Luxury goods

Economics

Luxury goods are products that are not essential for survival but are desired for reasons such as status or for the product’s quality or craftsmanship. These are goods that a culture or society find highly desirable. Luxury items show positive income elasticity of demand, the higher a person’s income, the higher demand there is for these goods. Conversely, with a decline in income, demand for luxury goods will decline. Due to this reason it is usually wealthy people who are the disproportionate consumers of luxury goods. These types of goods are also usually purchased to show off ones wealth. Luxury items are the opposite of necessity goods which people buy regardless of their income level or wealth. Luxury goods can include high end automobiles and expensive garments but also include services such as full time chefs and housekeepers. The definition of a luxury good is also subjective depending on a person’s financial circumstances. Some examples of luxury goods are haute couture clothing, accessories such as watches and jewellery, high end automobiles, yachts, real estate and wine. Some of the popular luxury products are – Gucci- The house of Gucci sells Italian clothing and leather goods. Hennessy- It is a French distiller of wine started in the 18th century. It is the world’s largest producer of cognac. Chanel- Chanel was founded by Coco Chanel in France; it sells clothing, purses, perfumes and cosmetics. Cartier- This high end brand sells primarily watches and jewellery.

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