While it may seem counterintuitive to tarnish a luxury brand’s exclusive reputation with more fleeting trends which are targeted to large audiences, these collaborations actually serve a very important purpose: relevance.
Luxury items are highly price-elastic, which means that a slight change in price could greatly alter the demand for the product. However, this is a different case when it comes to luxury brand collaborations. Since the prices of collaborations are usually higher than the brand’s usual line, only those who can afford the already steep prices of the brand’s usual line would purchase these products. Moreover, as these collaborations are usually more trendy, middle-income people would steer clear of spending exorbitant amounts of money on something that may go out of fashion within the year.
A trunk from the now-iconic Louis Vuitton x Supreme collaboration | Hypebeast
So who are their target market?
Asia is predicted to be the world’s largest consumer of luxury items by 2025, and so it would make sense that their target market is an Asian one, specifically post-1990s Chinese luxury consumers. There are two main reasons for this market: their wealth, and their online presence.
In 1979, the Chinese government introduced the one child policy, which limited most families in China to having one kid. This meant that for the majority of the kids born after this policy and before its relaxations in 2016 and 2021, they received the entire family’s money. Moreover, China’s economic boom starting in 1998 meant that many Chinese families were quickly becoming more affluent, multiplying the money that they had, thus multiplying their disposable income.
Not only does this generation possess a lot of purchasing power, they also grew up with the birth of the internet, making them one of the first generations to feel the influence of social media. As a result, these post-1990s Chinese luxury consumers became the primary market for more trendy, overpriced collaborations that most people could not afford or were not willing to buy. These limited edition pieces became extremely trendy on Chinese social media, and were often signifiers of wealth for these Chinese “netizens”.
What effect does this have on these luxury brands?
While not very popular and usually short-lived, these luxury brand collaborations continue to bring in revenue for the companies. They have a constant stream of loyal support from their main market of Chinese consumers, while also bringing attention to their brand all across the world for their unexpected products.
A perfect example of this is the Prada X NASA collaboration. While most people do not need or want a spacesuit, let alone a designer one, these products still send the message that Prada is constantly keeping up with innovation, and NASA, a science company; can be “hip” and fashionable.
So, in an age where there are so many “microtrends”, it is important that brands continue to find relevance. Whether this comes in the form of creating these trends, following them, or tapping into something that connects with the public, such as our favorite brands or childhood shows.
Written by Vi Lam Dinh
