Yes there definitely exists a breed which is not impacted by recession… at least overtly. And this breed straddles the two extremes of the society. Either below the poverty line or way up there in South Bombay or South Delhi…
Those below the poverty line, it does not really matter as to which industry sector is down in the dumps or which one is showing growth… Subsistence level, the focus is on very basic needs and are supposedly dependent on government aid. By the way, a must read in this regard is an interesting article by Mr Vivek Debroy in Indian Express today. And as is the case with these people in our society, not too many words need to be devoted to them.
But the other set of people – the stratospheric people (SP)… the ones who have helped Louis Vuitton grow 11% in a supposedly recessionary global economy… lets talk about them. They are the biggest consumers of luxury products. Mind you.. luxury.. and not premium! As Seth Godin defines luxury products – “Luxury goods are needlessly expensive. By needlessly, I mean that the price is not related to performance. The price is related to scarcity, brand and storytelling. Luxury goods are organized waste. ” Luxury products are like signals… they tell something about the person.. beyond the fact that it is such a waste. And brands that understand these people… create that exclusivity in their communication.
Being on page 3 or to be seen as stratospheric people… brand surround is important. An observation – I see more high ticket brands of cars on the road today than I did 9 months back. Maybe I have started noticing them now or there actually has been growth in sales. Laura relaunch at 17 lacs + (Pune pricing) is an indication that there exists a market for these cars. But then Audi or a BMW or a Porsche… now those are real badges. and I see enough of them now on narrow Pune roads. The other day I even saw a Hummer!
Cultivating these people is an art. Jimmy Choo would not be Jimmy Choo if they had an outlet in one of the malls isntead of a 5 * shopping center. Emporio, when they had the 80% off sale in delhi… I bet none of the SP even ventured close to the sale venue.
But here is an insight… SPs are not really recession proof. After all if the money disappears from the economy and there is a downturn, even the wealth (which is never accounted for in IT returns) also takes a hit. But to show they have been hit by the economy, would lead to immediate outcaste status (some interesting bits about this in Madhur Bhandarkar’s Page 3 i think). So brand hunger will not go away. But notice the subtle differences… within a brand, it may not be a top of the line purchase. Its all about appearances… a Louis Vuitton is a Louis Vuitton.
Of course a mention also for the people suffering because of recession. As would be very clear, they are the ones who earn their salaries… have loans to pay and are the ones who pay taxes and are the ones who buy the premium products. (premium product is an expensive variant of commodity goods). And as is obvious… thats where the sectors which cater to this segment are taking a hit in terms of sales. Also taking a hit are brands that are confused about who they are…. Luxury or premium… Mark’s & Spencer is a case in point.