Despite the uncertainty of the economy, demand for luxury items doesn’t seem to be slowing down.
- While many businesses are having to cut back on marketing and ad spending, luxury brands aren’t stressing about making these cuts.
- Luxury cars, travel, and other premium product sales are booming right now despite the ever changing economy.
- Global luxury goods revenue will increase from $309.6 billion last year to $349.1 billion in 2022, according to market-research firm Statista Ltd., en route to $419 billion in 2027.
- “At the high end, life is good and demand is robust,” says brand consultant Simon Sproule, who formerly held top marketing roles at Tesla and Aston Martin.
Why it’s news
As inflation has been rising and the threat of a recession looms many companies have had to cut back on add spending, but not luxury items.
Many businesses including Facebook’s parent company Meta have had a fall in earnings and had to cut back on ad spending, Luxury brands aren’t seeing these losses.
Luxury brands’ marketing budgets were much higher in 2022 than in 2021 and show no sign of slowing as 2023 planning begins, according to chief executive of Publicis Groupe, Julie Michael.
Marriott has boosted 2022 marketing budgets for high-end names including the Ritz-Carlton and St. Regis as many consumers are demanding high-end hotels.
Similarly, Four Seasons Hotels Ltd.’s paid media budget will increase 300% year-over-year in 2022, according to the chain’s executive vice president, Marc Speichert.
Luxury end cars are another business hitting high numbers, specifically electric vehicles. The demand for EVs have skyrocketed, more than half of car buyers worldwide want an EV. The number of people wanting evs has hit a worldwide tipping point.
The latest EY Mobility Consumer Index shows that 52% of people looking to buy a car want to buy an EV. This is the first time the number has exceeded 50%, representing a rise of 11 percentage points since last year.
Although money might be tight, people aren’t holding back on nice items they want.