Despite Looming Recession, The Luxury Industry Is Still ThrivingHeres How Black Consumers Are Driving The Boom
Have you ever heard the term revenge spending? It’s the concept that was coined post-COVID-19 lockdown, when after spending so much time at home, people began splurging money on items and experiences.
It looks like this phenomena is alive and well when looking at the sales estimates for luxury revenues.
Last October LVMH Moet Hennessy Louis Vuitton SE raked in one of its highest sales months despite the International Monetary Fund‘s warning of a worsening outlook for the global economy. Their report highlighted a continual rising in inflation rates and likely hiring freezes on the horizon.
Despite this dark news, luxury houses like Christian Dior, where a single, lower-price bag can command $4K, saw startlingly high patronage.
“Luxury is not a proxy for the general economy. We end up selling to affluent people and they have a behavior on their own, which is not necessarily totally aligned with economics,” said LVMH’s Chief Financial Officer Jean-Jacques Guiony in an interview with Bloomberg.
As Bloomberg pointed out, this essentially means that Louis Vuitton can raise prices without worrying about impacting demand levels.
It can be said this consistent growth in the sector can be linked to Black consumers specifically. More than ever before, Black shoppers account for 20 percent of luxury spend in the US market in 2019 — a number that’s forecasted to increase by 25 to 30 percent by 2025, according to a Bain report.
“The buying power estimates and differences in spending by race and/or ethnicity suggest that as the nation’s consumer market becomes more diverse, advertising, products, and media must be tailored to each market segment,” said Jeff Humphreys, director of the Selig Center for Economic Growth at the University of Georgia, in the “Multicultural Economy 2021” report as reported by Finurah.
This revenge spending trend is also evidenced by an uptick in sales for Hermès International, who reported an uptick of 24% this year, and that’s after the company raised prices by 4%. In other words, consumers don’t seem swayed by costly increases for items they deem worthy of paying for, particularly Black shoppers.
“If you feel like you’re under attack or a group that you belong to is, you will defend yourself by wanting to move closer to signifiers of that group,” said Tari Dagog-Jack, an assistant marketing professor at the University of Georgia told Finurah. “We will often use brands to reimagine our self-identity that we want to convey to others.”
Business Of Fashion reported that survey results found Black consumers are 20 percent more likely than the overall population to “pay extra for a product that is consistent with the image they want to convey,” and 31 percent more likely to spend $500 or more on a handbag.
