Are luxury brands recession-proof?

[aylabadia05]

Why do luxury goods often thrive even when global economies slow down?

They consider luxury goods to be a kind of investment, even though their value will decrease over time.
Take, for example, watches, bags, or shoes from well-known brands. They buy them because they can resell them later when they feel like it's time to sell.
They can be stylish, follow trends, and get the item.
This is my opinion, and it's not necessarily the true reasoning behind it. Think again.

[toryn388]

Luxury brands don’t rely on the broader economy as much as regular retailers do. Their main customers tend to have high, stable wealth, so a recession doesn’t change their spending habits that much.

In some cases, luxury sales even rise because people view those items as a “store of value” or a way to signal security when everything else feels uncertain.

[imthegreat]

Why do luxury goods often thrive even when global economies slow down?

Because the main buyers of this are the very rich, who don't understand the meaning of crisis or poverty. If the world economy is in trouble in leading countries, it means the rich will simply start earning more slowly, but still earning huge sums, as they always have. And sometimes they even make money: for example, during COVID, big pharma earned several times more. Imagine how much money the rich laundered from selling face masks, which were essentially useless.

[Darker45]

Because the economy only matters to ordinary people. Whether it's doing good or slowing down, the rich earn big. Their companies or investments may lose millions in revenue but it doesn't necessarily equate to a change in lifestyle. A struggling economy may necessitate a call for their companies to reduce expenses but it certainly doesn't call for personal frugality.

But I'm sure they aren't completely insulated from the effects of global economic problems. It's just that their market isn't dependent on ordinary people.

[henmark]

I don't think luxury brands are completely recession-proof. In recession, all major firms have to go through some tough times and so does the luxury brands as well. The target customers of luxury brands are not always the victims of recession so these brands still thrive in situations like these but their incomes will somehow take a dent. Luxury brands have various products and it will depend on the use-case of that specific product. Not all but some will even face a downturn when it comes to recession.

No company is completely recession proof but some are recession resistant depending on their product. If they offer essential goods and services or are somewhat working along with the government that that company might be recession resistant.

[imamusma]

Why do luxury goods often thrive even when global economies slow down?

Economic slowdowns do not significantly affect the wealthy, because in many ways they are part of the forces that indirectly create those cycles. For them, there are no real obstacles to fulfilling their wants and needs, they can purchase anything without even looking at the price tag.
In addition, luxury goods are often treated as investment assets, which is why it’s no surprise that when the economy weakens, demand for luxury items actually increases. Wealthy individuals do not spend their money carelessly, they are calculated and prudent in managing their wealth.

[o48o]

Why do luxury goods often thrive even when global economies slow down?

There are lower tiers to luxury goods, and lower tiers are probably are more affected then higher tiers.

I have seen some really rich people trying to get rid of their luxury apartments during bear market, so i am not sure if they are resilient against recession. That might have been a coincidence in timing as well, because i am pretty sure that most of the ultra rich aren't in hurry to liquidate their luxury items because of the markets.

And not so rich people can afford to buy only lower tier luxury items an investment. And during recession, it's unlikely that anyone would buy them as they aren't that easy or fast to get rid of if needed.

[Hyphen(-)]

Why do luxury goods often thrive even when global economies slow down?

Because influence from rich people and investors.
There is one thing with investors, they will always like to support each others business, and once they have invested in a business, they will want to keep it up always to maintain the value of their investment, that is why no matter how the market is and no matter how inflation affects Ted some brands, big and luxury brands will always remain at the top and will feel nothing on the side of the economy.

[wiss19]

Why do luxury goods often thrive even when global economies slow down?

they have the most elite marketing tactics

these brands are a sign of wealth and status
their customers do not care about the price they just want the exclusivity

they also sell timelessness and promotes their product as a worthy investment
and a safe haven

maybe it will help you to read this article on how luxury brands still get their revenue
https://www.wunderkind.co/blog/article/blog-article-luxury-brands-thrive-during-retail-recession/

basically saying that luxury brands take care of their elite customers extremely well like no other

That is because these luxury brands spend a lot of money in providing better experience to the customers. The product here is secondary but experience is primary. These brands charge a heavy money for that experience and customers are willing to pay more if they are treated specially. These brands will have better products for sure because in order to maintain high standards and a good user experience, they also need high quality products for which customers are willing to pay a premium price.

These customers who pay elite prices are usually not affected that much by the recession and will still continue with their purchases in order to experience the luxury and I guess this answers the OP's question.

[bhadz]

The luxury goods is a booming industry even if during the past pandemic that the world have gone through. And by just looking at the local market here, people are into the luxuries because it gives them that rewarding feeling that they did a good job. So, even during the hard times, higher inflations, recession and such, for as long as there are these hard working feeling that would like to give themselves a luxury, they'd do that. There were even studies that luxury goods have surged during that time and so, it will continue to go on since most economies have recovered but not in our country.

[ancafe]

There's not much of a difference though, they are luxury good, only a few can afford them, so why they can't maintain the price? If they lower it then it will not be called luxury goods or items. So I disagree with you that they won't maintain it. On the contrary, they could have add a mark up again during recession and still there will be some buyers for them, those ultra rich.

