Our love for luxury brands is marketer's dream
Fans of Jane Austen will know that it is a truth universally acknowledged, that a person in possession of a good fortune, must be in want of a Porche, a Tesla or a Mercedes Benz. And if they like to splash the cash, perhaps a Rolex watch or bottle of 1869 Chateau Lafite - a steal at just €180,000 a throw. Or maybe they might like to tear a page out of our Taoiseach's fashion stylebook and go for an on-trend Moncler jacket which retail for anything up to €1,400.
Just in case you hadn't noticed it, luxury brands are virtually everywhere. From the forecourts of car dealers throughout Ireland right through to the high-end retailers like Brown Thomas, hotel groups, jewellers and specialist luxury tour operators, business is booming at this top end of the market.
While luxury brands have always had a place in the market, sales did nosedive during the downturn between 2008 and 2012.
But as we celebrate the fifth anniversary of Ireland officially emerging from recession back in September 2013, it would appear that a chunks of Irish society have since tossed their hair-shirts into the bin and replaced them with something a bit more fetching from Gucci, Stella McCartney or Barbour.
In addition, the old banger that they drove during the height of the recession - possibly to throw the bank manager off the scent - has now been replaced with a Merc, a Lexus or, the chariot of choice for the school run in many south county Dublin fee-paying schools, the Land Rover.
In the global luxury goods market - which was worth a staggering €1.2trn in 2017, according to the US management consultancy Bain & Company, sales of luxury cars dominate the market. Last year, for example, the global luxury car market grew by 6pc to reach €489bn.
Five years on from the end of the recession, the Irish luxury car market has seen similar growth levels. Based on figures extrapolated from the Society of the Irish Motoring Industry (SIMI) monthly stats, Irish people have bought 85,831 new luxury cars over the last five years.
Using back of the envelope calculations and assuming an average, and possibly conservative, price of €70,000 a car, this suggests that over the last five years, they have coughed up a whopping €600m on high-end cars. These include Porche (364), BMW (28,077), Audi (29,428), Mercedes Benz (18,679) right through to Tesla (159), Jaguar (2,398), Land Rover (4,188) and the good old Lexus (2,538). These figures, it should be pointed out, don't include private imports of other luxury marques like Ferrari or Aston Martin.
That's a lot of luxury cars in an overall market which is finding it tricky in the more competitive mid-market while at the same time competing with growing number of second-hand imports from the UK.
"The appetite for luxury products remains strong due to the complex psychology that surrounds them. In an age of mass homogenisation and a latent need for recognition, especially online, luxury brands are just the device people need to help them stand out," says Ronan Traynor, managing director of Verve, the Dublin-based agency which specialises in creating tailor-made experiences for some leading luxury brands in Ireland and the UK.
While the luxury market is dominated by cars, let us not forget the all-important personal luxury goods market which embraces apparel, beauty and handbags. According to Bain & Company, global sales of these items amounted to €61bn, €54bn and €48bn in 2017, representing around 62pc of the total market. These are all categories that have fared well in recent Irish retail sales data and, for the time being anyway, show no signs of abating as Irish consumers - or those that have it - continue to splash the cash.
Some economists might scoff at all of this, particularly those who are fans of the American economist Thorstein Veblen who observed some peculiar traits about the luxury goods market as far back as 1899 when he penned the paper The Theory of the Leisure Class. In a nutshell, a Veblen good is a luxury item whose price does not follow the usual laws of supply and demand. Generally, the higher the price of a particular good the less people will want it. For luxury goods like cars or expensive wines, however, the item becomes more desirable as it grows more expensive and less desirable should it drop in price.
"Luxury products can be quite elusive and are defined by more than price - part of the luxury calculation is exclusivity or scarcity," says Traynor.
As luxury buyers are less sensitive to price, luxury brands still go to great lengths to keep them as customers through a wide range of tactics like exclusive previews, newsletters, clubs as well as tailor-made experiential events.
Veblen's theories aside, it's easy to see why the economic amnesia some people suffer from combined with what behavioural economists would call irrational behaviour, has conspired to create a wilful cohort of people who simply don't care.
And they, of course, are a marketer's dream.
Sunday Indo Business