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Monday, November 09, 2009

Recession forces luxury brands to target the wealthy

The first thing that popped up on “must blog” list is another item about luxury.

According to a Luxury Institute study, summarized by AdWeek, state-of-the-market series, 77% of high-end shoppers "agreed that luxury is less important in today's economy."

Surprisingly, the majority of affluent consumers aren't big luxury shoppers. Pre-recession, most of the luxury market's power came from lower-income aspirational buyers. Now they can no longer afford to shop that way, so luxury brands are looking for new ways to sell to the actual wealthy.

According to the survey, many affluent consumers said that they're primarily interested in quality and service, which they consider hard to find in luxury goods.

The survey also found that the rise of discounting has damaged people's brand perception.

"Radical discounting is a disaster. It tells people how big the margins were." Shoppers are confused, forgetting that luxury items are more expensive because they are of higher quality.
AdWeek suspects that shoppers will be much more discriminating in the future. One expert mentions a "rise of connoisseurship."

Interesting stuff. So if the aspirational buyers are having a hard time and it is the really wealthy who are still buying, what difference does that make to the profile of the target customer? Methinks it has just got older. Dick Stroud

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