult’ brand, albeit one which sells only a few tens of thousands units a year, is “beyond fashion”, according to Bonati, adding the company has resisted all temptations to diversify. Nevertheless, things will be tough. Having just returned from Asia, Bonati described Tokyo as “really, really dead”, and he’s concerned that the relative fall in Chinese growth could undermine consumer sentiment there. He added however that Panerai has a three-year waiting list for a particular model of ceramic-cased watch (pictured) at one, unnamed boutique.