High End Markets Suffer: Selling Luxury Good in a Tough Economy

Written by John Comments
Last Updated September 11, 2009

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People are thinking long and hard about the use and purchase of luxury goods. I find this an interesting twist that I have NOT looked at before. Since we do not sell luxury goods anymore (yeah, we started out with some high end jewelry back in da day) this has not been on my radar. However watching this video shows how deep the economy can drag for the luxury markets.

She does not mention this in the video, but I am aware of even hip hop artist are shunning the "bling" of yester year. Times are really changing and the luxury markets might be one of the last ones to see the end of the down economy as public sentiment is changed.

The Luxury Linens Expert

The video is very interesting and relates to the so called "new luxury" phenomenon.

.....What is luxury?

It’s anything coming at a premium price compared to mass market products or services.

Luxury markets have been growing exponentially in the past decades together with the wealth/GDP of all Western and Far Eastern countries. We have seen a worldwide proliferation of “self assessed” luxury brands like never before. It happened in any kind of Industry, from pet food to sportswear, from shoes to fine linens.

Overcrowded and supercompetitive markets moved businesses focus from the product itself to marketing. The one able to scream its message louder stood out of the crowd and won the consumer. Marketing counted up to 80% of the price tag. A lot of sizzle and no steak!

That’s the way it used to be!

Tha global downturn that slashed US economy into the worst recession since 1929 was not only evil. Strange as it seems there is also a good side of it. The Great recession brought people back to reality, easy and quick money was over and the idea of an eternal growth at the same pace as the past decades has been replaced by the concept of sustainable growth.

This changed consumer attitude forever. Focus is back again on the value of actual product.

A brand name alone is not enough anymore to justify a premium price tag and luxury doesn’t mean just to show off wealth and social status accomplishment.

New Luxury stands in a product’s superior key features that translate into actual benefits to the user. It’s that simple!

The winner in today’s economy is the one able to deliver that luxury product to consumers in the most efficient/cost effective way leveraging the power of the internet and the new media. The internet make it possible to reach a target audience in a much more effective way than traditional advertising thus shortening the value chain and giving value back to consumers.

Many traditional luxury brands still don’t get it. All that they do is making product more affordable by lowering quality thus not changing the way they deliver value. This is actually a runway to hell since poor quality will kill the perceived value of the brand itself in the long run.

Only those businesses able to justify a premium price tag with real, tangible value will prosper and be the winners in the New luxury markets. All the others are condemned to decline and will strive to survive.

New Luxury is good and is here to stay.

No more sizzle please, just the steak !