But if you look at it, those brands are already billion dollar empire, so it will just continue to for to make a lot of money as their clients are rich. So it's going to be a cycle as what we've seen, rich becomes richer in recession.

Everyone buys luxury goods at fantastic prices because they have investment value and can serve as a place for the wealthy to store their wealth. For some designer handbags, it might not be so obvious because their value isn't that high, but looking at those vehicles with fantastic prices, it's quite clear that they're being used and purchased solely for investment, not just for everyday use. It's okay if you disagree with me, because I'm responding based on events that occurred during the recession, unless I'm addressing the issue in the long term.

In a recession, people seek assets with resilient value, and that may impact the level of certain brand names. If we're talking about maintaining value over the long term, I certainly agree, as some assets used by wealthy individuals are resilient and their prices are substantial. This is why the wealthy's investment strategy differs from that of the average person, as they have the financial resources to support their investments.

[bangjoe]

Why do luxury goods often thrive even when global economies slow down?

That's because they are considered assets, such as paintings, limited edition luxury vehicles that always increase in price, limited edition watches, and other expensive items that are often collected by the wealthy. This is luxury brand marketing, targeting the wealthy as their market, and of course the world's wealthy are eager to obtain these items. After all, prestige is very expensive here, as it is a necessity for living in a wealthy environment.

They leverage scarcity to obtain the value of these luxury items, even as the economy slows down. And as you know, the economic slowdown primarily affects the middle and lower classes, while the upper class continues to operate smoothly.

[Oasisman]

Why do luxury goods often thrive even when global economies slow down?

The answer to this is plain and simple, and that's because their target market or customers are too wealthy to get affected by global recession.

However, I will not consider luxury brands to be a fully recession proof asset. Some luxury brands will still get a slight effect as they don't get much sales from the people in the middle class, who are most likely gonna feel the effect of the economic downturn as well.

[Koadharber]

There's not much of a difference though, they are luxury good, only a few can afford them, so why they can't maintain the price? If they lower it then it will not be called luxury goods or items. So I disagree with you that they won't maintain it. On the contrary, they could have add a mark up again during recession and still there will be some buyers for them, those ultra rich.

But if you look at it, those brands are already billion dollar empire, so it will just continue to for to make a lot of money as their clients are rich. So it's going to be a cycle as what we've seen, rich becomes richer in recession.

Everyone buys luxury goods at fantastic prices because they have investment value and can serve as a place for the wealthy to store their wealth. For some designer handbags, it might not be so obvious because their value isn't that high, but looking at those vehicles with fantastic prices, it's quite clear that they're being used and purchased solely for investment, not just for everyday use. It's okay if you disagree with me, because I'm responding based on events that occurred during the recession, unless I'm addressing the issue in the long term.

In a recession, people seek assets with resilient value, and that may impact the level of certain brand names. If we're talking about maintaining value over the long term, I certainly agree, as some assets used by wealthy individuals are resilient and their prices are substantial. This is why the wealthy's investment strategy differs from that of the average person, as they have the financial resources to support their investments.

Luxury brands operate differently from regular markets because their pricing is based more on perception than on economic balance in a recession people might expect prices to drop but luxury companies know that lowering prices can destroy the exclusivity that defines them so instead of cutting costs they either keep the price stable or release limited edition items to maintain scarcity. Their core buyers the ultra rich are rarely affected by recessions in the same way the middle class is even when the global economy tightens this group still spends because their wealth is tied to assets that hold value through downturns and for them luxury goods are not only purchases but also investments a limited edition watch supercar or art piece can appreciate over time making it a form of wealth preservation.

It creates a cycle where the rich get richer during recessions while the middle and lower class tighten their budgets luxury companies thrive on that reality they market to emotions of exclusivity stability and legacy and the demand among their clientele rarely disappears. In essence luxury pricing isn’t about affordability it’s about status and scarcity even if the world is struggling financially the people who buy ten thousand dollar bags or million dollar cars are doing it to separate themselves from that struggle so while regular industries may cut prices to survive luxury brands sustain theirs to remind the market who can still afford to buy.

[XOOMBOX]

The luxury goods is a booming industry even if during the past pandemic that the world have gone through. And by just looking at the local market here, people are into the luxuries because it gives them that rewarding feeling that they did a good job. So, even during the hard times, higher inflations, recession and such, for as long as there are these hard working feeling that would like to give themselves a luxury, they'd do that. There were even studies that luxury goods have surged during that time and so, it will continue to go on since most economies have recovered but not in our country.

The luxury brands really works differently than normal brands and the most interesting thing here is that even during economic crises, people want to show themselves differently and the luxury sector has survived from that mentality. For those who work hard, a bag, perfume or watch is not just a thing for them but a feeling of enjoying theirs achievements. Many studies have shown that the prices of luxury brands increased abnormally during the pandemic because people were looking for mental satisfaction even within the constraints. However, to be honest, the situation in all countries is not the same for example, in our country the purchasing power of the people has not yet returned to its previous level so this trend does not work in the same way yet. Nevertheless, from a global perspective, luxury brands are quite stable and often benefit even in recessions.

