W Magazine hosted a conference on luxury this morning - what’s going on with it, who’s hurting, who’s winning, when will it come back?

They conducted a series of polls with their readers, dubbed “Fashion Passionates,” and compared them to the more generally affluent, as in still-rich people who don’t devote their extra money to Givenchy and McQueen.

What’d they learn? This is the first time in recorded history that the luxury market has been hit harder than retail in general. Aspirational customers (those who save up for that one big purchase or consistently live beyond their means) are totally gone and not likely to return anytime soon. Even the best luxury customers are spending on average 50% less.

At the end of last year, during Super Sale Season 08, we were wondering what would happen after everyone got used to even the big stores discounting deeper than we thought was possible. And here’s what:

Believe it or not, some brands are reportedly dropping their prices. According to WWD, both Oscar de la Renta and Alberta Ferretti will be available for less this season (for example, a formerly $900 blouse from Oscar might now be $795 - not exactly earth shattering, but a couple days’ pay for most). Also, Zac Posen and J Mendel are both offering more at lesser price points, with dresses starting at nearly half the price as compared to past seasons at J Mendel.

Of course, some brands refuse to budge: Versace, Givenchy, Chanel and Prada have all made it clear that they truly believe their price tags are fair and worth the money the customer hands over in exchange.

So which way will this go? Will brands like J Mendel regret their price slashing, and never be able to sell on their higher tier again? Or will labels like Chanel and Versace simply lose their aspirational customers altogether, meaning less Chanel wallets but more Chanel evening wear?

In light of diamond prices taking a significant dip, Harry Winston’s made a big change. They’ve quietly launched an e-commerce site called the Harry Winston Online Salon.

It consists of only diamond jewelry, much of which is winter-themed (like at left), ranging anywhere from $6,000 for a pendant to $135,000 for a necklace.

Our first thought: Who the hell drops a mortgage payment online?

Our second thought: Well, it’s Harry Winston, so even though you lose all the magic of the glittering jewels in their boutiques, you definitely know what you’re getting, so the quality wouldn’t be any different than from jewelry bought there in person.

And yet, we still can’t help but feel like:

1. This comes dangerously close to diluting their brand image (Marilyn Monroe singing, the storied old house, etc) by placing their goods in the realm of shame shopping, which usually consists of bags and shoes.

2. Even though Harry Winston has famous standards, we still don’t see ourselves casually charging $20,000 to our Amex, even though it’s technically the same as doing it in the store (assuming you know what ten carats of bling look like on your ears.)

So many questions: Would you buy major jewels online? Or is that left for minor accessories - and should all major jewelry purchases be made in person? (Because, as much as we hate to admit it, we can’t imagine how we’d feel if we were on the receiving end of a major gift, and learned that the necklace/earrings/ring was purchased while watching television…)

Even though each day brings more and more clothes at deeper discounts these days, even though the highest of the high-end are lowering their prices in the US, and even though their sales for the third quarter decreased 46% (and even though holiday sales account for nearly half their total sales), Abercrombie says it won’t jump on the sales bandwagon.

They say that in order to “protect their brand image”, they’ll just take the hit that the fourth quarter may be. So if you were hoping for $40 Abercrombie jeans come Christmas, you might want to redirect those hopes to, well, every other store.

We’re hearing rumblings of blow-away sales come Black Friday - the rare term “80% off” has been thrown around, and from major brands. Deck the malls!

Some facts:

1. American workers make up almost half of all diamond purchases worldwide. [Another somewhat related fact: There is exactly one diamond mine in the US (in Arkansas), and it’s not used for commercial sourcing.]

2. US joblessness just increased to 6.5%, the highest in 14 years. Translation: A lot of those American workers are out of jobs right now.

3. Almost 50% of all diamond purchases are made in the fourth quarter. Translation: They’re usually bought as holiday gifts, or in anticipation of a major bonus to buoy the cost, so most major diamond dealers (Harry Winston, Tiffany’s, Van Cleef, etc) haven’t even felt the full effect of our downward economy, and are just about to enter the time of year that usually carries their business.

So what does this all mean? Well, according to Bloomberg, the price of diamonds should fall at least 15% next year, which basically means that Harry Winston is going on sale - but does 15% off $30,000 really help? Well, for some..

