A New Definition of Luxury

The generation of people who grew up online is soon to be the dominant consumer group. Their coming of age influenced many industries and how they adapt their products and services to the changing needs and desires of millennials. This generational shift has also affected luxury consumption, making the meaning of luxury become more fluid and subjective.

Not ownership but experience

Today’s young people are not necessarily drawn to ownership. This has to do with a new perception of status, shaped not by what one owns, but by one’s freedom, new experiences and technology. The emergence of sharing economy, on-demand services and the fractional ownership model is accompanied by a shift in preferences; instead of being in possession of products, consumers favor to just have access to them.

Scholars from Manchester Business School who interviewed young, affluent people in order to investigate what brand luxury means to them in the age of masstige (mass-prestige), showed that the interviewees emphasized the experiential nature of their luxury consumption. Instead of talking about ‘buying’, ‘owning’ or ‘things’, the respondents predominantly used words like ‘doing’ or ‘experience’. Thus for brands operating in the luxury market it’s not only about selling products anymore, it’s also about the whole experience surrounding it.

Success based on inclusion

The cultivation of a culture of exclusion, as a strategy to attract young people to luxury brands, is something of the past. Nowadays the success of luxury brands is based on inclusion and openness, as the most successful luxury brands right now know how to foster a sense of community. This partly stems from the increasingly blurring division between luxury and streetwear, with the latter category bringing the feeling of approachability into the mix. With Virgil Abloh, the founder of Off-White, being the creative director of Louis Vuitton, the pace at which streetwear is infiltrating the world of luxury is speeding up. And if there’s anything streetwear stands for, it’s the supportive and inclusive community behind it.

One could say that shifts like this one in addition to brands becoming more digital, have made luxury brands network based. Whereas in the past the only way to access and become part of a brand’s network was through a purchase, today because of social media, consumers can participate and contribute to the brand’s network on many levels, before or even without ever actually buying the product.

The focus here is on how the customers co-create a brand, and instead of consumer segments form consumer tribes. In tow with the rising popularity of streetwear is a more proactive role consumers play in shaping the brand image. This has to do with the fact that consumers are not as passive anymore, millennials are a generation of curators and creators who want to actively shape the world around them. Which translates to how the tone of the luxury industry is set, as more and more it happens bottom up instead of top down.

Reflection of values

For decades luxury served solely as a device for hedonistic pleasure and a show-off of social success, but in this day and age it has gained a new function of conveying personal values. As consumers are more careful with buying from brands that don’t share the same principles as them, purchases have become more important in reflecting what the consumers stands for, what narrative they wants to express.

In response to this development many brands are playing catch up and trying to become more sustainable or partner up with influential figures, activists or charity organisations. But having grown up with the internet, Millennials have become almost immune to advertising and can see through any desperate or insincere attempts of brands to resonate with them. Skilled in recognizing inauthenticity, the new generation of consumers is not easily fooled. Access to massive amounts of information and social media, made consumers not afraid to call out brands publicly on their wrongdoings, for example on Twitter or by devoting a whole Instagram account to it like @diet_prada.

As the democratization of luxury made exclusivity a less important trait of luxury, high end brands are finding themselves in a new landscape. With the new generation of consumers paying less attention to ownership, streetwear merging with high fashion and a stronger focus on community values, luxury brands are forced to alter their course. And for now it seems like only those who are willing to embrace these new developments will be able to stay afloat.

Feel free to get in touch for further insights and ideas on how to successfully market your brand in 2018. — contact@noservice.today

NO SERVICE 24/7 is a Berlin-based full-service agency for strategic brand communication operating at the intersection of arts, culture and lifestyle.