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Recent Trends
Have you purchased a luxury item within the past year? The U.S. is experiencing an uptick in luxury sales as splurging on designer handbags, sneakers, watches, and beauty products becomes more common. Letâs define a luxury good.
Analysts have a nebulous definition of what constitutes a luxury good, but itâs usually an object that not only has a sky-high price but also promises quality craftsmanship and an air of exclusivity - Vox
This year, Bernard Arnault became the worldâs richest man through his empire of luxury goods company, LVMH. Itâs no surprise that luxury goods are having a moment. We have got a whirlwind of variables to consider here:
People are looking to spend after the pandemic
Supply chain issues have eased
Internet culture has bombarded us with luxury imagery as the norm
The luxury market is no joke.
Not Rational Beings
In economics, itâs assumed that the market is operating in a rational space. But hereâs the thing - humans are irrational. Irrationality becomes apparent when it comes to luxury goods.
According to GlobalData, Americans with a household income of less than $50,000 make up about 27 percent of regular luxury consumers. Thatâs almost as big a group as luxury consumers with an income of $150,000 or more.
Studies have shown that times of higher income inequality translate to heightened anxiety about class. Itâs all a status game. A game everybody wants to play with a select few winning.
Think about the rationality of your purchase next time youâre at the check out aisle. This isnât to shame an irrational purchase, in fact, I support a wild purchase eventually but it can become easy to get carried away.
The Top Store for the Wealthy
The wealthy love to save. Itâs no surprise how their financial habits carried them into the upper echelons of society.
The top store where millionaires shop is Wal-Mart. Iâm not joking.
Key Takeaways
People buy luxury goods for status and personal fulfillment reasons
For the majority of buyers, luxury goods are a major cause of credit card debt
Price isnât an indicator of quality
Have a great week,
Jordan