- Consumers increasingly value memories and experiences over things. Affluence has a new definition.
- The old definition of exclusivity is less enticing than it once was. Inclusivity is increasingly becoming everything.
- Quality and craft still command price and denote upscale, but they’re not limited to haute couture and fine dining.
Brands Must Appeal to the Next Wave of Big Spenders Turning Upscale Upside Down
Luxury is a loaded word. It conjures images of showy opulence and status symbols. That aesthetic still appeals to many – sales of traditional luxury goods are headed toward $1.5 Trillion in the next few years.
But to a new (especially younger) wave of affluents, it’s the opposite of what they want. For them, the idea of luxury is not captured by one external standard by a small (and consolidating, as LVMH’s recent purchase of Tiffany shows) group of accepted luxury brands. The whole point of having money to spend is that you get to define things (and yourself) on your own terms.
Perhaps the most shared recent photo of Bill Gates is a shot of him in line at a taco truck. It shows that today, tacos and tee-shirts can entice today’s big spenders as much as 5-star hotels and fine timepieces if brands understand a few key things about the changing mindset.
It’s All Experience
To the next wave, life’s not about what you have, it’s about what you do. The old distinction between “personal luxury” and “experiential luxury” is less meaningful as everything merges around a new consumer intent.
A colleague of mine puts it perfectly, “the age of the Michelin starred food cart has already arrived.”
Experience is an over-used word for a simpler truth – there is no more valuable a commodity than spending truly memorable, inspiring time and emerging more connected to people, places, and yourself.
A 2019 BCG Study noted the move toward single-brand digital and offline retail environments that reinforce the power of traditional brands like Gucci to control context, reinvent and connect with younger audiences that are driving their growth. Also, notably, the growing importance of influencers, across both traditional fashion-focused and paid celebrities and micro-influencers that connect around interests in travel, food, veganism, biohacking, tech, fitness.
Everywhere, experience is the star, and luxury goods serve more as souvenirs and keepsakes that accompany your journey. While affluence used to mean white glove, penthouse exclusivity; the next wave might cluster in street-level lobbies, wearing street style and eating street food.
Buy Less, Mean More
The scarcity of supply still drives value. But more than ever, scarcity of demand does, too. That means making purchases that feel uniquely yours — transformative, not just additive. For instance, the BCG study also revealed the perceived value of sustainability is growing fast. Nowadays, you might not think twice when even the most upscale hotel invites you to re-use linens. Because that which used to be decadently non-essential now needs to feel somehow meaningfully imperative.
Some may still be decked out head to toe in Chanel. But if you’re expressing appreciation for craft and artistry, you may be modeling the type of mix and match, casualwear luxury mindset the shows up in studies of younger affluents. Think John Mayer, whose appreciation for the mechanics and nuances of his multi-million-dollar watch collection is featured on Hodinkee, while the rest of his vibe is on display for Grateful Dead aficionados.
You Define It; It Defines You
More and more, the exclusivity defeats the purpose. Inclusivity makes you part of the richness of what the world offers. Above all, according to a 2019 YouGov Study, the value people seek most with their money is freedom. If old luxury was about showing you belong in an upscale strata, now luxury shows you transcend it. Your people are everywhere, and everything is available to you.
This mindset drives the importance of partnerships unconventional collaborations for the younger luxury buyer. For instance, sneakers that pair premium streetwear brands like Off-White with Nike result in something rare, exclusive, and priced up to $3,000. It’s why Chanel partnering with Pharrell Williams, Rolex with National Geographic, Supreme and Stone Island, A Bathing Ape and Heineken. These brand collaborations are showing people how to mix and match to create a new vision of what’s possible for you.
Democratization By Design
A high-end personal trainer and financial planner are a tap away on the phone in your pocket. So are an entire economy of fancy cars and homes for the sharing. To the new wave, vintage and 2nd hand have become highly desirable treasures to hunt. (2) Quality and craft still command price and denote upscale, but they’re not limited to haute couture and fine dining. Any non-essential, from taco trucks to jetshares, can feel luxurious, provided the service and delivery is executed exceptionally for just what it is. It’s what allows the people who buy it to be just who they are.
The big shift in luxury is a shift in expectations. As Kenn Fine puts it, “it used to be that consumers used luxury goods to signify they’d joined the club. Now, it’s about how these brands revolve around you, joining your life and meeting your intent. The value in buying something is you opt into a story, and it becomes part of your journey.”
The term luxury is still relevant. But even when qualified as casual, approachable, new or even anti, it no longer correlates to a single standard and segment. While you still can’t walk a block in Hong Kong without seeing a $25,000 watch in the window, most of the top 10 richest people in the world wear t-shirts and jeans. And those of us who help to build luxury brands are excited to see the aesthetic of Napa Valley, Silicon Valley, surfers and skaters, and global citizens is on the rise. And brands that rise with it, will need to perfect a version of luxury that feels more essential.