While some companies are trying their hardest to come across as inexpensive as possible through advertised (and constant) sales and “everyday” low prices (Olay, Target, Bloomingdale’s), other companies, we’ll call them “luxury,” simply aren’t, because the general consensus has been that the luxury market is doing just fine.

But a big impressionist and modern art auction at Christie’s last week wasn’t just uneventful - it tanked.

44% of the works, including 19th century landscapes by Monet, failed to sell, with the auction’s sales totaling to less than one third of the pre-sale lowball estimates.

So what could this mean? Either people at the tip top of the financial echelons are hanging on to their money a little tighter these days due to their own financial woes - or, it’s simply become distasteful to drop jillions when news like this comes out.

Either way, it’ll be interesting to see how all the high-end jewelry companies respond to this holiday/bonus season. Harry Winston on sale? Let us pray.

LVMH may have just won a landmark case against eBay, but now their beauty division’s in hot water in Germany -

According to WWD, there was something of a beauty cartel in Germany up until recently, called “Schlossrunde,” which means “elite circle.” It consisted of quarterly meetings since 1995 between the German subsidiaries of LVMH Perfumes and Cosmetics, Chanel, Estée Lauder, Clarins, L’Oréal, Coty Prestige Lancaster, Shiseido, YSL Beauté and Cosmopolitan Cosmetics Prestige (now called P&G Prestige Products) for the purpose of collusion and price-fixing.

Translation: They would meet often to discuss who was charging what for which product, so they could raise prices in conjunction with each other to get you, me, and everybody else to pay as much as possible for their products without losing customers to each other.
They also shared information like how much each paid for advertising, to make sure they weren’t getting screwed by other companies themselves. Basically, it was like a luxury beauty union, but an illegal one.

Germany’s Federal Cartel Office is fining each company somewhere between $400,000 and $3.3 million, depending on who you are and what you did, though L’Oréal is appealing their fine, saying they weren’t involved at all.

We think this could make a kind of funny beauty thriller movie, but more pressing: Was this only happening in Germany?

We stayed too late at the Lydia Hearst for Puma party, so today we’re a little groggy.

Still, even if we’d had a yoga class and 8+ hours of sleep, we bet we’d think this video of Suzy Menkes and Natalia Vodianova was hysterical.

To start, there’s the contrasting pouf and pull of the hairstyles.

Then there’s the way Suzy eggshells away from Natalia’s super-rich husband in favor of her charity work building Russian playgrounds, which we get to see via interspersed clips.

We’re thrilled to see Natalia plugging her charity, but it’s interesting how Suzy frames the subject - Natalia is being interviewed for Suzy’s “Luxury” series, and she says “For me, luxury for Russian children is a playground.”

Natalia Vodianova is married to one of the wealthiest men in Great Britain. Her home in Tribeca costs $10 million. This is not mentioned in the Luxury segment, nor is this fun fact:

Her husband’s name is Justin Portman, so her married name would be “Natalia Portman,” and that sounds just like… anyway.

Over the past few years, it seems like “luxury” has become the new standard. We remember a time when the $200 jeans we now own would have made us think there was a typo on the price tag, and the $800 boots we’re considering buying would have seemed like a practical joke.

And while there have been a lot of complaints about oversaturation in the market ($275 headband, anyone?) it looks like what’s even considered luxury might change once again.

The luxury market is splitting.

Amid recent reports of department store slowdowns and Van Gogh paintings failing to sell at auction, there is talk of the two different types of luxury- “affordable luxury” versus “genuine luxury-” experiencing two different types of sales.

Stores selling mostly “affordable luxury,” like Nordstrom and Macy’s, have seen a steep decline, while Saks and Neiman Marcus, both considered vendors of “genuine luxury” have seen a significant rise. So while Juicy Couture and Coach aren’t getting bought, Hermes bags and Balenciaga pants still have wait-lists.

The new economic trend poses a big threat to the way women are shopping right now -

If “affordable luxury” brands go under, then we can either shop way up (Chloe jeans!) or way down (Old Navy jeans!). And for millions of women used to living in Barneys Coop, that’s going to be a problem.

Also:

What does this economic slow-down mean for companies like Banana Republic and J Crew, whose prices are already too high?

—NATALIE HORMILLA