Will the European debt crises affect American luxury spending? – Luxury Daily – Commerce
All luxury marketers will be hit by the debt crises plaguing European countries such as Italy and Spain, but diversified brands that practice customer retention have the best shot of surviving.
Since many luxury brands are headquartered in Italy and Spain, there is a chance that the productivity will be hindered if the countries are not bailed out. Furthermore, affluent consumers in Europe, as well as around the world, could take this as a sign to slow down luxury spending.
“I have one term: customer retention,” said Milton Pedraza, CEO of the Luxury Institute, New York. “The luxury industry loses customers who will not purchase again in the next 10 months.
“Brands need to gear up for a dramatic effort to make sure customers who buy continue to buy,” he said. “Marketers have been negligent in terms of customer retention and they need to get more serious because it may help them thrive in recessions.
“The debts will definitely have some impact, because there is not a question that there will be some economic repercussion not only for Italy and Spain directly, but for the marketers in the European Union.
“Everyone will have to contribute to make sure that not only Spain and Italy, but Ireland, Portugal and Eastern Europe stabilize.”