Will luxury retail ever recover?

Retail analysts say this recession has fundamentally changed consumers' approach toward spending. While predictions that retail will not return to 2007 levels before the year 2012 are fairly common, some analysts go further to say this economy will change consumer and retail forever, and that luxury retail in particular has suffered a permanent blow. Could they be right?

With the Reuters 2009 Global Retail and Luxury Retail Summit underway in London, there's no better time than to examine the issue. Howard Davidowitz, retail consultant and Chairman of investment banking firm Davidowitz & Associates, seems to be the retail's industry own Mr. Doom. He says that "living standards will never ever be the same," changing consumer behavior forever. The overspaced, overstored, overstocked retail sector will shrink significantly and the luxury sector is not going to survive. Already, 20 percent of the stores on Madison Ave have closed.