How are luxury brands beating the cost of living crisis | Business Beyond

Luxury brands are thriving despite the cost of living crisis, with sales of personal luxury goods such as premium clothing, cosmetics, handbags, and jewelry surging since the COVID-19 pandemic. The demand for luxury brands has been driven by consumers seeking escapism and a change in perspective, as well as the growing number of wealthy individuals worldwide. Luxury cars and private jets have also become increasingly popular, with concerns about emissions from private flights. The luxury real estate sector has proven resilient, but doubts remain about its longevity. The scalability of luxury brands makes their long-term growth prospects favorable, particularly among the younger generation.

  • (00:00:00) In this section, it is noted that even with the world facing a cost of living crisis, luxury brands are doing surprisingly well. From fancy footwear to Ferraris, sales are soaring. The personal luxury goods sector, which includes premium clothing, cosmetics, handbags, and jewelry, is seeing sustained growth, with spending surging since the COVID-19 pandemic. Consumers are seemingly seeking escapism, and luxury changes their perspective, according to Air1 Rombour, HSBC’s expert on personal luxury. LVMH, the owner of Louis Vuitton, Dior, Tiffany, and Hennessy, became the first European company to surpass a market value of $500 billion. The surge in demand for European luxury products has even surprised the sector.
  • (00:05:00) In this section, it is discussed how luxury brands are beating the cost of living crisis, particularly in Asia, where Japan has long been a popular destination for high-end shoppers, while South Korea has become the world’s biggest buyers of premium brands. Luxury car sales are also booming, with sales of cars costing over half a million dollars expected to increase 14% each year through to 2031. The pandemic has been a driving force behind the boom, as people avoided public transport and upgraded their own set of wheels. Furthermore, the growing number of wealthy individuals in the world has created strong demand. Luxury brands are also limiting the availability of their products in markets like Asia to keep the experience exclusive.
  • (00:10:00) In this section, the video highlights the surge in demand for private jets in the luxury sector. With commercial airliners cutting 60-70% of their schedules, private jets became the solution for those who could afford it. Corporates sent their people to parts of the world that commercial airlines wouldn’t take them to, sidestepping certain health concerns. As a result, the private jet industry grew to over $34 billion in 2022. However, environmentalists are concerned about the emissions that come with private flights, which are believed to emit 10 times more per passenger than commercial flights. Nonetheless, demand for private jets is expected to go through cycles, with some people preferring the flexibility it brings.
  • (00:15:00) In this section, it is noted that luxury real estate sales have been resilient despite the high interest rates affecting more modest homes, due to the fact that luxury buyers are mostly cash buyers. However, there are doubts about the longevity of this trend as the relocation trend following the pandemic may taper off soon. It is also mentioned that there is a huge wealth transfer expected in the next 10 to 15 years, which will drive luxury consumption, particularly among the younger generation. The scalability of luxury brands makes their long-term growth prospects favorable.

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