3 Ways Luxury Manufacturers Drive Sales During a Recession

Dollar stores, discount big box retailers and fast food chains saw the silver lining that comes with every recession, but they were not alone. Companies that manufacture luxury products refused to accept a decrease in sales with a drop in consumer spending power. Below are three examples of how luxury companies weathered the storm:

1.  ”Used” is such an ugly word; BMW focuses on pre-owned

BMW, among the best examples of a luxury automotive manufacturer, saw a decrease in sales caused by the recession. Instead of strictly pushing new sales, they reinvented the idea behind owning a used car.

According to Bloomberg, “U.S. sales of so-called certified pre-owned luxury autos rose 4.7 percent this year through August, bucking a 31 percent drop for new luxury models, according to researcher Autodata Corp. BMW, Lexus and Mercedes certified sales jumped 14 percent.”

• Takeaway:  Companies can retain the value of their brand without dropping prices. Provide or emphasize options that already exist at lower price points.

2.  Apple drops prices while introducing features

Earlier in the month, Apple introduced a refreshed line of iPod nanos with perhaps the most significant technological improvement since its introduction:  the ability to shoot and record video. And they did it with a $20 reduction in price.

• Takeaway:  Reducing prices alone makes a company look desperate, and the practice harms their brand. Reducing prices while adding features strengthens their brand while remaining competitive.

3.  Louis Vuitton/Ralph Lauren looks to the East

Reuters and Bloomberg report that LVMH and Ralph Lauren are looking to expand and penetrate China and Lebanon in the next few years, and their expansion has already begun. Companies like these want to lay the foundation for years of growth by increasing the percent of revenues derived from emerging markets.

• Takeaway:  All markets are affected during a global recession, but not all markets are affected or respond equally. Modern-day executives should pay attention to opportunities abroad.