The Fashion Statement: What is Luxury Now?

As designers march their winter haute couture collections down runways in Paris this week, one has the feeling we're witnessing the end of an era. Only a handful of women in the world can afford this level of craftsmanship and, in the throws of the most diabolical recession we've ever seen, even they are pulling in their gilded belts. More's the pity.

As a result, this may be the last of Christian Lacroix. A few days ago, the designer showed a jaw-dropping collection every bit worthy of his couturier status. But his house is in such a financial mess, it needs a buyer to survive.

Lacroix is not alone, of course. Earlier this year, I asked a CEO of a high-end Italian fabric company how he was planning to celebrate the company's anniversary. "We'll barely be able to afford a birthday cake!" he joked.

Meanwhile, New York's famed specialty store Henri Bendel has stopped selling designer clothes altogether. Beginning this fall, the store will focus exclusively on selling smaller ticket items like jewelry, handbags, fragrance and gifts. It's a well-known fact that accessories sales are the bread-and-butter of retailers and fashion houses. Runway looks, especially haute couture, are more about creating publicity and brand image. But learning that H. Bendel will no longer be selling designer clothing is a little like discovering the coolest kid at school is into Dungeons & Dragons. It's just sad.

The luxury segment-particularly fashion and jewelry-has skirted trouble for years. In Deluxe: How Luxury Lost Its Luster out a few years ago, reporter Dana Thomas chronicled how the then $157 billion luxury goods industry eschewed exclusivity-a key characteristic of luxury-in order to rack up mass sales.

Still, few predicted the floor would drop out quite like this. "You can't justify premiums these days with the same old stuff," says Milton Pedreza, CEO of the Luxury Institute, noting luxury companies will be forced to reinvent themselves to stay relevant. "Many people feel like luxury has duped them into buying ubiquitous products. The main principles-great design, superior quality, heritage and service-need to be upped quite a bit