Even with the economy in a funk and many Americans pulling back on spending, the rich are again buying designer clothing, luxury cars and about anything that catches their fancy. Luxury goods stores, which fared much worse than other retailers in the recession, are more than recovering — they are zooming. Many high-end businesses are even able to mark up, rather than discount, items to attract customers who equate quality with price. In July, the luxury segment had an 11.6 percent increase, the biggest monthly gain in more than a year.
1. According to the article, Tiffany’s first-quarter sales for 2011 were up 20 percent to $761 million, as compared to last year. Based on this information, what were the last year’s first quarter sales?
2. According to the article, in 2008, for example, the most expensive Louboutin item that Saks sold was a $1,575 pair of suede boots. Now, a $2,495 pair of suede boots costs $2,495 . What percentage increase is that?
3. What is the snob factor? What is your reaction to this article? Which comment to the article is your favorite and why?
4. If, as the article said, consumers awaited 70 percent discounts rather than buying right away and we assume that a luxury item was priced at $3,300, how much would the consumer pay?
Clifford, S. (2011) Even Marked Up, Luxury Goods Fly Off Shelves, The New York Times, Aug. 3 (Retrievable online at http://www.nytimes.com/2011/08/04/business/sales-of-luxury-goods-are-recovering-strongly.html?src=ISMR_AP_LO_MST_FB)