Future Living
JUNE 2009:
Recession Reloaded
The three areas of pre credit-crunch spending where londoners really excelled – food, fashion and frivolity – are having to adapt or die.
As the recession hits hard in London, companies are getting more inventive, people more resourceful and spending more careful and calculated.
The Arrival of the Recessionista
Notting Hill has always functioned as a kind of barometer for trends in London. If you are looking for interesting new products, new trends in the consumer landscape,
or checking out the lifestyle of the middle class or the new creatives, then this is the place to look.
It is an area that up to Christmas 2008 was holding out against the bigger signs of recession. But now that has all changed.
The buzz in the boutiques has gone, the eager anticipation of the next season’s collections, and the sense of anticipation of spending has vanished.
Even the down to earth Woolworths store on the Portobello Road much loved by the areas yummy mummies has closed down.
Tyler Brule, writing in the Financial Times in March 2009 about the recession hitting London’s luxury shopping areas, said,
“Perhaps one of the most dramatic areas is in west London’s Notting Hill, where in certain stretches it seems like every second shop has closed for business
and you get the feeling that it would only take a few more high-profile closures and the whole area could easily capsize”.
It is as if the party is over for Notting Hill’s fashionistas (devoted followers of fashion). Indeed they even have a new monika.
They are now called the Recessionistas (recession + fashionista) for their newly found attitude to spending on their beloved clothes and accessories.
A few years ago when the price of your average must-have designer handbag inched its way over the magic 1000€ mark, this was seen as a turning point in the fashion world.
Once a few leading brands had dared to do it, the rest followed suit, and amazingly it wasn’t long before it was considered “normal” to pay this extraordinary amount for a designer handbag.
But now thanks to the credit crunch, and a certain degree of so-called luxury fatigue, waiting lists for such things as “botox injected snakeskin”
handbags are now considered by many as seriously bad taste, and the prices of such hyped things as the alligator skin Luxury Warrior Burberry bag has been drastically reduced on the store’s website.
Symbolic of the luxury hype of the last few years, “an “it” handbag will, according to Clarie Kent a luxury label consultant, “become an embarrassment”.
Jimmy Choo has for example increased the amount of designs available at what has been coyly referred to as the accessible-end.
Others are now cutting leather and suede to look like python (to get the look without the cost), and much to the horror of some fashionistas,
one of the their “temples of taste” the smart department store Liberty on Regent Street, a source of many “it” fashion items,
have recently greatly reduced the space they devote to designer handbags. More drastic measures include scaling back the shop’s expansion plans.
As a London-based luxury goods analyst said, “2009 will be the most difficult year luxury goods makers have faced in a long time.”
But how do these companies who have built up a loyal following keep their profile high during a recession.
The luxury bag maker Mulberry for example has, according to one newspaper, “broken the first law of branding”
(that is, don’t slash prices or produce cheaper versions) and has designed a 95 pound red canvas version of its Bayswater bag for the high street chain Gap.
As one worried retailer said, “the problem will be persuading customers to go back to paying the 595 pounds for the ”normal” leather version.
While several large fashion holdings have gone into administration, other luxury brands are bravely trying to see the threat that “luxury is over” as an opportunity.
As one italian investor told the Financial Times, “no one needs another designer and no one needs more luxury...but elegance and chic,
a great product that gives quality and innovation at the right price.”
Meanwhile the Recessionistas in London are eagerly awaiting such “bargains” as the new Valextra Namasté pouch bag –
in bold raspberry colour and which the company have even more boldly priced under 1000€.
So perhaps it is too early to hope as one columnist recently said, that “now we can stop spending and get a life”.
The (almost) Free Lunch
When it comes to doing business in London, long luxurious lunches were one of the great perks.
In their heyday there were legendary stories of six bankers running up a €44.000 lunch bill at one of Gordon Ramsey’s restaurants
(and that was just for the wine – the restaurant gave them the food for free).
Today in long newspaper articles journalists mourn the loss of the business lunch as if they had lost a great friend to a nasty disease.
There is talk of the end of an era, the end of an institution, and even the end of schmoozing as we know it.
The demise of the excessive expense account lunch has, it has to be said, been on the cards for a while.
