PERFORMANCE OF LUXURY BRANDS DURING RECESSION
SOME FACTS ABOUT THE PERFORMANCE OF LUXURY BRANDS DURING RECESSIONS
-Luxury brands usually manage to lead recovery post-recession.
-The world’s most luxurious brands managed to report booming sales and increased brand value in the aftermath of the EU and the US recessions.
-Hispanic-Americans and Asian-Americans are bigger consumers of luxury goods than the average American or European.
-Recessions bring many opportunities for alert brands and companies – These are times when companies leapfrog their competitors and become stronger.
CONSUMER BEHAVIOR DURING A RECESSION
-The wealthy and the very wealthy (the top 1%) are more immune to recession, it tends to be the middle class that gets squeezed during the times of economic hardship.
-Even during recession, everyone wants a slice of luxury, and brands that have understood this and companies that have geared for it have thrived.
-Despite the economic uncertainty, consumers are increasingly eager to indulge in luxury and in high-quality, cutting-edge design brands.
-People invest their hard-earned cash in brands they feel they can rely on to produce quality, long-lasting products and personal satisfaction.
-The affluent adopt luxury products as a form of alternative investment. (“Putting money in banks, or bonds, or the stock market is seen by some as increasingly risky, but putting money in luxury goods could look, by contrast, relatively safe and reassures the affluent’s lifestyle, especially to those individuals living in economies under pressure”)
-Buyers become choosier and more discerning – You may lose the occasional buyer but you will never lose your steady customer.
-Luxury brands possess something regular brands don’t – an increased emotional engagement quotient that provides consumers with products that possess an added-value well beyond primacy of product. (It was Coco Chanel who wisely professed, “In order to be irreplaceable one must always be different.”, and it turns out luxury brands are).
STRATEGIES OF LUXURY BRANDS AND COMPANIES DURING A RECESSION
-Positioning: Luxury brands are better poised to withstand the crisis by staying true to their heritage and by choosing to reinforce their luxury status .
-Spend on the Brand: When others are cutting their spending and loosening the emotional engagement with customers, it will pay in the longer term to spend on the brand.
-Diversification and Expansion: Brands and Companies see the crisis as an opportunity to expand geographically and touch on new potential customer bases.
-Build Brand Relevancy and Customer Engagement: With luxury brands, relevance is an extremely important issue and therefore one must move with caution. Recession is the best time to build relevance and such relevance will stick for long-term.
-Brand Visibility: Luxury companies make sure their flagship stores are in tiptop shape.
-Digital Marketing: Luxury brands explore new ways of reaching customers, through social media, mobile advertising, or online sales, for example.(The focus is not just the brand, but targeting people with a certain lifestyle and adding value to them)
-Product Development: No compromise on product quality (craftsmanship, raw materials) and development of entry level products.
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