Luxury Goods, Emerging Markets Seen Fueling Recovery
Looking at job prospects from his leading indictor incubator at New York University’s Stern School of Business, Dean Peter Henry is optimistic, saying, “Things are going to get better.”
Henry believes the recovery will be slower in the US and other advanced economies, where discretionary spending has cooled, while emerging markets—and their newly discovered taste for fine goods—will bounce back more quickly.
“The key is going to be striking that balance between high growth in the rest of the world, and moderate to slow growth here [in the US],” he said.
Deep discounts may have been what kept many consumers shopping during the recession, but steady growth in years to come is going to be more dependent on its alter ego: luxury.
“I think luxury is always going to be there, but it's also evolving at the same time,” Henry told CNBC.
As sales of luxury goods in the US and Europe remained stagnant or shrank, sales in emerging markets have exploded. In a recent report by JP Morgan , the Middle East, Russia, China, Latin America and India account for 18 to 20 percent of luxury goods sales worldwide. The greatest foreign consumer is China, taking in 6 to 7 percent of the world’s luxury goods.
As the demand for luxury grows, Henry noted that more high-end businesses are setting up shop online. One example is online luxe retailer Gilt Groupe, based in New York City, which Henry believes is redefining how luxury goods are bought and sold.
“That's an example of a company that's changing the luxury model,” he said. “They're making it more accessible to a wider audience,” he said. In 2009 alone, Gilt Groupe generated $170 million in revenue. As of June 2010, the site had 3 million users worldwide.
The fusion of luxury and technology is among the collaborations that Henry stressed as important, saying, “Collaboration leads to innovation. And that kind of innovation is a real huge value added for companies.”
Aside from luxury, Henry and his colleagues cited “EMT”—entertainment, media, and technology —as among the major sectors on the rise, based on internships his students are receiving now.
“Students and business folks who can take advantage of those opportunities will do well,” he said.