Owning a Chanel bag, a pair of Balenciaga sneakers or a Cartier bracelet may be the dream of many. But are they really worth the hype?
When we hear the word “luxury”, we think of the sparkle of chandeliers; we think of the purr of a sports car engine; we think of…gold-plated staple pins? Don’t we?
But what makes these coveted items worth so much more than the average ceiling lights, the average family car and the good old staple pins that you can get a dime a dozen? Well, as they say, the devil is in the details, and the value is in the label of luxury.
A luxury item can be defined as products or services that are not considered essential to everyday life and are associated with affluence. As people’s income increases, so does the demand for things that one couldn’t previously afford while trying to meet necessities.
Luxury items are those whose demand increases with their prices.
Non-luxury items are those whose demands are higher when incomes are low. Often these are items of lower quality, making them more affordable for those with fewer earnings. In the domain of fashion, these would be well-known fast fashion brands, like H&M, Forever 21, Urban Outfitters, Zara, Levis, Abercrombie & Fitch, etc. These brands are massive global franchises and extremely popular due to their high affordability, allowing people to easily access to the latest trends. Their clientele mainly constitutes individuals from lower or middle-income backgrounds, making these brands the go-to for most clothing and apparel needs of these groups.
Luxury items often gain their appeal from the fact that they are difficult to acquire without a certain amount of affluence and influence (or connections).
The famous exotic leather Hermes bags are extremely expensive (pushing US$10,000 for a second-hand purse). But more so, they are extremely exclusive. Without the money or the network, potential buyers once had to be on a waiting list for up to six years before they can even get their hands on their own Berkin or Kelly purse.
They are certainly not within the means of the public, making them a status symbol—something widely coveted, but not easily acquired. Exclusivity is valuable; even if that exclusivity is a created myth.
Anyone who has watched the Leonardo DiCaprio-starred 2006 movie Blood Diamond knows that diamonds are not a naturally rare substance. The supply of diamonds in nature are far exceeding the demand. Some justify the high cost of diamonds with mining difficulty and the rarity of finding rough or even colored diamonds that are high quality enough. These concerns aren’t baseless but can be remedied with lab-grown or manufactured diamonds, which are indistinguishable from natural diamonds, significantly cheaper, can be created flawless and more eco-friendly.
Massive corporations, like De Beers, who have had a monopoly over the diamond trade and supply since the 1800s, would only release enough diamonds to meet annual demand. This creates an illusion of rarity so that the market will not be flooded, and the prices will not go down. The artificially-reduced supply inflates costs, which is something that luxury jewelry brands, like Cartier, Piaget and Tiffany & Co., still benefit from. Thousands of unsold diamonds remain in storage for years before they ever see the light of day.
Diamonds are nearly indestructible, but many other unsold apparels facing an infernal fate are not as lucky. Luxury brands have come under fire for torching unsold inventory of luxury goods, including Burberry, Chanel and Louis Vuitton.
Brands, like Burberry, claim that the immolation of these goods can be used to create thermal energy in an attempt at “energy recovery”. However, the energy “recovered” from these projects does not compare to the energy used in creating the burnt items.
Others, like Richemont, the Swiss parent company of Cartier and Montblanc, openly admitted that they had destroyed more than US$500 million worth of watches to keep them from being resold.
Refusing to sell a product at a reduced price despite the ample inventory creates a forced exclusivity for designer brands, even if the alternative is to destroy it altogether.
Popular purse brand Coach has recently declined in popularity after too many sales made them far too accessible to be considered exclusive. The brand tried to rectify this by adding more expensive items to their inventory and cutting down on online flash sales. Another well-known luxury handbag brand Michael Kors faced a similar decline in the luxury market when overexposure and increased accessibility lead to a decline in sales.
In short, what make these handbags a luxury is the reputation of the brand that is selling them but not the actual cost of producing the item.
Many luxury brands claim that the high prices of their products come from the craftsmanship of a handmade item, as opposed to mass- and machine-produced items. For instance, the crocodile and ostrich leather in the case of Hermes bags or the precious stones and metals in Cartier jewelry. But that’s not always the case.
The Italian eyewear company, Luxottica, has a major monopoly on the sunglasses market by making sunglasses for other luxury brands, like Chanel, Polo, Tiffany, Coach and Ray-Ban. While exact markups are unknown, their designer shades can retail for around 20 times the cost they took to produce. Many of the company’s cheaper glasses can have a very similar look to the more expensive, branded pairs. All one is really paying for is the brand’s logo.
Simply put, when products are affordable, they cease to be a luxury, unless advertised otherwise by the brands that sell them.
Luxury goods are commonly associated with three categories of people: the old-money rich, the Nouveau rich, and the wannabee rich.
This artifice of luxury has created a whole market for dupes or fakes, to blend an emulation or envy of aesthetic taste with material desire. Fast fashion retailer Shein’s masterfully created dupes have been the catalyst of much internet comedy at the expense of both the luxury brands being imitated and consumers attempting to pass off the imitation as a legitimate product.
According to the CEO of The Business of Fashion, Imran Amed, 2020 was the worst year in the history of modern luxury, preceding which, the annual revenues for the luxury fashion market topped US$380 billion. However, by the first half of 2021, profits for some of the biggest names were up as much as 40% on pre-pandemic levels, making record profits.
The demands of luxury goods have quietly made themselves felt, despite the economic devastation caused by the pandemic. Well then, are luxury goods worth it? The sales numbers certainly seem to think so and consumers are not always the most rational of beings. This fascination for what is luxurious brings a saying to mind:
“Poverty screams.
Money Talks.
But wealth only whispers.”
Also read:
Banner image courtesy of Unsplash
What comes to your mind first when you think of wildlife conservation tools? A pair of binoculars for observing distanced large animals? Perhaps a magnifying glass for studying small creatures living on leaves? These are what zoologists and ecologists use when they carry out their studies; but as technology advances, researchers have begun deploying modern technology, namely artificial intelligence (AI), to optimize wildlife conservation.
In the past two years, we have seen companies jump in on various trendy tech products and services. From buying land in the metaverse and hiring virtual influencers to promote their brands to creating NFTs for their products—companies are waiting with bated breath to be the first ones to adopt the latest tech innovations.
You may be wondering how you can use your blog to generate leads (individuals who are interested in a firm’s services in any form). After all, isn’t a blog supposed to be a forum for sharing your thoughts and opinions with the world? It can certainly be that, but it can also serve as a powerful lead generation tool. According to HubSpot, 60% of consumers read blogs.
During World War II, the German term “blitzkrieg” (lightning war in English) described a war tactic that if you carry what you need, you can move very fast, surprise your enemies and win. The startup world equivalent of blitzkrieg is “blitzscaling”, a term coined by LinkedIn co-Founder Reid Hoffman and entrepreneur Chris Yeh in their book Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies published in 2014.
Look around you, and I’m sure you’ll find at least one person who is either into Korean pop music (K-pop) or Korean dramas (K-dramas). The popularity of Korean cultural products, be it music, TV shows, fashion or skincare, is called the Hallyu (Chinese term for the word Korean) wave. Hallyu wave’s acclaim has had a positive impact on the South Korean economy, with boy band BTS contributing US$3.6 billion to the country’s economy all by themselves.
The one thing Microsoft and Michelle Obama have in common is that both run their own successful podcasts. Podcasting has been experiencing exponential growth during the pandemic, with the number of podcast listeners increasing from 274.8 million in 2019 to 383.7 million as of July 2021.
About Author
