Why now – amidst the US-China trade war – is the best time for top luxury brands

May 27 , 2019

The current US-China trade war will create losers – but also winners – in the luxury industry. Photo: Shutterstock

Bad financial results are often a sign of poor branding and innovation and creativity, but Louis Vuitton and Gucci’s strong mainland sales results show leading names can prosper

This article was originally written by Daniel Langer for Jing Daily

In 2008, at the height of the global economic crisis, markets around the world were devastated and consumer confidence was shattered.

One reason strong brands resist shocks such as tariff increases is that they’ve created significant value for consumers. Real luxury is nothing other than extreme value creation

Commentators and media publications around the world forecast the end of luxury as we know it. I remember being asked: “Why do you believe in luxury? It’s ending!”

Leading brands, such as the Italian luxury fashion house, Prada, can use the slowdown in China’s economy to differentiate themselves from the rest of the pack. Photo: AFP

My answer was simple: luxury markets are actually more recession proof than non-luxury markets.

First, in times of economic contraction, consumers with lower incomes are affected, but wealthy consumers feel it much less.

Second, luxuries are an extension of personality and, because of this, consumers tend to hang on to luxury purchases longer than you’d expect – they won’t scale back until they have to.

Indeed, when we look back at what happened after 2008, all the pessimists were wrong.

With brands such as Louis Vuitton and Gucci showing strong sales results in China, bad financial showings seem like more of a reflection of poor branding, innovation, creativity and consumer connection