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Restructuring / Turnaround Strategies Case Study

Case Title:

Luxury Industry in Turbulent Times

Publication Year : 2009

Authors: Naga Sandhya Ramadugu & Pasupuleti Girija

Industry: Luxury Goods


Case Code: RTS0130

Teaching Note: Available

Structured Assignment: Available

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This case was primarily written to debate on how to manage troubled times for one of the highly recession-prone industries – Luxury Industry. It captures the performance of luxury industry during turbulent times – Wars, recessions and US Financial Crisis (2008). The current financial crisis has had crippling effects on luxury industry. The connotation of luxury is used in a very generic sense in this case study, symbolising all the ultra-premium and super premium goods. It also enables an interesting discussion on whether the industry succumbed to the troubled times’ business pressures or did it use those troubled times to come out with business and market innovations. This case study particularly looks at what happened to fashion brands as a result of US Financial Crisis. This case tries to resolve the following questions. Firstly, is luxury industry a recession-proof or a recession-prone industry? What made the luxury brands to hold back their expansion plans, lay off employees and set their minds on improvement of sales? How can luxury brands uphold their growth during turbulent times? Who can be their target customer and how should be their positioning strategy during crisis times?

Pedagogical Objectives:

  • To analyse and understand the nature and business dynamics of luxury industry and to debate on whether luxury industry is recession-proof or recession-prone
  • To examine the performance of luxury sector in the light of US Financial Crisis (2008)
  • To analyse the ways in which luxury brands can sustain their growth when industry is engulfed by economic and financial crisis.

Keywords : Luxury Industry, US Financial Crisis, Luxury Brands, Premium Brands, Brand Loyalty, Recession, Purchasing Power, Disposable Income, Brand conscious customers, Conspicuous Consumption

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