This past year the prices for nearly everything have gone up. From gas to food and travel costs, it seems harder and harder each day to afford all those necessary (and luxurious) items. But despite the cost and the talk that our economy is headed toward a recession, the rich keep spending. Here's everything you need to know.
Luxe companies, including Ferrari, Dior, Louis Vuitton, and Versace, have all recently reported that despite the high cost of their products, their sales have gone up this past year! The persistent spending that is seen by the rich is something that has been prevalent in the past whenever the economy seems to take a hit, based on reports from experts. It proves that the wealthy have the least negative effects from a recession since they have money to fall back on - just in case something happens. But more than that, purchasing expensive and luxurious items is also a way to secure their status in society.
"Having symbols of power within your tribe is a powerful thing," explained Milton Pedraza, founder and CEO of Luxury Institute, a market research and business management firm. "Those symbols of power still matter tremendously within the tribes of the ultra-wealthy." While companies like Walmart, Best Buy, Gap, and others have to lower their spending costs due to their lower-income consumers shopping less, high-end brands seem to have no worries about the market. Capri Holdings, which owns Michael Kors and Jimmy Choo, said overall revenue rose 15% to $1.36 billion during this period. Capri's CEO John Idol admitted that the company is confident in its long terms goals because of "the proven resilience of the luxury industry." He said, "None of us know what's going to happen in the back half of the year with the consumer, but it appears that the luxury industry is quite robust and quite healthy."
Shopping is not the only industry that sees an increase in wealthy consumers. Delta Air Lines has revealed that their revenue for business class and premium economy is higher than their economy or coach tickets. While the luxury industry has always had more resilience against financial burdens, the pandemic caused an even greater wealth disparity that is fueling the industry's strength - according to Amrita Banta, managing director of the luxury consultant firm, Agility Research & Strategy, which specializes in affluent consumers. "The disposable income of most affluent and HNW (high net-worth) consumers has increased because less was spent on travel," she explained.