While being a college student doesn’t usually come with much money to buy luxury goods, you may have noticed high-end brands rarely offer discounts. Compared to fast fashion retailers who slash prices at the end of each season to clear inventory, luxury brands hold firm to the prices initially set. These brands aren’t worried about clearing out inventory. You may be asking, why? The answer lies in the word luxury itself. Luxury means having exclusivity, prestige, and long-term value. An end of season sale could damage what it means to be a luxury brand. By avoiding these major discounts, luxury companies are able to maintain their allure, protect brand perception, and reinforce luxury products are elevated above other products in the market.

Exclusivity Sells: Luxury as a Status Symbol

Often, luxury products are hard to find or are located in high-end locations surrounded by other well-known luxury brands. This exclusivity matters because these brands view their products as more than just an item—they’re symbols of status and prestige. When comparing luxury to mainstream brands, there is a difference in priority to obtain a sale. Mainstream brands such as American Eagle and Best Buy will offer huge sales during Black Friday to generate a push in revenue in the last quarter of the year. However, if a luxury brand were to do the same type of Black Friday sale, it risks cheapening their image and making their product seem more accessible. Often, the target market for luxury products aren’t specifically looking for the functionality of the product rather how exclusive the product may be. To ensure high status and desirability of the product stays high, luxury brands must keep their products as exclusive as possible.

Scarcity Drives Demand: The Power of Limited Supply

One way luxury brands keep their products more exclusive is by creating artificial scarcity. In other words, brands intentionally limit production on products. This limited production reduces supply even if there is high demand for a product. For a mainstream brand, this would be counterintuitive because they want to produce items in bulk to limit costs and have the necessary supply for high demand seasons. However, this tactic of creating artificial scarcity is used by brands like Hermes or Rolex who have long waiting lists for their extremely popular products, Birkin bag and watches, respectively. Often, these products are so hard to find that they go for double or triple their retail price on the secondary market. By keeping the inventory low, luxury brands can control their narrative of being a top-of-the-line product.

Long-Term Strategy: Sustaining Luxury Value

There is a reason why many luxury brands have been around for decades and even centuries. Some part of it has to do with their focus on long-term brand equity. In other words, luxury brands are trying to attract loyal, high-value customers that will keep coming back even when there is not a discount in place. Often, if a customer finds value in what they are purchasing, they will keep coming back for more in the future. Additionally, luxury items are seen in many circles as great investments because of their usual increase in value over time. All these factors lead to the brand’s prestige to stay intact or increase over time when loyal customers feel their purchases are worth the money.

Next time, when you are in the area of a luxury store, you may feel inclined to check it out and spot how they are enforcing strategies of exclusivity, controlled scarcity, and long-term strategy to keep their prestige up. Luxury brands keep high prices and limited availability to create an elite experience for their target customers. Compared to mainstream brands, luxury isn’t about affordability; it’s about status.

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