• Ad Age , Tuesday, September 16, 2008 10:30 AM

While the subprime-mortgage crisis hit many lower- and middle-income consumers, the latest financial crisis will have more of an impact on the upper and upper-middle classes, analysts say, further shifting people away from luxury goods. Among other repercussions, massive layoffs are expected in the banking industry.

"The loss of Wall Street jobs and, more importantly, the effects of a less-liquid market on the economy will mean a few more percentage points of decline in revenues," says Milton Pedraza, CEO of the Luxury Institute. Pedrazza notes that high-end brands have been under pressure for several months.

Brands such as Tiffany and Coach, as well as high-end retailers such as Saks Fifth Avenue, Nordstrom and Neiman Marcus, which owns Bergdorf Goodman, likely will feel the pinch. But players in the space still see the downturn as temporary. Pedraza says the luxury market is cyclical and has experienced downturns before.

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