A distributive rarity in Luxury Market
The luxury category has always been subject to change with alternating consumer expectations, but rarity remains a constant feature. It is the essence of luxury, particularly in an era of where superfluity invades our daily lives, rarity is entitled with the power to deliver abiding luxury. It can be personal, cultural or more traditional like resource or manufactured rarity. Consumers have a constant desire to distinguish themselves and the desire for individuality is becoming increasingly prevalent in the Luxury industry. A simple way to drive desire is to limit both the quantity and availability of a product, creating a sense of product scarcity.
It is a basic law of economics that when demand exceeds supply, the price goes up. Apple avails this effect by creating an artificial scarcity at each new product launch which makes people wait in line at Apple stores for an entire night and become price-insensitive, even though they know almost nothing about the new product. The same effect can be seen in services. For example, it is a good signal of value when one must book many days in advance to get a table at a restaurant.
There are many ways in which the brands are marketing through different mediums to create this rarity. Romanee Conti vineyards produce only a few thousands of bottles of wine per year. Ferrari also restricts its production, as does watchmaker Patek Philippe. Herme`s Kelly bag sales are limited by the actual scarcity of more-than-perfect crocodile skins available globally. These famous examples demonstrate the myth of luxury as a rarity business. However, physical rarity/scarcity is not welcomed by shareholders of listed luxury groups because it prevents fast growth. Even though some brands, such as Herme`s, hold to this objective rarity, the luxury sector has grown thanks to a shift in what may be termed virtual rarity: the feeling of privilege and exclusivity
A current-day example that I can think of is Kylie Cosmetics by Kylie Jenner. Brand awareness here is through the influence of Kylie Jenner. Her cosmetics line was first launched and available only through her website ( now in ULTA). The launch of each line is accompanied by a carefully documented “sold out in 10 minutes” through her Instagram. The pop-up stores saw thousand waiting in long lines, again the frenzy documented through her social media. Kylie cosmetics is a good example of using social media to create a perception of product popularity and limited access for customers to act fast.
Another strategy used by brands is to release a new fragrance only once or twice a year. This gives customers time to smell the fragrance several times before making a purchase. Limited perfume releases also make the product appear refined and sophisticated and give the impression it is a classic scent that will stand the test of time. Consumers these days like to stand out and express themselves in the most unique ways. Within the luxury market, scarcity of items makes them more desirable to the consumer which will boost pre-sale purchases and revenue on release days.