This time last year the fashion world was booming: houses such as Louis Vuitton were opening new stores and entering new markets, while limited-edition products with six-digit price tags were selling out before they hit the shelves. Then the bubble burst.
Now, it's hard to imagine how things could get worse for the industry. Independent labels and small boutiques are closing, while struggling retailers are downsizing their operations. In the US, prime retail areas in cities such as Los Angeles have been abandoned while department stores say they are reducing their upcoming autumn/winter orders by 20 per cent or more, according to a recent report in The New York Times.
Even the once impenetrable Russia, home to 'oligarchs', has taken a battering. Stella McCartney, Manolo Blahnik and Alexander McQueen have shut their stores in the country only a year after they opened. And the forecast is just as gloomy for once-booming markets in the Middle East and India.
In Hong Kong, the knock-on effect is hard to ignore. Retailers are offering discounts or new promotions to increase traffic, desperate to clear the way for the spring's new arrivals.
But most of the spring/summer merchandise was bought more than six months ago, before the recession set in, and their bright colours seem at odds with the gloomier economic climate and sluggish consumer demand that has taken hold.
For autumn/winter 2009, things are likely to be vastly different. Buyers face a new set of challenges, including smaller budgets and the need to be more discerning in their choices. If the men's ready-to-wear shows (which take place a month before the women's) are any indication of things to come, then next season will offer a darker and more sombre vision.
'I think in reality designs will be less frivolous with the freezing temperatures of both the economy and winter in Europe,' says Helen Willerton, managing director of Chloe Asia Pacific.
'There is definitely a sombre mood in luxury and retail and I believe that collections will be more understated to reflect this global emotion. However, this doesn't mean designs will be less creative. It's still possible to have a creative and appealing collection even if the marketplace is more cautious.'
But others say the market will carry on despite the adversity, as it always has.
'Fashion is fashion. Designers know what they're up against this season and can't depart from their fashion point of view in any economic cycle,' says Jennifer Woo, president of Lane Crawford.
Balbina Wong, chief executive of Imaginex, is hoping that from the ashes will come something new and unique: 'I'm confident that the autumn collections will be just as distinctive as in past seasons. A classic example is Marc Jacobs' famous grunge look created during the economic slump of the 1990s. I'm sure that creativity will not be compromised even in these difficult times.'
While creativity on the catwalks is one thing, what actually sells in stores is a different matter. 'What we have realised is that seasonal trends are not long lasting - they aren't as prominent as they were a couple of years ago and it's not so much about buying the trends,' says Adrienne Ma, chief executive of Amma Holdings.
'We need a mix of wearable clothes with the more avant-garde, more forward looking. There needs to be a balance for buyers. Sometimes if you buy too conservatively customers will say they have something similar and won't want to buy. We need to offer something interesting but new because it's still fashion.'
In an attempt to attract customers, some retailers are putting emphasis on unique items and new brands.
'The retail market will become more competitive and retailers will use new tactics to get their market share,' Woo says.
As part of this offensive, it's necessary to continue marketing activities - although not to the extent of previous years.
Wong says: 'Cost control is essential when sales are slow, but it doesn't necessarily mean cutting back on all store openings, marketing activities, and so on. I would say invest wisely for the long term. It's also important for labels to strengthen their brand equity and relations with loyal customers during bad times so that when the economy recovers, these brands will be the first to rebound.'
Peter Cheung, regional vice-president of communications for Versace Asia Pacific, says he's optimistic about the outlook for Asia and China, in particular.
'We see similarities to when Sars hit in 2004. It was like [there was] no end in sight, but the industry rebounded soon after,' he says.
While many brands and retailers are trying to remain positive about sales next season, the big question on consumers' minds is whether prices will go down. Towards the end of last year, Women's Wear Daily reported luxury brands were lowering their prices by up to 15 per cent in the US and Europe. Will Hong Kong follow suit?
'In general, I think all brands will have to take a close look at pricing and the fluctuating exchange rates to ensure they are competitive - it would be irresponsible to believe that people are still in the same purchasing mindset as a year ago,' says Willerton.
'While the recent sales have been necessary, continuous and heavy discounting will eventually erode the longevity of a brand.'
Ma agrees: 'There's no point flooding the market with products that would devalue the sense of luxury. Luxury has been evolving and morphing over the past several years. We do see some brands that have overly distributed, while others have tried to add couture lines or limited-edition pieces.
'I don't think the luxury market has changed just because of the global gloom and doom. In fact, it will eventually recapture its true meaning - offering something that people might desperately want, but not everyone can afford.'