When the market slows down: what the high end does

Three crises, one lesson

When I wrote the book, in 2021, the chapter on the why had just been updated for the pandemic: the world frozen, lockdown, SMEs pushed ten years ahead in one go, all online within a week. Luxury had lost a fifth of its volumes but recovered faster than in 2008, because many brands no longer depended on physical sales.

Then came 2022: inflation at 8.1%, the highest since 1985, and electricity in Italy at an average of €304 per megawatt-hour, peaking at 543 in August. In 2023 ECB rates at 4.5%. In 2025 American tariffs of 15% on almost all European goods, which according to Confindustria cost Italian exports 16.5 billion. Three different crises, none predictable with precision. And the same lesson: those with margin held up, those selling at the right value for money closed. Between 2019 and 2024 Italian manufacturing lost 59,000 businesses.

1. The wall of cash is built beforehand

The first strategy for getting going again is to have applied it beforehand: sell at high prices, to earn a large margin, to generate a positive and steady cash flow, to build a wall of cash around the company. During the crisis it's too late: you don't raise your prices to a customer who is cutting back. In good times you raise them every year, by at least 5%, and that margin is what paid the energy bills in 2022 for those who managed to pay them.

2. Fixed costs, not variable ones

The only way to raise profit when revenue falls is to cut fixed costs. Variable costs fall on their own with sales. You start with suppliers, divided into strategic ones, those the customer perceives as value, which you don't touch, and secondary ones, energy, telephony, packaging, where you negotiate. Then people: there is only one question, “would I hire this person again today?”. Urbano Cairo brought RCS into profit in the middle of the newspaper crisis, with revenue down 5.7%, by cutting 55-60 million in costs: 71 million in profit in a company that had never made money, and still in profit in 2025.

3. Whoever has their contacts in-house keeps selling

In 2020 the shops closed and those who sold only through retailers came to a halt. Those with their own showroom, a website with a single price list, an email list and remote design carried on. The case I always tell is from one August: a Russian customer with a villa in Barcelona, the company closed for the holidays, the showrooms closed, the competitors closed. Through an exchange of messages on his phone he ordered €25,000 of bathrooms, paid in advance, without ever having seen the product. What convinced him was all the brand work done beforehand, which had already made him decide to trust us. In a crisis, the content marketing you did in the good years is the only thing still working.

4. Don't stop communicating

The temptation, when things go badly, is to cut marketing and disappear. It is the most expensive mistake. If you have to make three or four videos a month, you make them in a crisis too: the worst thing is for the customer to see you as struggling, and a dormant blog, a page that doesn't post, an old catalogue say exactly that. Even if you are struggling, you must let customers and competitors understand that you are in a growth phase. In 2020 the kitchen manufacturer in liquidation paying for Google banners to advertise its discount was telling everyone it was closing. Those who in those months published their projects, testimonials and beautiful photos had a queue in 2021.

5. Tariffs can be absorbed, a low price can't

The latest crisis, the tariffs, says something precise about the high end. A 15% tariff on a product sold at the right value for money wipes out the margin: that product no longer goes to the United States. A 15% tariff on a product with a luxury multiplier is a fraction of the margin: you absorb it, explain it to the customer, and keep selling. It is the same difference as between the 294 furniture companies that closed in Veneto and those who built a brand. We don't know what the next crisis will be, but those with margin will get through it.

From my book Direct from Milano and my classroom courses. Figures and examples updated to September 2026.