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Tiffany & Co. Latest Casualty In Tectonic Shift Of Consumer Preference

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Tiffany & Co. Latest Casualty In Tectonic Shift Of Consumer Preference

This piece contains the opinions of the author, Kristin Bentz, President at Talented Blonde, LLC, that do not reflect the opinions of Benzinga.com.

Don’t say I didn’t warn you.

On December 23, 2014, I posted a missive on my Tumblr page lamenting the recent weakness in traditional luxury names, followed by some pretty compelling #ChartPorn.

Actually, I spent an hour barking about it on the Benzinga Webinar back in October 11, 2014 titled: “Turn Down For WHAT? A Global Economic Turmoil in the Luxury Space.”

That said, for some reason investors and analysts seemed caught off guard by Tiffany & Co.'s (NYSE: TIF) announcement of lackluster sales in October and November and dismal holiday sales.

The company cited strength in the U.S. dollar as affecting its international business, as well as weakness in Japan—which has been hit of late with a sharp sales tax increase. Tiffany & Co. also took down guidance for 2015.

Tech Usurps Traditional Luxury

Before we throw the baby out with the Blue Box™, let's look at what’s really happening here.

Tiffany is just the latest victim in a broader structural shift in consumer buying behavior in the luxury sector. Prada (19:13HK), Kering (KER:IM) (parent of Gucci and others,) Ferragamo (FERG:IM), Moncler (MONC:IM), LVMH (MC:FP), all have suffered similar hits to their sales and stock performance. There is a slow moving train here that is symptomatic of a global economic slowdown in luxury.

Related Link: Did Michael Kors Sell Out?

Not only am I seeing a profound shift in the way consumers are purchasing luxury goods, but also in what they are buying. My contention is that technology has finally reached an inflection point as another form of luxury.

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I’ve long viewed Apple (NASDAQ: AAPL) as a luxury stock and have mentioned for years that technology has emerged as the new fashion statement. With the plucking of talent like Angie Ahrendts from Burberry (LON: BRBY), one of the first luxury brands to aggressively use digital marketing strategies to reach its consumers, its easy to argue that the company agrees with that logic.

Add in the launch of new products from the likes of GoPro (NYSE: GPRO) and the rise of the “Selfie Stick,” and it’s not hard to believe that there were more BYTES under the tree this holiday than Blue Boxes™.

Although, full disclosure: I did receive one under my tree. Indeed it seems that experiential luxury is more and more what consumers are seeking. To clarify, I am not stating that luxury goods are dead, or that consumers aren’t purchasing them.

I’m merely highlighting what I see as sectors that are seizing share of wallet that historically went to traditional luxury goods like jewelry, timepieces, apparel etc. and these stocks are reacting in kind. No longer can luxury goods purveyors sit back and believe consumers will simply seek them out.

That share of wallet has to be EARNED. Retailers that marry superior, differentiated merchandising with a flawless omnichannel experience will prevail as consumers shift their preferences of what they feel is true luxury.

For instance newly re-imagined RH (NYSE: RH) or Restoration Hardware as it was formerly known, has completely reinvented itself. No longer the tweener Pottery Barn-esque boutiques with retro gadgets and leather club chairs, this retailer has emerged after going public in 2012 in one of the most prolific retail transformations I have ever witnessed.

And, its timing could not have been better.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

 

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