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June 9th, 2020

Design 4Retail

What is luxury?

The power and prestige of luxury has always derived from its ability to convey status. Thorstein Veblen’s 1899 work ‘The Theory of the Leisure Class’ coined the phrase ‘Conspicuous consumption’ to describe this facet of commerce. It can be argued though that conspicuous consumption as a status symbol is on the decline in our increasingly open society as many consumer products become more widely available to all classes, thanks to increased globalization, digital connection, and advances in technology. Rental and re-sale make luxury items more affordable and accessible, and basic products such as T-shirts and slides from high-end labels put those brands within reach of more consumers. The traditional notions of what luxury is are being challenged by changes in global culture, the omnipresence of the internet, and the shift in consumer values as Millennials and even Gen Zers become more important buyers of high-end products.

The power and prestige of luxury has always derived from its ability to convey status. Thorstein Veblen’s 1899 work ‘The Theory of the Leisure Class’ coined the phrase ‘Conspicuous consumption’ to describe this facet of commerce. It can be argued though that conspicuous consumption as a status symbol is on the decline in our increasingly open society as many consumer products become more widely available to all classes, thanks to increased globalization, digital connection, and advances in technology. Rental and re-sale make luxury items more affordable and accessible, and basic products such as T-shirts and slides from high-end labels put those brands within reach of more consumers. The traditional notions of what luxury is are being challenged by changes in global culture, the omnipresence of the internet, and the shift in consumer values as Millennials and even Gen Zers become more important buyers of high-end products.

Today, more than ever, what constitutes ‘high value’ is changing, and with it the definition of luxury. Once strictly tethered to cost, production quality, and an historic interpretation of social and economic worth, luxury today is more complicated and mutable than the simple acquisition of expensive items as status indicators. The paradigm shifts from exclusivity to inclusivity. Where once luxury was a form of elitism, luxury today is more democratic. Whilst it still comes at a cost, that value is now more closely aligned with knowledge, experience, or access.

Once merely indicative of a shared status, material goods now convey shared values- 85% of respondents to a recent High Snobiety survey believe that what their clothes represent is just as important as their quality or design. New luxury consumers see purchases as a way to convey their value system to like-minded consumers. Rather than an aspirational image-focussed ethos of old luxury, new consumers are looking for inspirational, values-based proposals from their brands; they want access rather than ownership, to participate rather than purchase, and value being over belonging. The real luxury is in an ‘elevated knowledge’- a knowledge that rewards a bearer for sifting through the mental and visual clutter of retail and on the internet to discern and locate those products and experiences that will have covetable status. In this way the products that consumers own and wear convey whether that person is culturally knowledgeable.

The result being that conspicuous consumption of the traditional sort is being supplanted by a different type of commerce that makes social, cultural, or environmental awareness the new social capital. The limited edition sneaker, the fashion show crew T-shirt, the tour hoodie are the new signifiers of status in that they are intrinsically linked to a moment or experience that has value within the community of cognisant consumers.

Modern consumer mindsets

New luxury products

Modern luxurian products often look to subvert ideas of traditional luxury; to challenge the relationship between luxury and materials which are historically understood to be precious or rare. Context here is everything and these ‘new luxury’ goods can even be deliberately ugly, reflecting the desire of designers and consumers to move away from accepted standards of taste with younger consumers prioritizing uniqueness over traditional craftsmanship. The application of this ‘new capital’ value creates a perception around a product that elevates it by association to the social currency formed, created, and disseminated by elite consumers and their connections. Instead of buying a product, new luxurians are buying into a collective lifestyle or community.

An exquisitely crafted product- one of the key pillars of the traditional, aspirational type of luxury- matters less to younger consumers than it did to previous generations. In a busy and more intrusive world, people are increasingly valuing time and space to enjoy special or extraordinary moments instead of the acquisition of objects. With consumers seeing value in physical retail for the tactile experience that it offers, what appeal in stores today is the brand itself, through their image and storytelling. The market is consumer-centric, rather than brand-centric, meaning that the value of the entire experience is what counts. Many luxury brands are going beyond the standard shopping journey and creating a store that is not simply visited for a transaction, but to experience a destination overflowing with engaging content, and even adventure.

Who decides what luxury is?

The reach and ubiquity of social media challenges the paradigm, whereby brands created and controlled their public image through advertisements and by building relationships with fashion editors. Now anyone with a smartphone can wield influence, crafting their own share of a brand’s image and shifting the balance of power. While brands still have agency, consumer research prior to purchase is now primarily via online reviews and brands must adapt to this way of reaching consumers.

This shift is reflected in the ‘drop’ phenomenon. In particular the exclusivity, interest, and added cultural currency provided to luxury products and brands by the unexpected creative changes provided by collaboration projects. In a retail landscape where an item’s desirability is determined by a community of knowledgeable consumers over any particular retailer or editor’s edict, we’ve arrived at a more democratic method of consensus around defining luxury.

Uncertainty

Historically, the emotional aspect of owning a luxurious product was the sense of accomplishment, of success; exclusivity has been an integral part of luxury’s draw for the few who can afford it. But rental and subscription services are making these products accessible to a broader range of consumers, and at the same time we question whether luxury is still based solely on acquisition of objects with innate material value. Within a market that has inherently been defined by exclusivity, modern brands must cater to a world that is increasingly more diverse. The world is changing, luxury can be both inclusive and exclusive, aspirational and attainable, providing a great opportunity for the companies that evolve to meet these challenges.

In thinking about luxury retail, it has become clear that our ever-changing and increasingly turbulent world is impacting the future of the sector. Amongst accelerating technological developments, an unstable and polarised political climate, and shifting societal attitudes, one of the biggest challenges for luxury retailers and brands in the future is maintaining relevance

Last year, LVMH announced singer Rihanna will become part of the brand – the first woman to create an original brand at LVMH and the first black woman at the top of the group – signalling that the group recognises that growth in the luxury industry may no longer come just from reinventing old heritage names, but by embracing a new diverse, digital, direct communication-enabled reality.

Even more urgently, luxury brands will have to turn their attention to demonstrating their commitment to the well-being of customers. In times of a global pandemic, being healthy and safe can also be considered a “luxury” and brands should evaluate how to best connect on a human level, acknowledging and reinforcing priorities for their consumers. We also consider whether society has evolved to demand that luxury have some social responsibility, be it championing endangered traditional skills, or driving innovation, or creating a better world for all. Despite widespread industry fears that the current moment is not a time for the frivolity of fashion or luxury goods, 89% of respondents to a sector survey still wanted to hear from their luxury brands. This is caveated with the requirement that activity from brands is not a value-add but an authentic response to an expectation of proactive and educated altruism.

Our perspective

Here at Design4Retail we understand that luxury is changing, that new, more demanding luxury consumers are rewriting the industry rules at a faster pace than many legacy high-end brands could have predicted. We believe the future of luxury will be about experiences, immaterial possessions, and increasingly valuable intangibles, such as quality of life, time, and balance. Luxury will increasingly be about self-discovery, not about ownership.

With the rise of new disruptive direct-to-consumer premium and luxury brands, affluent consumers now have access to endless luxury alternatives. They have more freedom to move between brands than ever. To stay relevant luxury brands will need to focus on increased retention efforts, and to create deeper and more meaningful engagement with their consumers on topics as diverse as inclusivity and responsibility; they must act sincerely, and with an appreciation and understanding of their customers’ communities ability to shape the value of a product amongst their peers.

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