Already a year ago many companies were capping the amount per person for lunch expenses,
or opening their cafeterias until later in the evening to encourage the wining and dining of clients in-house.
But the real shock has come this year, and in London alone, already more than 100 restaurants have closed.
“Instead of lunch, with wine, business meetings are more likely now to be conducted over lattes or,
once the weather warms up, sandwiches in the park.” writes one particularly miserable ex-expense account luncher, Mr Jeffries in the Guardian.
What measures are the top restauranteurs taking to save their businesses? Some are closing on the quieter days of the week, say monday and tuesdays.
Others have completely cut down the prices of their menus offering cheap lunches.
One famous Michelin-starred restaurant, L’Atelier de Joel Robuchon in the West End of London now amazingly offers a two-course lunch for 19€.
The general manager Achille Cherchuz proudly says that doing this has increased the number of customers, and that at lunchtime they are running at full capacity most days of the week.
People, he reports are literally running off the street into his restaurant, delighted that they can get such a cheap lunch at a Michelin-starred establishment.
“Our customers should thank the credit crunch for that” says Cherchuz. They can also thank the credit crunch for the trend to restaurants where you only pay
what you think the meal was worth (see text by Cate Trotter). Or the fact that pubs across the UK have reacted fast to falling food sales and have revived buisness by offering a €1 credit crunch lunch.
As one pub owner said, “it was a way of protecting staff jobs, keeping their morale going, and targeting a market that is going through a difficult time.”
On the one end of the scale we have seen top restaurants rapidly adjust their business model, or close as a result of the credit crunch,
and right at the other end of the scale a boom in sales of lunchboxes and thermos flask bottles heralding the “return of the packed lunch”.
As the first signs of recession began to be felt it began to dawn on many people just how much of one or two daily Starbucks latte or the equivalent add up to,
and that was perhaps the first port of call for saving (a two-a-day habit can cost the average London worker around 150€ a month).
Not surprising then that sales of thermos flasks in 2008 went up 400% compared to 2007.
Furthermore there are reports that several metal drinking bottle manufacturers were also taken by surprise by rise a in demand last year.
The rise in sales cannot only be credited to the recession and the need for people to bring their own homemade drinks to work or school, but also to the environmental aspect.
Popular brands such as SIGG are marketing the bottles with the eco-plus factor, and pledge to donate 1% of sales to environmental causes.
When it comes to lunch itself it is estimated that switching from expensive ready-made sandwiches to homemade sandwiches saves a full time worker at least 40€ a month.
Sales of lunchboxes reflect this trend, with one retailer Robert Dyas selling 650,000€ worth of lunchboxes in the 2008, compared to sales of 386,000€ in 2007.
The chain's chief executive, Steven Round said: 'This trend for "Smart Shopping" is one we expect to continue for the foreseeable future.
After all, he says, why spend money where you don't need to? At the other end of the equation, convenience food manufacturers such as Uniq last year issued profit warnings as sales slowed.
While a basic lunchbox at Robert Dyas costs only €2, if you look around, the range available is diverse and growing with everything from plastic to metal
and from Disney motifs to super chef-designed arty boxes. Meanwhile all those out of work chefs are falling over themselves to contribute to articles about how to
fill them with everything from chargrilled vegetables to left-over pasta salad.
When it comes to the supermarket shop the signs are also clear. Aldi is now the fastest growing grocer in the UK, and in a break with tradition and image
Waitrose one of the biggest and more upmarket supermarket chains in the UK is bringing out an “essential” budget range of goods this autumn.
The big losers are supermarkets such as the Whole Foods retailer which opened its first health food European outlet in London in 2007.
The flagship store was impressive for its size – it took over a building that was formerly a huge department store – the range,
and also the prices (aimed at people for whom healthy eating was more important than price). Nowadays it just is impressively empty.
As one newspaper report said, “thousands of people are losing their jobs and homes every day.
The last thing on their minds is which type of camembert to buy” (the store offers 8 varieties).
One typical former regular customer, an IT professional now favours Tesco. Another typical Whole Foods visitor, a consultant at Accenture said
“because of the credit crunch i’ve become much more open to supermarket own brands and would no longer shop somewhere like Whole Foods.”
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