The Luxury Market’s Mixed Messages

When I first read the headline “AZATURE to Sell $250,000 Black Diamond Nail Polish” last week, I did a double take. What is this? I thought. 2007?

The story went on to talk about how the Los Angeles-based firm, named after jewelry designer Azature Pogosian, just came out with a one-of-a-kind bottle containing 267 cts. of black diamonds. It’s officially the most expensive nail polish ever made. The story also mentioned Azature’s more affordable line of gem-inspired nail polish, Black Diamond Babes, which will retail for $25. But the quarter-of-a-million-dollar varnish is, of course, the one I fixated on.

Azature’s new $250,000 black diamond nail varnish

The item reminded me of a series of stories that senior editor Rob Bates drew our attention to at the beginning of this month, when he blogged about “5 Truly Bizarre Diamond-Covered Objects,” including a $17,000 diamond-studded pacifier, a $15,000 pair of gold and diamond-encrusted contact lenses, and a $1,500 business card made with diamonds and gold.

I understand the value of publicity and if these were all stunts to garner it, fair enough, I suppose. But even still, haven’t we learned anything from the past four years?

The gilded, stratospherically-priced products that wouldn’t have raised an eyebrow before the market crashed in September 2008 seem so patently out of sync with the spirit of the times that I can’t help but wonder if I’m the one who’s out of sync, or if the zeitgeist just happens to be sending mixed messages?

Because in addition to stories about objects that take the notion of luxury to egregious extremes, there are the stories about the luxury market’s imminent collapse. Take this subject line that arrived in my inbox on Friday morning, for example: “Luxury Market Weakens: Reports from Coach, Tiffany, AMEX, Ralph Lauren Warn of Fall.”

The email came from Pam Danziger, president of Unity Marketing. She was touting a webinar scheduled for Aug. 21, in which she’s going to discuss the results of Unity Marketing’s Luxury Tracking Survey. Hint: The numbers don’t bode well for luxury marketers. Her remarks are coming at a time when global markets are still reeling from the volatility in the euro zone and the apparent slowdown in China.

All of which seems to clash with the received wisdom, which is that the luxury category is the only one showing promise in this still-fragile economy. Talk to jewelers and many will corroborate the reports that suggest the market for one-of-a-kind items that feature exceptional gemstones and craftsmanship is thriving.

So which is it? Luxury is booming? Luxury is crashing? I suspect it may be both. That is, jewelers who are selling true luxury products—those made with quality, backed by an authentic heritage, and sold by professionals who understand the value of the retail experience—are connecting with clients for whom money is still no object. On the other hand, those who are shilling products that cost a boatload of cash but only boast a superficial sheen of deluxe styling may see their fortunes turn in the coming months, as luxury consumers lose confidence in the market and recognize the emperors with no clothes.

We’re covering the topic in depth in our October issue, which will include a feature on the current issues facing luxury jewelers—and what the real prospects are for this coming holiday. But between now and then, I’d love to hear your feedback. What’s your take on the state of the luxury market?