Thursday, January 18, 2018

Deluxe by Dana Thomas

I decided to borrow this book because the luxury industry is pretty interesting (at least from an economics standpoint). Luxury goods tend to be Veblen goods, with the demand increasing as prices go higher, unlike most goods. So when I saw this book, I decided to borrow it and see how the industry has changed.

Deluxe is a history and analysis of the luxury industry, starting from the 17th century to about 2005, near to the publish date of the book (2007). Most of the history and analysis centers on the Post World War II period, where the luxury industry became corporatised and a greater focus on the bottom-line came into play. The main claim that the book makes is that this focus on the bottom line has, in fact, cheapened the luxury industry, resulting in less exclusivity and quality. This is explored through issues such as fake luxury goods, the perfume and bag industry, and the luxury industiry in non-American and European markets (most notably Japan, with substantial sections on China, India, and Brazil).

Sadly, not much of the analysis focused on economics. It's a bit of a pity since the book claims that the luxury companies are now focusing on the mass market, and I would have liked to read an exploration of whether there was an economic contradiction in that. After all, luxury goods are Veblen goods, which imply that people buy these goods in order to signal a high status (conspicuous consumption), and a marketing shift towards the mass market could end up making these same consumers disinterested in the good, as it is now seen as something widely available and hence less of a status symbol.

Another issue I would have liked the book to explore would be the effect of counterfeiting on the demand for goods. The book talks about the increased quality of counterfeit goods and what the brands are doing for it, but I wonder how it affects demand. Does it reduce demand, because the good is no longer as exclusive, or does the counterfeit good train consumers to buy the real product? For example, are there any statistics on how many consumers start off by buying counterfeit goods (as aspirational symbols) and then 'graduate' to buying the real deal when they have enough money? That was a topic that I hoped would be explored but wasn't.

I just realised I've spent two paragraphs talking about what I hoped the book would have instead of what it does have so let's change focus now. What the book did a good job of was in interviewing people related to the luxury industry and weaving their knowledge into the broader view of the industry as a whole. While the account stops in the mid-2000s, it does provide a pretty comprehensive understanding of what the industry was like at that period of time and how it got there.

Speaking of time, the book did not feel as dated as I feared. I was warned by a friend that because the book was published in 2007, much of the luxury industry now is very different. While I don't know how much of that is true, I didn't find the book to feel very dated, the way some technology books are. There is a lot of emphasis on history (especially on the first part) and the analysis of the modern industry only appears in the second half of the book, which meant that the book felt fairly evergreen.

To sum, Deluxe is a readable account of the luxury industry. If you're interested in how the luxury industry has changed in the last few decades and don't mind not having the very latest information, I think this is a good read. Of course, if you're looking for economic analysis as well, you might want to look for another book.

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