Luxury in recession

Posted in Uncategorized by Abhinaya Chandrasekhar on August 22, 2009

The world is facing an economic downturn. And, yet I receive messages from Ralph Lauren about their new collection. The biggies still hold fashion shows and are doing well for themselves. Is there a layer of consumers who are unaffected by the financial crisis?

Guy Richards post on Why brands increase price in an economic downturn explains the strategy behind this. But what about consumer behavior? Do people really pay more during a recession? Will it work? How do they advertise during this period?

This came up during my discussion with luxury marketers in India:

Recession has had a huge effect on the affordable luxury. This is the time when the line between true luxury and affordable luxury widens. Consumers who have $10 million in assets are recession-proof and they continue to spend as planned. This has affected brands like Ralph Lauren and Calvin Klein who have slipped from their true luxury status. Brands like Louis Vuitton and Prada continue their production like ever before.

Companies are also employing the “targeting luxury” strategy. It’s the strategy being employed by Maurice Lacroix as it provides watches as giveaways to corporate executives it meets in the course of its promotions, such as the Time Machine campaign and the brand’s deal as the “official watch” of the Indianapolis 500.

Also, some brands continue to do what they are best at – appeal to the refined taste and matching egos of the upscale consumer.

Beside all these company-specific strategies, what all of them have done is:

– Cut out the advertising budget.
– Spend more in the engagement experience. Allow the up-scale to feel rather than see / hear.

    Hard to believe, sounds weird, but its true! They still spend.

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    1. Luxury in recession « IT News said, on August 22, 2009 at 11:55 am

      […] Read the original here: Luxury in recession […]

    2. Sudhir Pai said, on August 23, 2009 at 12:53 pm

      Interesting subject!

      Economic recession. Things wont look up till 2012 at least. From Rado to Ralph Lauren, everyone’s sales curves have plummeted. So what do they do?

      From a consumer( my own, mind you) point of view, these are products that i still desire, and would love to own when things get better financially. So I imagine it is imperative for luxury brands to uphold their status in the subconscious of the consumer. And I do not buy (as a disclaimer, my opinion has nothing to do with my financial state!) the argument that luxury brands should stop marketing their goods because they are no buyers. What they should refrain from doing is indulge in something that a not-so-luxury brand would do.

      Coming to what some have been doing, wont be surprised if a ralph lauren is up selling to a old customer. A Tom Ford or Brioni would send tailors to your place if you’ve bought a suit from them before. And even if you do not buy, they would still titillate your desire for the product. Ditto for Perfume Stores. Even if I’m broke, I’d still pick up a Ralph Lauren Polo Black if it was given to me with a 30% discount

      Shortly after WW2, “German economy” was as good an oxymoron as “happily married”. I’d read somewhere that during those days, BMW had shut down their Automobile Production, and for sometime were into Kitchen and garden equipment. Well, things aren’t so bad now are they? So go on, I say. Get a better brand for your buck. That may not save the economy, but it’s a small price ( that too with a hefty discount) for happiness.


    3. Anvar said, on August 25, 2009 at 12:31 pm

      Hey, gre-e-a-at blog! You put us all to shame, Abhinaya

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