NICE DECADE, NASTY DECADE
Changing times, charted by the Magazine
When recession fears bite, many regard sales of certain products as indicators of how the economy is faring. Are luxuries such as fine wine affected before everything else?
There are things we need. Then the things we sort of need, but how often we need them is a matter for inside-the-head debate. Then there are things we want, but can't honestly say we need.
In times of recession, you might think that we stick to the essentials, offsetting rocketing fuel and food prices by spending less on non-essentials.
Then there are luxuries that are so expensive that only a select few can afford them. When the select few stop buying, this shows how things are bad for the rest of us. With fears of a downturn intensifying, it might be assumed that artworks and expensive shoes are now way down the shopping list. But the picture is complicated.
British people are definitely spending less on shoes. The British Retail Consortium's Retail Sales Monitor for April showed the biggest decline in spending for eight years.
More pricey shoes are being bought
It's the same story with clothing in general, although while menswear and womenswear sales are poor, children's clothing has suffered much less. It may be the case that while people will apply austerity in their own lives, they draw the line at depriving their offspring. That, and children often grow out of clothes long before they wear out.
Perhaps against expectations, sales of expensive designer clothes and shoes are bearing up well in the face of recession.
There is no slowdown in the art market, says Jussi Pylkkanen, head of Christie's Europe. "It isn't always an indicator of the general economic situation."
At the top end, sales are extremely rosy, with Francis Bacon's Triptych and Lucian Freud's Benefits Supervisor Sleeping both breaking records. And in the middle or "day" market of works valued between $50,000 and $500,000, sales are also very solid.
"The last major dip was back in 1990. The market was very different, very polarised, a lot of Japanese buying in the Impressionist market. Today, the leading market is post-war and contemporary."
Today the art market is bigger, with the value of works dealt with by Christie's each year multiplying five-fold over a decade. The Japanese, American and western European buyers of 1990 have been joined by a new generation of Russian, Middle Eastern, Indian and Chinese millionaires.
The buoyancy of the art market is also related to oil. There is a maxim that when the price of a barrel of oil is high, the art market benefits.
Dry cleaning can be expensive. The occasional coat is one thing, but when an item of clothing costs a fiver to clean, you might be reluctant to wear it and get it grubby when times are tight. Or so the theory goes.
Less laundry being done professionally
Murray Simpson, chief executive of the Textile Services Association, admits that typically a recession sees people dry clean less. But the effect is likely to be more pronounced on laundries which wash and iron shirts.
"That is something you could do at home. It is very difficult to dry clean at home."
But both laundry and dry cleaning services are holding up, he says. There is no question in his mind that the recession will not be as bad for dry cleaners as the smoking ban. Now that going-out clothes don't come back smelling of smoke, people clean them less.
House prices, food prices, fuel prices, job cuts - read the news and there hardly seems a reason to crack open a bottle of champagne or an expensive Bordeaux. It's a mode of spending associated with City bonuses and with these drying up, surely there will be a dent in the posh wine market.
"In the past six months there's nothing that you would say is a drop in any way at all," says Simon Staples, sales director at wine merchants Berry Bros and Rudd.
In fact, Berry Bros has seen the average price of a bottle of wine sold to British customers go from £16.20 to £18.45.
The confusing picture may not just be restricted to the top end of the wine market. Sales of cheaper bottles could potentially be pushed up as people save money by not going out. By skipping trips to restaurants, the theatre or the cinema, the consequences may be increased spending on cheaper treats.
DVD sales are up, reports the British Retail Consortium. One might guess that 2008 will be the year of the quiet night in with a bottle of wine and a DVD.
If there are job losses in the City, the assumption might be that Porsche sales could be hard hit. But Porsche insist their cars are selling well in the UK at the moment.
People are still buying Porsches
There is a catch. A Porsche is typically delivered to its owner six to eight months after the initial order, so completed sales now reflect the mood at the tail end of 2007.
Despite no concrete figures being available, the firm says orders are bearing up well despite the gloomy economic forecast. But in the coming months even the non-sports car driving segment of the population may be taking a quick glance at the "Porsche Index" to see how the nation is faring.
Below is a selection of your comments.
I recently did some work on the UK wine market and it's true that alcohol sales are not affected by recessions. If anything, people turn to alcohol, and sales of premium wine remain solid as people treat this as a 'treat' to brighten up the bad times.
People who buy these luxury goods are more likely to be in a stable financial state. Consequently they will be less affected by recession. It makes sense that sales levels would stay fairly steady.
Recently I have noticed many of the festivals and gigs over the summer which are normally sold out in hours still have tickets available, which might be a sign of belt tightening… or equally could be a sign of poor line ups!
I have always gone without the necessities in order to have the luxuries.
Carol A Partington, Nether Poppleton, York
For a start clothes and shoes are rubbish anyway. That is why no one is buying them. They are cheaply made and don't even fit anyone correctly.