As CNN's Felicia Taylor finds out, high-end goods are now making a comeback.
Gucci, Chanel, Hermes, Dior, Vuitton or Dolce Gabbana, you can almost pick a name. High-end goods are coming back strong. We took a big punch to the stomach and it was a big decline, so the luxury sector took a bigger hit than other sectors, so you are coming off of a lower base. I think what surprised me has been the rapidity at which the high-end prices, the best price points have come back even stronger than I thought they would, more quickly. And it’s not just in the US, the Asian shopper is feeling a little less shy about showing off too. The market is absolutely exploding. Part of what's happening is an expanding class of consumers in China who are able to…uh…to just spend more money and to consume more goods, and in fact if you play china forward over the next five years, we expect that china will be the third largest market in the world for luxury goods. Reports show that the rebound in luxury sales is really dictated by those stores that are owned and managed by the brands themselves, such as Hermes. In 2010 alone, sales were increased by about 20 percent. At Hermes, it was more like 23 percent. And it's all about the accessories--whether it's handbags, scarves, wallets, or even shoes--those sales increased by about 16 percent and frankly it's even beating out the leader of the luxury sector, which is of course, apparel. But it's not just women who are making cash registers ring. Our men's business has increased significantly, and actually in the last 12 months has really outpaced the growth in the women's category. And when you browse through the top-dollar shops, you may be hard-pressed to find a sale sign, a sign of pricing power. No question that you've seen less promotions. In the first half of the year, our gross margins improved 600 basis points. We reduced the amount of promotions by about 30 percent. Of course, this is a very small piece of the retail pie, as overall consumer spending is expected to remain weak. Just 6 percent of consumers are driving more than 70 percent of the purchases in luxury goods so the rebound comes from a very small portion of the population, indeed.