With unemployment at an all-time high and no end in sight in the ongoing pandemic, America is close to declaring recession status. And it’s no wonder, people aren’t working as much and don’t have nearly enough disposable income to play around with as they did 5 years ago. Yet, there are still businesses that are surviving, some even thriving.
Take Amazon for example. Instead of experiencing losses in the past 3 years, they have had gain after gain, operating only in a victory mentality. Then there are the luxury fashion houses: Chanel, Hermès, Rolex, etc. It’s got me thinking how brands become recession proof. In other words, what are they doing, or what systems do they have in place that keeps them more than afloat when entire economies are crashing?
Quality is the name of the game
Fashion historians and experts at Deloitte released a recent report predicting it has something to do with quality over quantity. In a recession, similar to the pandemic world we live in today, people become very aware of their possessions. They start to have a deep understanding of what is worth keeping onto and what monetary value things have. Oftentimes, they start looking to investments that they can pass down to their families.
Traditionally, a house or large sum comes to mind, but often it happens to be physical goods, like a Rolex or Chanel bag. They are thinking this way because of the sizable return these items continuously have in terms of resell, and have withstood the traits of inflation. The report lists these items as collectibles that can be looked at as financial assets with low risk and very high returns.
The report shows Rolex collector watches outperforming by +8% in 2020 , with Chanel bags up 11.8%, and the infamous Hermès Birkin (not to be confused with the Bushwick Birkin) up by 38%. They compared these fashion items to fine art, where Sotheby’s experienced 2% growth, and classic cars saw 6.2%.
Previous studies have even shown that the iconic Birkin bag is a better investment than stocks of gold stating that Hermès is “the safest and least volatile investment market.” Those are really large numbers and claims that stand alone, proving that these historic luxury brands were not going anywhere. So what’s the key to recession proof brand? In this case: brand legacy, quality, and a following.
But then you have Telfar Clemens and his popular shopping bags available in 3 sizes. Known as the “Bushwick Birkin” for it’s popularity in the borough, these bags only started in 2020, proving that it didn’t take legacy for this brand to be a recession proof brand. Sales continue to run rampant, new colors are constantly released, and waitlist lines are so aggressive and far in advance that the brand has even created a “Secure the bag” program, where customers and wannabe customers can select as many bags as they want and wait months for it to be produced. It is a guarantee they will receive the bag.
In this case, Telfar is recession proof due to its fanbase and durability of product. I also believe that since Clemens is a Black designer, loads of people outside the culture are eager to support him to show their support to our community after the racial injustice they know about now.
So what constitutes a brand to be recession proof? Lots of things it appears, but the most important factors are: the brand name, quality, and fanbase.
If you’re looking to take advantage of a possible recession with your excess coins, invest in stocks.
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