[bhadz]

The luxury goods is a booming industry even if during the past pandemic that the world have gone through. And by just looking at the local market here, people are into the luxuries because it gives them that rewarding feeling that they did a good job. So, even during the hard times, higher inflations, recession and such, for as long as there are these hard working feeling that would like to give themselves a luxury, they'd do that. There were even studies that luxury goods have surged during that time and so, it will continue to go on since most economies have recovered but not in our country.

The luxury brands really works differently than normal brands and the most interesting thing here is that even during economic crises, people want to show themselves differently and the luxury sector has survived from that mentality. For those who work hard, a bag, perfume or watch is not just a thing for them but a feeling of enjoying theirs achievements. Many studies have shown that the prices of luxury brands increased abnormally during the pandemic because people were looking for mental satisfaction even within the constraints.

That is so true, even if there's a recession or any crises at all, there are people that are showing off how resilient they are and one of it is by showing they can afford to buy the luxury goods. We can't stop them, that's their hard earned money and also a way for them to preserve that money from inflation because what they think is that these are also investments and the value increases but not all for the luxury goods.

However, to be honest, the situation in all countries is not the same for example, in our country the purchasing power of the people has not yet returned to its previous level so this trend does not work in the same way yet. Nevertheless, from a global perspective, luxury brands are quite stable and often benefit even in recessions.

Are you also from the PH? because that's what is happening here. The purchasing power of people have decreased a lot dramatically and we're in the 'ber' months and yet, we don't feel the spirit of Christmas and holidays.

[Cryptomultiplier]

In my opinion, luxury brands tend to be more resistant to recession and not recession proof.
Luxury brands have the most exclusive brands for the wealthiest class in the society who in the cases of recession don't even notice how the economy is slowing down and also luxury brands have the premium market for the lesser, not poor or average earners and it is during recession in this market sector that the experience of recession is noticeable felt as sales and patronage slowdown.

[imthegreat]

The luxury goods is a booming industry even if during the past pandemic that the world have gone through. And by just looking at the local market here, people are into the luxuries because it gives them that rewarding feeling that they did a good job. So, even during the hard times, higher inflations, recession and such, for as long as there are these hard working feeling that would like to give themselves a luxury, they'd do that. There were even studies that luxury goods have surged during that time and so, it will continue to go on since most economies have recovered but not in our country.

Perhaps people have become hungry for luxury items during the crisis. After all, we're all doing well now, until the AI ​​bubble burst, which will likely lead to another crisis (after all, it's not even banks that are investing in it, as in 2008, but governments). Now everyone continues to buy iPhones and expensive clothes, even though these items are no longer the best quality; just look at the reviews. People want to show off, and for them, this is more important than financial freedom. It's a short-sighted decision, but it's their choice.

[ovcijisir]

It's because the luxury brands' customers are not affected by recession.

The economies slow down, but if they're the first hand suppliers, both sellers and end customers will still buy the product because they really need it. Example if we want to clean our teeth, we need a toothbrush and a toothpaste, do people want to create their own toothbrush and toothpaste when they can buy it in cheap price? most people won't.

Since many people depend on rich people's product, those rich people are safe and they can as much as they want, including to buy products in luxury brands.

Nice comment but I'd like to add that in my opinion it applies just to luxury items that are small and affordable to rich people like parfumes, cosmetics, etc. Big and expensive items like cars see the decline in sales too in recession. I just checked Lamborghini sales report for last few years and they did have decline in 2020 during pandemic. But also that could be consequence of lockdowns and forced quarantine. Too bad that 2009. data was not available to back up my opinion, but I'm pretty sure that big and more expensive items that impact even the daily  budget of rich are also affected by recessions.

[bhadz]

The luxury goods is a booming industry even if during the past pandemic that the world have gone through. And by just looking at the local market here, people are into the luxuries because it gives them that rewarding feeling that they did a good job. So, even during the hard times, higher inflations, recession and such, for as long as there are these hard working feeling that would like to give themselves a luxury, they'd do that. There were even studies that luxury goods have surged during that time and so, it will continue to go on since most economies have recovered but not in our country.

Perhaps people have become hungry for luxury items during the crisis. After all, we're all doing well now, until the AI ​​bubble burst, which will likely lead to another crisis (after all, it's not even banks that are investing in it, as in 2008, but governments). Now everyone continues to buy iPhones and expensive clothes, even though these items are no longer the best quality; just look at the reviews. People want to show off, and for them, this is more important than financial freedom. It's a short-sighted decision, but it's their choice.

Those luxuries became a status symbol of every person and that's why they're buying it. It's not about the features that they'll get to use by having those but it's a way of increasing their status in the society as how these brands have published and advertised themselves. The problem is that even those who cannot afford it, they're wanting to have it and so even it will cost them a loan they're willing to do it. That's the cost of showing off, wanting to have that chance of bragging to the others that they own these expensive luxuries. While here's me, I don't care about those things because I have no plans of buying them.