How Luxury Brands are paying to keep you poor
Why do people pay thousands of dollars out of their pocket just to own a bag that is probably not worth the price?
Starting with the experience that these luxury stores give you. In order to turn luxury goods into experiences for the customer, companies prey on the feelings that drive customers to make a purchase. What they sell is a pleasing experience for customers; triggering an emotional connection between the product and their purchase.
This could be something like an added benefit when shopping at their stores, maybe some extra water or tea to make you feel special. Albeit not costing lots, this makes the customer feel as if they are treated luxuriously, thus creating a positive feeling. When their mood is heightened, they might buy more. There are many TikToks of people spending thousands on luxury brands and feeling special because they have been served tea and brought to a VIP room.
Common luxury brand names like Chanel or Hermes create their wealth through exclusivity. This means limiting the production quota or availability in order to make it harder to attain and thus desirable . It plays into the consumer’s wishes to be special and own an exclusive, rare bag. There have been many internet videos of consumers proudly spending thousands (reportedly $10,000) on items they do not necessarily need or want, just to be worthy of being offered a Hermes Birkin bag (which ranges from $10,000–30,000). Burberry reportedly destroyed unsold clothes, accessories and perfume worth £28.6m in 2017 in order to keep its prestige of exclusivity.
Seems like it does work indeed because there was not a drop, but a rise in company profits. Luxury brands are capable of earning enough to burn off unsold stocks. This also goes to show the large gap between its cost of raw materials and market price.
Another obvious reason why people shop luxury is the prestigious association that comes with it. An experiment called the Payless Shoe Hoax showed a normal retail store opening up a brand called ‘Palessi’.
They managed to fool influencers into thinking their shoes were luxury just by manipulating higher prices and creating a luxurious display of products. The influencers testified to being willing to pay $645 for footwear that usually retails for between $19.99 to $39.99, showcasing people’s willingness to pay exponentially more for brand names and the aura of luxury, despite the quality not matching up to the price.
As with most brands, luxury companies in the third quarter (3 months) of 2021 invested roughly $400 million on marketing solely in the United States. A joy of heading down Oxford street is witnessing the display of luxury stores adorned with large decoration pieces. These attract customers, add to their brand image and increase reputation.
Brands can also simply gift influencers their products in exchange for some social media exposure. This is perfect for marketing as it is predicted that in 2025, over 50% of luxury goods consumers will be Gen-Zs.
As previously mentioned on the feeling of exclusivity, influencers will want to show off the possession of a luxury good as much as possible, motivated through elitism and classism. In turn, these influencers with a large audience will convince people that they too desire that luxury good as their favourite influencer is seen adorned with it. Instead of spending millions on the traditional method of marketing (signboards being $6650 per year lowest), social media seems much more feasible.
For example, the Jacquemus Le Chiquito bag is inconveniently small (maybe enough to fit an iPhone) but they dispersed their bags to thousands of influencers and soon their bags were plastered in most crevices of social media. Though many have complained of its size, they still manage to garner a lot of sales. This is because once you start seeing an item more, you become convinced that you actually like it, or that you need it in order to become as fashionable as that influencer you just saw. After all, who wants to feel left out on something everyone seems to be doing?
Touching on the psychological aspect of luxury brands, we as humans gravitate towards external validation by others and brand our worth on how much we can pay for certain luxury items. It is a show of success of being able to afford luxury goods. Thus, we humans showcase our success through showcasing our wealth which can be done by purchasing luxury goods. Brands know this, which is why they have plenty of mid-range products featuring the brand’s logos. This is why flex culture (or the logomania style) has grown in popularity with the display of it on social media allowing a momentary gain of self-confidence. It almost turns into a competition of who has more wealth, more success, or more luxury goods.
So before you reach for that thousand-dollar bag, think about the influences that luxury marketing uses. Is it really worth it to use all that hard-earned cash for a mediocre bag with a brand plastered onto it?
