How Luxury Brands Were Affected by Recession

Topics: Recession, Luxury good, Late-2000s recession Pages: 3 (1122 words) Published: March 19, 2013
Artjom Jekimtsev

Bovis homes group PLC, a leading UK house builder, had to review its corporate plans as a result of the recession and major cuts in government spending on building projects. Gives the high level of change in economic and political environments, is there any point in corporate planning? Justify your answer with reference to the house building industry and/or other organisations or industries you know that have been affected by such changes. (40 marks)

Post 2007, global economy has been reeling under recession. Recessionary pressure began with United States economy slowing down; however it has spread globally affecting all countries in some way or the other. Income level, employment have been affected 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 end class, 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 are affected due to economic recession. During times like these, companies usually dependant on corporate planning. Some of them in order to grow, others – to survive. Corporate planning is the process of drawing up detailed action plans to achieve an organization's goals and objectives, taking into account the resources of the organization and the environment within which it operates.

Music and books retailer 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 roughly 10% of the group's UK High Street presence, which comprises 285 HMV shops and 312 Waterstone's outlets. The massive store closure of outlets was an attempt to survive, as they has been hammered by competition from digital downloads...
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