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Luxury in the new world
In the post-recession landscape people want richness of experience, not just products. That’s according to Michael Hughes, former executive director of strategy at The Brand Union.
September 27, 2010 4:09 by shafeer
The world has changed since 2008 and the Middle East has not been immune. This used to be one of the fastest growth markets for luxury brands. However, being one of the quickest to grow, it has also suffered one of the most dramatic declines.
Prior to the recession, most luxury brands couldn’t keep up with demand. For hotels, restaurants, fashion, cosmetics, and cars, it was the same story: Demand massively outstripped supply.
Suddenly, a market that had the means to buy many of these brands shrank significantly. One of the biggest factors is the sudden decline in the ranks of the “super nouveau riche”. What seemed to be an unstoppable rise of those with high disposable incomes and an insatiable appetite for luxury has all but disappeared. The bubble has burst, and not just in the property and financial sectors. Many – who were spending well above their means and using luxury brands to display wealth they didn’t have – have had to adjust to a major shift in circumstances.
For those who still have money to spend, it could be one of the best times to buy, as luxury is now more affordable. This has been evident in ongoing sales. Some of the smarter retailers have even realigned their normal pricing to meet customer expectations. However, the ability to spend is no longer the only barrier as many people are now driven more by sentiment than actual hardship.
In the image-conscious Middle East, attitudes have started to change. Overt displays of luxury or wealth are no longer essential for social acceptance; in fact, they can even be a turn-off for many. Affluent consumers are curbing their profligate ways to re assess, re-evaluate and reprioritize their lives.
Luxury is now much more personal – it is about richness of experience rather than just products. Regardless of wealth, people are now much more conscious about what they spend their disposable income on. Impulse purchasing is now extremely rare.
The purchasing process is now much more complex and takes longer, especially for larger investments. Luxury brands have to work much harder to justify the investment, especially if there is a more affordable option.
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