“It’s not just the fact that the elites have all the wealth in a society, but that they are disconnected from the problems. If the rich and powerful still live the good life as society is spinning downhill, they are not motivated to solve the problems.” (Jared Diamond)
Sanford C. Bernstein analyst Ali Dibadj saw in the third quarter a “decoupling” of the luxury and prestige markets, also including LVMH and Elizabeth Arden, from the mass marketers. And the results extended beyond beauty, as Macy’s and Nordstrom showed increases in customer traffic year over year last quarter even as the U.S. Walmart division last week reported continued year-over-year declines in traffic for the quarter ended Oct. 31, albeit improvements from the prior quarter.
“The luxury consumer is shopping again, and we are seeing our strategy contribute to … prestige beauty growing faster than mass in many parts of world,” said Estee Lauder CEO Fabrizio Freda on a conference call with analysts last month. He pointed to U.S. beauty sales in department stores and Sephora growing 4% last quarter, according to NPD Group, while sales in mass channels grew only 1%. (Advertising Age, “Prestige, Luxury Products Thrive as Mass Market Sputters,” November 22, 2010)