Global luxury adapts on pricing

Whether through second-hand sales or deep discounting through third-party sellers or personal shoppers, luxury brands are having to adapt on pricing.

Why it matters

Amid strong demand, the luxury market displays two sides of adaptation. On one side, brands are capturing demand by understanding the long game; on the other, there is an unwillingness to adapt that cuts into revenues and exclusivity. The smartphone market is an interesting parallel, with high-end brands like Apple understanding that there’s a lot more market to capture under the flagship price point.

What’s happening

Luxury brands have always, necessarily, spoken to audiences who are not in the market for goods. Creating an image in the mind of the non-buyer is what supplies the cachet to the buyer. But new avenues are emerging through which price-sensitive buyers can dip into luxury.

• In India, the luxury car market is seeing some of the deeper trends visible in the apparel market with second-hand cars – always important to car marques – climbing into 10-15% of revenues, according to reports in Brand Equity.
• The key, say brands, is not to supply people with new cars but to bring them into the brand experience through retail and after sales.
• On the other side, some brands are seeing their murky production lines fuelling a booming “gray market” made up of genuine goods drop-shipped across the world to get past import tariffs and offer deep discounts. According to the New York Times, the market could be worth as much as 8% of total global personal goods luxury.

Sourced from Brand Equity, The New York Times