Over the years, Jung von Matt Stockholm has been working with a lot of different luxury and high-end brands, such as BMW, Mercedes-Benz, Hyundai, Miele and Blueair. We know that luxury goods are rarely just about the product. Of course, the luxury consumers do want good design, craftsmanship and high-quality. But they pay a premium for something more than that – status. Luxury has always been, and still is, about status.
But to appeal to the luxury consumer is a tricky balancing act since the values and what gives the premium consumers status constantly is changing. As consumers reprioritise what they value most, the concept of “luxury” changes and luxury brands need to adapt and respond – they have to deliver luxury in a different way to stay relevant.
What is Old Luxury?
Old, traditional luxury and rareness go hand-in-hand.
Had you been asked the question “What is luxury?“ a decade ago, a large list of famous brands (maybe Louis Vuitton, Ferrari, Dom Pérignon, Dolce and Gabbana, Mercedes-Benz, Burberry, Gucci and Prada) and items such as expensive handbags, jewelry, watches, furs and five-star hotels would instantly come to your mind. The people who represent the “old luxury” simply enjoy showing off their wealth and never mind the high prices as long as they feel that they are wearing and surrounded by luxury items.
In the past, luxury products could be defined as luxurious simply because they were made out of something super expensive or rare, or because they were only accessible to the privileged few (the very rich). Then, exclusivity was the most crucial attribute that defined what was considered luxury.
The shift from old to new luxury.
The Democratisation of Exclusivity.
The brands and products that were once considered exclusive can now be seen all over the streets, worn by the middle-class (and the cheap copies doesn’t help). Old luxury becomes less exclusive as more people are accessing it. The wealthiest are no longer interested in covering themselves with designer labels such as the Burberry check, the Louis Vuitton monogram, the Birkin bag or a Hermes scarf. They won’t even think about getting an item that they are tired of seeing, and they are especially sensitive to the fact that ‘regular people’ are able to save up money to buy one of these status symbols. We call it the Democratisation of Exclusivity.
What was earlier seen as status and accomplishment, is now seen as snobbery, arrogance or just mainstream. It’s simply not enough to have a high price tag, and therefore a product only available for a few, to denote a luxury item. Today, exclusivity is no longer the number one the key definer of luxury.
What defines New Luxury?
When brands that were luxury symbols for decades are no longer as exclusive as they used to be, what will the luxury consumer do with their money and the desire to lead an exclusive and extravagant lifestyle? As we said, today’s luxury consumers aren't about setting themselves apart by opting out with heavy labels. Okay, I can afford a Ferrari. But drive it across town to dinner tonight? No thanks. Subtlety is key.
Materialism matters less.
The luxury consumers are finding other ways to mark out their status and wealth – not all of them tangible. Today, when consumers are more sophisticated, more educated about brands and more demanding of brand values, materialism matters less. Therefore, brands can’t compete based on an aspirational image and product alone.
Quality comes before exclusivity.
Unlike old luxury, exclusivity is not the key definer of luxury nowadays. Of course, modern luxury still involves exclusiveness, but not because it is addressed to few privileged people, but due to modern luxury values such as education levels and cultural awareness, etc. Instead of exclusivity, quality is now the key definer of what constitutes luxury for consumers globally, according to Albatross Global Solutions and Numberly’s ‘The Journey of a Luxury Consumer 2015’ report. The partnership between Apple and Hermès is an example of that and a strong signal that the definition of luxury is changing. Apple now sees itself as luxury brand – a shift that is largely driven by the reputation it has earned through its high-quality products and not because of its accessibility.
Luxury as an experience.
Today, consumers place greater value on experience than ownership. So rather than buying luxurious goods, people are choosing to spend their money on experiences. This includes top-class dining experiences such as taster menus in Michelin-star restaurants, exotic holidays such as safaris and cruises and even fitness and well-being related services such as exclusive gym memberships. This kind of luxury spending is growing at a faster rate than things you can own.
To be desirable today, brands must be ethical, sustainable and environmentally aware.
Since most consumer products are now widely available, all but the most exclusive items have lost their value as class signifiers. In their place, goods that broadcast a consumer’s high education levels and cultural awareness have gained importance. Today's luxury consumers are keen to express who they are in terms of being ethical, social and environmentally conscious. Sustainability matters in where they spend their money, and they look for markers of social and environmental awareness from the companies they support. It’s not an exaggeration to say that terms such as “organic”, “sustainable” and “handmade” are now used to convey a sense of high-value luxury.
Conclusion: Status has become less about 'what I have' and much more about 'who I am’.
Old Luxury values:
- Tangible items
- High quality
- Showy richness
- Prestigious, arrogant
- Exclusivity, rareness
- Perfectionism, elitism
(no particular order)
Modern Luxury values:
- Awareness, meaningfulness
- High quality
- Subtlety, discrete richness
- Exclusivity, rareness
- Self-fulfillment, authenticity
- Strong, human
What can premium brands learn from this?
1) A few decades ago, the luxury goods audience was more homogenous: these days, brands can’t even rely on homogeneity within a single market. One shift for a brand could be to target “consumers of luxury” over “luxury consumers”. Many of us are not just luxury consumers but consumers of luxury, even if it’s just once a year for a special birthday or anniversary or even every Saturday night on a romantic date for example. We find those consumers everywhere.
2) The best brands today are about the consumer – about what they seek and aspire to. Redefining brands around people gives a business space to innovate in broader and deeper ways. And since modern luxury today is more about the experience rather than the expense, it’s a good idea for brands to create a platform for the target audience to participate.
3) Premium brands always need to prove its price premium and to work to achieve price acceptance, i.e. make customers see the extra value that the product will bring them and therefore accept a higher price. For premium products, that “extra value” is often something that gives the owner higher status or something nice they can say about themselves because they use/own the product. Therefore, premium brands must keep up to date on what values are giving their customers higher status today.
4) Customers need to feel an emotional connection and an intellectual investment in their luxury products purchases. Brands can’t compete based on an aspirational image and product alone. And exclusivity is not enough. To engage your audience and connect them to your brand, your brand must be emotionally relevant for your audience and you need to enable customers to express their own personality through your brand.
Is your brand affected by the changing face of luxury? If so, do you want to dig deeper into how you should respond? Feel free to contact us.