The brand and the beautiful
The luxury goods industry is booming in Australia while personal debt is at its highest recorded level. Joel Svensson asks why we’re still buying into the illusion that happiness comes with a premium price tag.
It’s 34 degrees on Collins Street, but behind the sleek glass walls of Melbourne’s designer boutiques, it feels arctic.
That’s half the work of the powerful AC and half the withering stare of the Louis Vuitton store assistant.
“No, we don’t give interviews,” she says.
I’ve come here to ask about her clientele, but looking around the glamourous austerity of the store, at the glass displays reflecting back everyday sandals — not Manolo Blahniks — perhaps I don’t need to. Two women in their late twenties and Cotton On skirts point to a handbag under the counter. One gloved hand carefully draws it out from behind the glass. The other hand is bare, ready to take savings or credit.
Today, luxury brands like Louis Vuitton and Gucci across the road are part of a booming industry in Australia.
The luxury goods market has experienced steady growth since 2007 — growth that has proved immune to increased unemployment, expanding consumer debt and global financial crises. Forty-two of the world’s 62 prestige brands have now opened up shop in Australia, with 44 percent of Australian luxury consumers aged between 29 and 39.
We have become a big target for luxury brands globally, as they rush to satiate the increasingly aspirational diet of the Australian consumer.
So why are Australians spending more than ever on designer brands?
In the world of luxury marketing, billions of dollars are spent each year with the aim of making even well-off people feel deprived. The industry’s great triumph has been to tie wealth and status to branding, and here in the 21st century, we are swallowing it whole.
Luxury brands are out to convince us that the “beautiful people” — the wealthy, famous and successful — buy nothing but premium products. They ply the message that their wares are the most tasteful and exclusive, and that by purchasing them, we are purchasing a piece of that exclusivity. We are lead to believe that if we dress and act like the rich and famous, we will become them. As a result, many of us now take the adage “fake it ’til you make it” a little too seriously.
But it’s not entirely our fault. Everywhere we look, popular culture seems to be doing its best to reinforce the cultural prestige attributed to premium brands.
In films, we have James Bond with his $2000 Brioni suits and Omega timepieces. On social media, we have millionaire playboy Dan Bilzerian posting photo after photo of lavish parties, private jets and custom firearms — alongside digital marketing, of course.
The situation is no better on television, where reality shows like Keeping Up with the Kardashians, The Rich Kids of Beverley Hills, and The Real Housewives of Wherever normalise material excess. Even in the fiction section, book series like Gossip Girl have convinced an entire section of Gen Y that the coolest and most attractive people hyperconsume luxury goods, attend expensive cotillion balls and basically spend their lives in imitation of 19th century nobility.
But the idea that a piece of branded apparel contains some kind of talismanic quality to make you rich or famous is of course a delusional one. Celebrity is not gained by wearing a Prada suit or sipping Grey Goose vodka — if it did, every second professional on Elizabeth Street would have their own talk show. Celebrity is attained through either extraordinary talent, gruellingly hard work, or incredible luck — sometimes it takes all three.
The same goes for wealth. Few people will ever get rich by splurging money on designer labels; they are far more likely to end up the best-dressed person at Centrelink. Just ask Professor Thomas J. Stanley.
The wealth illusion
In his book, Stop Acting Rich and Start Living like a Real Millionaire, Dr Stanley describes the consumption habits of America’s millionaires. Of the thousands of wealthy people surveyed, Stanley found that only a handful hyperconsumed the way the media portrays.
The number one brand of watch among millionaires? Not Rolex, Omega or Tag-Heuer, but Seiko — a brand of high-quality watches in the $100 — $300 range. The median amount that Stanley’s millionaires paid for a suit was just $482 USD.
Apart from a tiny minority comprised of celebrities and the super-rich (those in the decamillionaire to billionaire categories), it seems that the majority of wealthy people are a frugal bunch whose purchases reflect bang-for-buck rather than prestige.
Far from frittering away disposable income making sure they had the label-version of everything, these people got to where they are by doing precisely the opposite — buying sensibly, investing prudently, and living well below their means.
But even if you don’t believe that wearing a Rolex will make you wealthy, it at least has to make you happy, right? Surely you’d be better off than the poor sack wearing some digital wrist-breaker off the shelf from Kmart?
Not necessarily. In a 2011 study, researchers found that purchasing luxury goods did have a positive effect on one’s emotions — but only for a few days, and only when that person had a materialistic orientation. Non-materialistic people benefited far less. Materialism was also negatively correlated with overall happiness — a finding consistent with six previous independent studies. According to the authors, this might be due to the fact that luxury-hungry materialists find it difficult to look past their tasteful fixations and appreciate pursuits that yield long-term gratification. From the paper:
“Because luxury consumption feels good and is positively appraised, materialists may not initiate the pursuit of these more rewarding activities, and, as a result, fail to learn how rewarding these can be.”
So, not only does luxury consumption fail to provide us with long-term satisfaction, it also reduces our chances of engaging in activities that could. As if that weren’t bad enough, the researchers go on to say that these effects can result in behaviour that sounds an awful lot like addiction:
“These processes may ‘lock in’ materialists in their lifestyle, irrespective of the long-term adverse consequences for self and society.”
Speaking of consequences, this March, national credit card debt reached its highest recorded level according to the Reserve Bank — a collective $51.502 billion. Not only has Australian consumer debt deepened, but the number of households with a “high risk” debt-to-income ratio continues to grow steadily.
The Australian luxury market, meanwhile, is now worth more than $1 billion, and in cities like Melbourne and Sydney it’s continuing to expand. While it’s been reported that an increase in Asian tourists is behind the growth, 70 to 80 percent of all luxury consumers are Australian locals.
As many a statistician has reminded us, correlation does not mean causation. But at the very least, it appears that our appetite for luxury is growing while our collective financial freedom is shrinking. Could it be that we have so conflated wealth with the trappings of wealth that some people would rather have a closet full of prestige labels than a positive account balance?
Back at the Louis Vuitton flagship in Melbourne, the sales assistant moves aside to let a man pass up the golden stairs behind her.
“You could try coming back right on ten in the morning,” she tells me. “Any time after that, we’re packed. It’s like rush hour all day.”
As I turn to leave, a decision has apparently materialised between the couple beside me. One of the women reaches into the confines of her brandless but still-functioning handbag.
“Make it credit.”
Photos and words by Joel Svensson unless otherwise specified.