How Luxury Brands Were Affected by Recession Essay

Bovis homes group PLC, a leading UK ho occasion builder, had to check out its corporate plans as a result of the ecological niche and major cuts in government spending on mental synthesis projects. Gives the high level of depart in frugalal and political environments, is there any point in corporate be after? Justify your answer with reference to the house building industry and/or other organisations or industries you know that provoke been bear on by such stirs. (40 marks) Post 2007, global economy has been reeling under recession. recessive pressure began with United States economy slowing beat however it has spread head globally affecting all countries in some way or the other. Income level, employment have been abnormal badly. Consumption levels have gone down drastically, which affected consumer dependant countries, such as the UK. Traditionally, luxury brands have not been affected by recession so much, since they have been catering to the higher(prenominal) end cl ass, which is not so affected by the economic downturn. However, in recent past, the luxury has been catering to the inspirational customers, whose consumption patterns ar affected due to economic recession.During periods wish well these, companies usually dependant on corporate planning. Some of them in order to grow, others to survive. Corporate planning is the wait on of drawing up detailed action plans to achieve an organizations goals and objectives, taking into account the resources of the organization and the environment within which it operates. Music and books retail merchant HMV Group became a company that was heavily affected by recession in 2008, as it had to close 60 UK stores in the next 12 months in response to declining sales.The 60 stores set to close represent near 10% of the groups UK High Street presence, which comprises 285 HMV shops and 312 Waterstones outlets. The bulky store closure of outlets was an attempt to survive, as they has been hammered by r ivalry from digital downloads as headspring as supermarkets and online retailers undercutting it on price. As hearty as the store closures, HMV said it would implement other cost-cutting measures that would save it a further ? 10m per year.However HMVs corporate planning hasnt prove to be successful, as it turns out HMVs shargon price has declined steadily throughout 2010, and the latest drop brings its cumulative fall to more than 75% over the last 13 months. Also the firms shares dropped 20% even further after it revealed the sales data, and admitted it was having trouble meeting the term of a bank loan. As it turns out, HMVs retail analyst didnt expected music and DVD market falling that fast, despite their attempts to sort their sales mix, bump offering iPods and live music in order to preserve in the market.HMV is repeating Woolworths and Zavvi collapse during the recession. Fox described extremely intemperate trading conditions with total sales of physical CDs and DVD s down 10% and 8% respectively against the same six-month period last year. Without a unused sympathize with to fire the imagination the picture was even worse in mental picture games where sales plunged 12%, a fall that was on top of the 30% slump seen in 2009. It is not that value is moving from physical to the digital sales it is effective that value is being lost, said Fox. Therefore the HMV is liner severe competition and tough times due to recession.Their corporate planning proved to be unsuccessful, they are trying to deal with already perfectly market, which dont have any prerequisites to grow in the future. Poundland is complitely dissimilar business, with different approach and corporate plan, as they grow during the recession periods. They are aimed at consumer who requires value. Some of that is driven by the economy or the economic conditions, some of that is because the people have low disposable incomes and traditionally thats been the case, and they have need ed to seek value. During tough economic conditions, that was always the case.When US recession just took place, in 2008, poundland started to grow using external growth. At christmas 2008, when Woolworth post-administration 600 stores became available, poundland took 70 of those over three years. Big success from the very scratch was due to , very talented property team, who use a earnings of agents so they are are constantly searching for new opportunities of expansion. A number of other opportunities have arisen over the years as well and they have been able to convert those quite quickly because they had a new store opening team and a refurbishment programme, which really is nigh pie-cutting.So theres a process. The average around 60 stores a year now, so over one a week, which I think is testament to the quality of the team, the sourcing of the stores and the continual improvement in the surgical operation of the business, which of course helps finance those opportunities. I n the recession or difficult economic periods, all decisions needs to be discussed and implemented using professional team, which impart make your business distinguish from arising competition. In the conclusion I would like to say that recession is not true for every business.As we have seen higher up, poundland did well during the recession period, as they targeting those on low-incomes and those, who giveing to save, however a situation in a luxury industry differs The wealthy are not much affected by economic downturn and to use luxury goods is a kind of addiction it isnt easy to change the lifestyle even if personal income dropped. The Geneva motor show 2013 is incident right now. Rolls Royce is selling better than they did last year, as is Lamborghini.The Middle East, Russia do not seem to be whole toneing the crunch for the time being. The habitual feeling is that desire for the super luxury brands remains high scarce purchases are being delayed. Lamborghini always un der produce and have exuberant orders to remain keep production going for a long time whilst mass to mid luxury car factories are laying off workers, that is the trend that works in the luxury sector. However, the middle-class luxury brands will be heavily affected due to concept that was stated above with an example of poundland.Surely some of them could be richer during the trouble times, but around are struggling and havent the mind to spend freely money for luxury items as before. The wealthy never stop spending, they just change what they spend their money on. For example companies like Hermes, Alfred Dunhill, Vacheron Constatine, and Botega Veneta are designed to be recession proof. Marc Jacobs and Chanel on the other hand will feel the pain. As stated above its all about client habitation and how corporate plan was developed and implemented.