Mention the word recession to members of the fashion elite, and you'll get some colorful reactions. Among high-end retailers, a grim optimism is de rigueur. Burt Tanksy, CEO and president of Neiman Marcus, recently quipped: "Remember, when our customer tightens their belt, it's generally ostrich or alligator."
But even the rarified worlds of fashion and luxury are linked to the broader economy—and marketing lavish, often ephemeral goods is brutally challenging in the best of times. With banks tanking, bonuses vanishing, and retailer bankruptcies on the rise, peddling luxury in 2008 is no enviable task.
Here's a quick survival guide for how the American fashion industry will ride out these distinctly un-fabulous times.
1. Accessories will be everywhere.
Like jewelry, for example.
In a paper detailing predictions for the 2008 luxury market, consumer-trends analyst Pam Danziger of Unity Marketing deemed jewelry purchases less susceptible to market fluctuations. "Jewelry is unique among luxury goods because it offers the customer some perceived inherent value," she said.
Retailers and editors are keeping their fingers crossed that Danziger is right.
"We've shot more and more with jewelry," says Sally Singer, fashion news and features director at Vogue. "Jewelry can upgrade any outfit, and jewelry purchase values don't change as quickly as clothes, especially gold."
Other accessories—especially shoes and handbags—will continue to be big business for designers and retailers. Consumers might be skittish about investing in expensive, trendy apparel but will still give themselves a smaller designer fix with these products.
And designers—many of whom already make more money from accessories than ready-to-wear—will be looking for ways to further expand these lower-price-point lines of their brands.
2. Bon voyage, French couture; hello, Americana.
The disastrous state of the dollar abroad has made the importation of European collections prohibitively expensive in America, causing buyers to cut back on purchases from design houses overseas.
"I skipped the last buying trip to Paris altogether," says Erin Crandall, head buyer of designer collections for online retail site ShopBop.com. "The cost of the trip would have outweighed the money we'd have made on the lines."
Which means that enterprising American designers can step up to bat and vie for real estate once occupied by their French and Italian counterparts. Crandall points to wunderkind Alexander Wang and wrap-dress queen Diane von Furstenberg as "recession-proof" designers with perceived long-term value.
Other big American sellers for ShopBop: relative newcomers Derek Lam, Chris Benz, Rachel Roy, and Tory Burch. Expect to see more of them elsewhere.
3. Earlier, increasingly aggressive sales.
You came, you saw, you desired: a gorgeous but hideously expensive Armani dress. You made a deal with yourself: If it goes on sale, I'll buy it.
This might be your lucky season: Designer goods are going on sale earlier than ever. Markdown schedules are moving up and becoming more competitive. For example, Saks Fifth Avenue recently announced 40 percent-off markdowns, which included some of its couture merchandise; the spring sale came a week earlier than last year's. Other retailers will feel obliged to follow suit, since failure to mark down as quickly could hinder sales. In order to keep margins from sinking too low, retailers will likely use techniques like mandating a minimum purchase amount, then giving big discounts on more.
4. Chic downgrade options.
Retailers and editors will provide a variety of lower price options for women looking to spend less but maintain a particular luxury aesthetic.
"Let's say that we have a woman who didn't get her raise or bonus," says Crandall. "She might turn to Theory instead of Chloe, so I'm stocking up on that. I just added Free People, too, to make sure that I had the under-$100 price point covered, too."
Barneys New York—usually home to some of fashion's most elite fare—surprised many in the industry by showcasing the soon-to-be-launched Rogan for Target Collection in its New York and Beverly Hills locations. Lower-end retailers, such as H&M and Kmart, have made enormous successes of their designer capsule collections, such as Karl Lagerfeld for H&M, Stella McCartney for Puma, Issac Mizrahi for Target, and so on. Elite stores appear to be sanctioning and capitalizing on this trend. Magazine editorials will follow suit in showcasing a high-low mix.
"We'll show big labels with H&M tees," says Elle's fashion news director, Anne Slowey. "Ten years ago, fashion was about luxury conglomerations. Now it's democratic."
5. Spare, spare, everywhere.
Fashion oracles declared the trend of the garish "it bag" dead last year, but other gestures toward flashiness are apparently teetering on the edge of the same grave. In the fall collections, showcased in New York earlier this spring, editors and buyers sensed a move toward minimalism and even austerity.
"There's a mood: It doesn't feel right to show things that are overly opulent or steeped in luxury, in light of everything going on in the world," says Hope Greenberg, fashion director of Lucky magazine.
The dress, which has enjoyed a lengthy reign over the market, is losing ground to more conservative, versatile, basic pieces that can blend and carry their owners through several seasons. Retailers report excellent sales in practical items such as blazers, denim, basic separates, and trousers.
As ShopBop's Crandall says: "Classic designs in bad times."
Of course, it's always possible that a downturn will produce its own aesthetic. Uncertain times often produce astonishing results in the fashion world; after all, the dreary early-1990s economy produced Marc Jacobs' now-famous grunge epidemic. Editors and buyers are very curious to see what turns up in the American spring/summer 2009 collections, which will be showcased in New York City this fall.
"We're in very unstable times," says Vogue's Sally Singer. "There's a war going on, and you wouldn't know it in the city. But fashion designers are receptors; they have refined antennas, and it comes out on the runways."