The secrets of luxury
It is hard to imagine this world without luxury items. This is probably because society and its opinion affect those who want to stand out from the gray mass, which is one of the keys to luxury brands’ success and serves as an incentive for leaders in the space creating luxury goods to keep moving the industry forward. On the other hand, this can be a road to nowhere since individuals are spending excessive amounts of money to attract attention to themselves with hopes of raising their “status in society.”
Of course, the way you dress and what you own reflects your self-image and the message you want to convey to others. Wearing brand clothes, accessories or driving a luxury car can also indicate a person’s status, but what makes luxury products truly luxurious?
Clients are the first and most visible factor driving luxury brands’ accelerated growth. Without a doubt, Millennials (Gen Y) and Gen Z customers will continue to uphold their position as crucial growth levers for the luxury sector in 2022. And this generational shift will only continue accelerating in the coming years.
By 2025, these younger generations, who primarily consume content from the performance art industry, be it musicians they follow on Spotify or influencers from popular platforms such as Youtube or TikTok, are expected to account for 70% of the luxury market and contribute 130 percent of luxury market growth.
These influencers have large audiences who watch them and copy their buying habits because they closely follow new trends and the latest releases from the leading world brands. The company Louis Vuitton SE (BATS EU: MC) sells most of its cloth to its prominent clientele before it is released to push the current luxury trend and keep positioning itself as an exclusive brand. As a result, you won’t find the rare Louis Vuitton items on the store shelves but rather directly being worn by your idols, making them more appealing and desirable to you.
Secondly, there should be a meaning that the product conveys to the consumer. Luxury must be built on reality; therefore, it needs to be made of better materials which are more sustainable and environment-friendly, with increased durability. Sometimes even the history of a specific item are aspects that play a critical role in determining its value. The price reflects the increased cost of incorporating these elements into a luxury product that is carefully crafted to perfection.
The look is designed to set these qualities apart in a distinctive way; undoubtedly, the Italian brand Brunello Cuccinelli (BATS EU: BCU) stands out in this aspect. Customers know they are paying for more than just a physical product, but also the higher lifestyle that it symbolizes and evokes with its superior quality in both craftsmanship and history.
The French company Hermes International S.A. (BATS EU: RMS) disrupted the bag market thanks to the combination of quality materials and the history of the product that only the most privileged customers could buy its most wanted Birkin bags, which range from $10,000 to $200,000 in price from authorized dealers.
Last but not least, the secret of luxury goods is their rarity. Who wants to spend hundreds of thousands of dollars on an item owned by everyone? If it’s challenging to find and own, it’s exclusive. Some intricately designed products with years of engineering aren’t luxury items because they’re produced in high numbers, but if they are limited, demand rises exponentially.
The Italian sports car manufacturer Ferrari N.V. (BATS EU: RACE) built only 210 LaFerrari models, priced at $2.2 million each. One of the models was sold at a booming $5.36 million and is considered the most expensive car ever sold on the Internet.
Swiss luxury watches and clock producer Patek Philippe recently made a collaboration with Tiffany and Co (NYSE: TIF), which is acquired by LVMH Moet Hennessy Louis Vuitton SE (BATS EU: MC), and made a fortune on that. With only 170 existing samples of Patek Philippe Nautilus 5711 Tiffany Blue watches at a staggering price of $52,635 each, it still doesn’t come close to the price fetched by the first limited-edition Nautilus watch that was sold at an auction for $6.5 million.
When you aim for luxury and high-end items, there is no single sight to set your eyes on. Nevertheless, the most important thing is to recognize the inherent value of the product you acquire, both in its dollar value and its intrinsic value in society. Luxury is about a belief, mindset, and a certain lifestyle which has a strong cultural influence created around it, affecting all levels of society while channelling new trends. What will luxury look like 100 years from now? Will it remain the same, or will it shape itself into a new form of expression in our society?