As the effects of the economic crisis ripple across the global economy and demand for expensive products plummets, luxury brands face gloomy prospects in North America and Europe. Except in China which saw 15% retail sales growth in Q1, consumer spending is in sharp decline as consumers retrench, look for value in their purchases and cut back on non-necessities.

The second half of 2009 does not present much hope for a rebound. Global luxury spending rose 6.5 percent in 2007 before slowing to 3 percent . Growth in mature markets such as Europe, Japan, and the United States suggest flat or negative growth in 2009.

In the face of reduced demand, luxury brands like Gucci are turning to China as a potential stronghold for consumer spending in 2009. Like the rest of the world, China is feeling the effects of the economic crisis, and real estate and exports have all taken a beating.

China’s $586 billion USD stimulus package which is designed to encourage consumption will also help maintain luxury sales. If luxury brands focus on the desires of Chinese consumers, they may be able to use China as a haven even as other markets falter.