Crisis makes luxury consumers buy less but spend more
According to U.S. Bureau of Economic Analysis, at the peak of the Great Depression in 1930, Americans spent a full 24 % of their income on clothing and shoes and 76% on necessities (food, housing). Last year, by contrast, they spent 13% on clothing and 50% on necessities. This only highlights old habits are reinstated. People are trading excess for excellence and superficiality for substance. People are paying more attention to quality and appreciate understated design. Disposable clothes such as Top Shop, H&M and Zara are becoming less favored by the luxury consumer.
Also, in housing, people appreciate more design and comfort rather than size. Architects are focusing on designs that use local materials and pay a great deal of attention to sustainability.
Free wi-fi, express check in kiosks have been the innovation of luxury design hotels to lure clients at the price of a Holiday Inn or Novotel.
As expressed during the IHT Sustainable Luxury Conference in Delhi this March, luxury brands have become aware they need to go back to their core competencies to survive long term. Louis Vuitton will find it more and more difficult to convince consumers all its product ranges match the quality and the reputation of its leather goods. The appetite for luxury comes as a nature human trace. Once the depression is over, people will most likely go back and rethink buying in bulk and will focus on exceptional products. As Stendhal once said Beauty is nothing other than the promiss of happiness. The same can be said about luxury.
Transparency ad honesty will also play a crucial role in communicating the brand values and product features. Consumers have become more savvy about the origins and ways of manufacturing the products.