Given an economic downturn, most industries and markets shrink. Prices go up, demand forcibly decreases, and businesses take a hit. However, there is one segment of the business world that seems to manage to weather such things out better than the rest: luxury goods. Being some of the most expensive goods of their particular type, luxury items would theoretically be among the first to see a sales hit in the event of economic problems. Yet, despite that, the current situation has not only seen the business continue on, but has witnessed it actually thrive.
In comparison to the 4 to 6% growth that retail markets experienced, luxury goods had growth in the 20 to 32%, with the U.S. market alone being worth an estimated $400 billion. In contrast to the common perception, the numbers of actual customers for luxury goods are surprisingly high. There are 1.2 million households in the U.S. alone that are worth over $5 million, the starting point for many luxury companies. As the rich get richer, the market can only increase.
The sector has also shifted how it does business in the front lines. One-on-one, highly personalized service to customers are becoming increasingly important, alongside custom marketing campaigns that show that they understand what the demands and values of the customers are. More and more people are trying to expand their knowledge and savor the best of the best, regardless of what those products are. This sense of connoisseurship has become crucial for the luxury goods sector, as it gives them new people to tap into that are seeking what that part of the business world has always presented itself as: the cream of the crop.
Luxury goods are also starting to evolve. No longer are many of their marketing efforts concentrated on getting by based almost entirely on reputation and tradition. Their products have always been of the best quality, and more companies in that sector are marketing based on that. It simply isn’t enough to rely on their experience and prominence in the market anymore as customers become more discerning and more critical. To adapt, many have taken marketing and advertising advice from their “low end” counterparts, presenting a stronger product and tapping into more of the market than before.
Overall, the luxury sector has begun to evolve and adapt. Their market might be the last to feel anything in the event of an economic crunch, but that has not deterred them from adapting. These changes have helped them weather through all but the worst of economic situations.