Michael d’Souza, of Mufti, on the state of the British luxury market
What does luxury mean today? I feel for some time that the term has been generally overused and fatigued. A luxury, by definition, should be an indulgence of sorts, something special, something slightly out of reach, a treat. Over the past few years, there has been very little that is truly out of reach of most people, unless of course you are Roman Abramovich and nothing is out of reach! Being able to buy a football club such as Chelsea is truly a luxury (and, yes, I am a Blue!).
I have been lucky enough to have benefited when the British luxury sector was buoyant. The pound was two-to-one to the dollar, property values continued to see double-digit growth year on year and city bonuses were skyrocketing. Life was good for most of us and the interiors market was inundated with overindulgent customers. I don’t think I am the first to say that, while we should have seen it coming, we didn’t, and when the bottom fell out, British consumers, more than most, due in a large part to media persuasion, have pulled in the purse strings tight and the market has choked.
Over the past year, every retailer, including myself, has been forced to regroup and downsize and focus on managing stock levels better. Luxury fashion retailers such as Harvey Nichols (with whom I have first-hand experience, having sold our product range there for four years) saw their profits fall by something like 40 per cent. The footfall was down drastically, sale or no sale. In fact, there were times when there were more staff on the floor than customers. The real casualties in the luxury sector were probably the accessory, the inessential, the high ticket, the impulse purchase. I believe the reason why companies such as Mufti have made it through a really crippling year was the fact that the old values are returning. Assets such as materials, craftsmanship and individuality are back at the forefront of the decision process and are being more appreciated and sought after by customers.
I have worked for over 20 years in the ‘luxury/aspirational’ sector – my last job before moving to London to start Mufti was with Ralph Lauren in New York. During the previous downturn I was a well-compensated, salaried Manhattanite, so didn’t feel the full impact. This time round, however, running my own brand means I interact daily with my clients and suppliers alike, and I really feel there is a sense that people are starting upgrade their lifestyles again. The Europeans are taking advantage of the weak pound to snap up properties, and the Asians and Russians never stopped spending, bringing essential cash into the London market. With the recovery of the stock market and the talk of the return of the bonus culture, people are spending again, albeit cautiously. They are spending more per item, but are buying fewer items. So while the physical number of transactions is falling, the value of the transactions is going up. I believe that the initial hysteria has subsided and people are indulging themselves with treats again. The owner of a well-loved restaurant/bar in Notting Hill told me a few months ago, “Recession? We are selling more Champagne than ever before – except it’s just by the glass not the Methusela!”
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