The definition of luxury has never been a hotter topic. Here, Cream UK CEO Graham Painter cuts through the hype to investigate how much has really changed – if at all.
I’ve been in the business of promoting luxury brands for over 30 years, so you’ll forgive me if I’m a little skeptical about any research that shows dramatic shifts in how consumers define the concept of luxury.
But that’s exactly what the fourth annual ‘Journey of the Luxury Consumer’ report from Albatross Global Solutions and Numberly is suggesting.
“ 86% of global luxury consumers cited Quality as a key luxury attribute, whereas only 52% cited Exclusivity ”
That dramatic shift? The importance of exclusivity as a key luxury attribute is dropping like a stone, whilst that of quality is rising fast.
The report found that 86% of global luxury consumers cited Quality as a key luxury attribute, whereas only 52% cited Exclusivity. In fact, the rating for Exclusivity fell by 15 percentage points year-on-year, and it dropped to third place behind Elegance. Two years ago, it was ranked as the number one attribute.
The gap is even more pronounced in the UK, with 89% of the sample citing Quality whilst only 51% mentioned Exclusivity. Craftsmanship crept into the number two slot, with Elegance lying in fourth place.
“ What’s important to the consumers of luxury isn’t going to change that dramatically in just a couple of years ”
Such large shifts don’t ring true to me – what’s important to the consumers of luxury isn’t going to change that dramatically in just a couple of years. But I can’t dispute there are changes happening – just not quite as seismic as those figures would suggest. Well, not yet at least.
Those changes are being driven by Millennials, consumers aged 18-34 who many regard as the luxury consumers of the future but who are having quite an impact on the present. Recent research estimates that they already make up 45% of luxury consumers.
This is a generation very different to the Baby Boomers, who they’re set to outspend in the next couple of years – a generation whose behaviours have been shaped by growing up in the digital economy and whose mentality has been affected by the ‘great recession’ post 2008.
If luxury consumption is partly driven by how people perceive themselves and partly driven by how they want to be perceived by others, then Millennials put more emphasis on the former. They’re on a constant quest to enhance their online profile, and their bragging rights within their peer group are formed on the basis of rare and different experiences rather than anything which resembles conspicuous consumption.
A 2014 survey in the US that found that 78% of Millennials would rather spend money on a desirable experience or event rather than buying a desirable object.
This journey of self-actualization leads to a constant quest for the rare and the new – for brands that reflect their personal aspirations. New and little known have appeal – heritage, provenance and tradition mean little. This is the Airbnb generation, for whom an apartment in a residential area with a local host is much more desirable than a five-star hotel with a marble atrium in the tourist district.
“ If you’re looking for an explanation for the greater emphasis on Quality, the Millennials will be at the heart of it ”
And the 2008 recession has bred a certain attitude – one which leads them to question whether it makes sense to own or whether it’s smarter to share. This generation is open to car pooling, or renting that designer jewellery or designer dress for a special occasion rather than buying it. If they do invest in luxury objects, they want them to last – so they can pass them on to future generations – hence the desire for quality.
If you’re looking for an explanation for the greater emphasis on Quality, and flagging importance of Exclusivity – which smacks of old school elitism – the differing attitudes of Millennials will be at the heart of it.
“ Luxury marketers need to be ready for the sands of luxury to gradually shift ”
But it’s not yet the time to throw the baby out with the bathwater – there are still those who crave things that others can’t have, particularly as you move into the upper echelons of affluence.
But luxury marketers need to be ready for the sands of luxury to gradually shift. The new Millennial consumer needs to be approached in a very different way. Their desire to seek out and discover for themselves suggests a very different type of marketing. Their desire to experience but not necessarily own a very different type of product.
Nothing is forever so it’s wise to prepare now, otherwise brands will find those shifting sands will gradually swallow them up.
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