source @GQ
Unfortunately the worldwide economics have been hit in the past few years with multiple factors which resulted in recession. Usually marketing is the first thing to cut out when a company is trying to save money, but that is the worst possible idea. There is a strategic was to use marketing during difficult periods to your advantage and many fashion brands are using it too.
Have you ever wondered how is it possible that the performance of Luxury brands increases during recessions and other crises (a lot!)? It all comes down to simple math:
Majority of low and medium income households are heavily impacted, so are medium and small businesses. Also, as such a large amount of people slows down or stops spending on non-existential things, a lot of companies are impacted by the decrease in purchases (also marketing strategies used until then are no longer working as consumers’ focus and interests shift. So if we were advertising something as a fun summer dress, we should market it as an affordable, timeless, long lasting dress for multiple occasions).
On the contrary, rich people, not that they not lose money, they earn more money during a recession, so since they are not impacted by the crises and have more money, spending increases. However, a more important aspect is that people buy luxury for the exclusive status it gives them (usually). By the time people who were able to afford a small luxury item every now and then, now doesn’t do it and luxury is accessible to lower amount of people, so exclusivity increases. That’s also why luxury brands during recessions produce more flashy items with big logos, which increases their revenue by A LOT.
Business of Fashions' Imran Ahmed did a research and posted a few months back:
A recession is looming. Inflation is stubbornly high. House prices have started to fall. Stock markets are down. The war in Ukraine has entered its 8th month. And, we have shot past the 1.5 degree threshold to limit the impact of global warming, which means we can expect more climate catastrophes like heat waves, floods and deadly storms. All the news is negatively impacting consumer sentiment, so why are wealthy shoppers continuing to buy luxury goods at a pace that will see the market rise by 22% this year?
The analysts at Bernstein wrote: “We are seeing an outsized wave of high-end consumer spending. Rich consumers are spending much more than before the Covid-19 pandemic. Both for products and for services. And this trend has sustained for at least 1.5 years. One explanation for this is that Covid-19 has reminded us all that we are mortal. The prospect of being the graveyard’s richest person is not attractive. Hence, those who can are spending as if there was no tomorrow.”
But I can’t help but think there is something more going on — I’m really not sure what it is but one other theory is that we are using all of this consumption and hedonism as a distraction from the real problems in the world, and have somehow convinced ourselves that buying more stuff, going on more holidays is going to make us feel better when overconsumption is actually making things worse.
And for Mass Market brands?
Well they should focus on building community and increasing emotional engagement, shared values with its customer base during difficult periods. Because at some point customers will start buying again and you want your brand to be on top of their mind once that moment comes.
Here are some of the revenue statistics of Luxury brands vs Mass Market brands:
Revenue of the luxury fashion market worldwide from 2012 to 2025:
So if you pay attention to numbers, you will see that the revenue and value of luxury brands were growing, but the overall market itself was not moving much: That implies that some other markets (non-luxury) suffered big losses if 20 something % increase of luxury market purchases kept the bar on the same level:
And at the same time Brands with most value that made the list in 2021 (below) are mostly high-end or luxury brands:
2020 Brand Value
2021 Brand Value
And today? In 2023 when balance slowly started to restore, these are the top brands with highest value:
LVMH group ($49.05 Billion) owns Loewe, Moynat, Louis Vuitton, Berluti, Rimowa, Patou, Celine, Fendi, Loro Piana, Christian Dior, Emilio Pucci, Kenzo, Givenchy, Marc Jacobs from the apparel category alone.
H&M ($18.82 Billion)
Kering group ($15.70 Billion) owns the luxury brands Gucci, Balenciaga, Bottega Veneta, Yves Saint Laurent and Alexander McQueen.
Gap ($15.65 Billion)
Richemont ($11.83 Billion) owns Azzedine Alaïa, Baume & Mercier, Buccellati, Cartier, Chloé, Giampiero Bodino, Jaeger-LeCoultre, Montblanc, Piaget, Delvaux and YNAP (Net-a-porter, Mr Porter, etc.) amongst others.
Phillips-Van Heusen ($6.04 Billion) : PVH Corp. owns brands like Calvin Klein, Warner's, Tommy Hilfiger, Olga and True & Co. They also supply neckties to brands like Ted Baker and DKNY.
Lululemon ($6.5 Billion)
Levi Strauss ($4.67 Billion)
And where is the Inditex group on the value scale you might wonder. Well, it cannot compare because as of March 2023 Inditex has a market cap of $95.17 Billion. This makes Inditex the world's 142th most valuable company by market cap. Inditex owns Zara, Zara Home, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home.
Another important point to keep in mind from a financial and business perspective is that all resources are cheaper during difficult times. People are getting laid off, are are looking for jobs. They will work harder than usual to keep the competition off and secure a contract that brings them income. That's why it actually might be smarter to hire more marketing in these situations. Not to mention, good marketing will keep your brand afloat and create a good base for growth.
So all in all market is variable and all brands have a place in it and time when it's easier to shine. Nevertheless, if one pays attention to consumer behaviour based on the current situation the world around them is, it is possible to create strategic plans to survive difficult periods and grow.
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