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Comment by spenvo | Hacker News Reader

> Companies that cater mostly to luxury clients

Nah - look at what happened to the Boating industry in 2009. The values of jetskis, sailboats, etc took a major hit as demand dried up. Boats are considered luxury items

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I would think the important distinction would be luxury products that cater to the extremely wealthy (as opposed to luxury products bought by people that can barely afford it).

What kind of luxury products cater to only (or even primarily) the extremely wealthy? Superyachts, airplanes, maybe some exclusive villas/hotels, what else? Even supercars are bought by the merely "very" wealthy, who may be affected.

For a watch analogy, consider Tissot vs Omega. The former is considered an "entry-level luxury" brand with many offerings around the $1000 mark, while the latter is a true luxury brand with most offerings in the range of tens of thousands of dollars. Pretty much any broke person can get a Tissot to appear well-off, if they want it hard enough.

For a car analogy, consider BMW vs Aston Martin. Many people in an unfavourable financial sitation can get a well-specced 3-series and appear well-off, while a $200k DB11 is well out of reach for most "pretenders".

Hmmmm... I'm not terribly familiar with watches, but a $200k car is well within the reach of most people with 7 or low-8 figure net worth. Those people aren't so wealthy that their spending habits are recession-proof.

What percentage of Aston Martin buyers are 7-figure buyers as opposed to 9-figure buyers? I'm wildly guessing it's a big percentage, since there just aren't as many 9-figure buyers? Do we have any way to know?

I don't entirely know because I'm very far from being in that demographic. Despite that, I'm sure that there are some super expensive luxury home furnishings.

You have a valid point, I was thinking luxury retail.

Why would luxury retail be a good harbor in a recession? Usually luxury spending goes down.

Depends on the luxury level. At the very top the customer base consists of the most recession-proof people in the World. I assume they just carry on with their habits recession or not.

I don't think that's true. I worked for a luxury retailer right after 08/09 and I looked at their revenues. They were about even, if not moderately higher. I went to work for another shortly after that, and it was a similar story. Now, net sales may go down, but luxury retailers have a pretty wide latitude in what they sell their products for because they're often artificially controlling inventory (similar to the way Nintendo does). I think that's what really affects the bottom line.

There is a significant population on Planet Earth that are "permahedged" from any material anxieties. Clearly, we are talking about annual consumption trends of $500K per individual, and not in the luxury yacht race. (They likely already have access to one if needed).

This is the market to cater to. The question is: with what truly novel good?

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