Luxury shoppers are buying less, but better. This is the conclusion of a recent study that shows fake luxury products changed the luxury market. Minimalist luxury is the new trend, which was also heightened by the pandemic. You own fewer luxury items, but original and of better quality.
LUXURY INDUSTRY IS CHANGING
The luxury industry is changing, and it’s not only because of the pandemic, but also because of all the AAA fakes, those counterfeited items that are such good replicas they stole the market. Why would someone pay $10,000 on a Birkin bag when someone else, next to them on the street, has the almost exact same bag, but for $100? Luxury shoppers need to differentiate somehow and they need to show their wealth through other means. How can they do that? By buying less, but of better quality. This is what the study from Wharton University, conducted by marketing professors Z. John Zhang and Pinar Yildirim, tried to explain. The paper is called ““A Theory of Minimalist Luxury,” , written along with co-author Z. Jessie Liu, a professor at Johns Hopkins University’s Carey Business School, It analyzes the current trend in the luxury industry, it shows what it means for the luxury goods market and what the luxury managers should do about this trend.
“CONSPICUOUS CONSUMPTION” – PEOPLE BUY LUXURY TO SHOW OFF
It was demonstrated in various papers, starting with the economist and sociologist, Thorstein Veblen, back in the 1890s. Those who were more wealthy felt the need to signal somehow their social status. And what was the handiest thing they had in mind: clothes, accessories, things you could buy and wear outside your house. This is called “conspicuous consumption”, meaning that people don’t buy high-priced items for the high-quality material, craftsmanship, or tradition of the brand, but because owning that very thing would put them on an upper level in society.
Through them, they could communicate their social status and economic status. And if we think about it, not much as changed in the last century. This mentality has been perpetuated even until our times..sort of. The last decade or so has seen a change in trends. as I mentioned in the beginning of the article, counterfeit is everywhere. Some are such good replicas that you can hardly tell the difference between an original product and a fake one. This – and the pandemic last year – has heightened more and more this trend of “minimalist luxury”. This means that the luxury shoppers buy less luxury items because nowadays most of people own a brand item. Is it original? This is the least important detail. They show it off and people can see it. So how can the real wealthy individual signal their wealth properly now?
LESS IS MORE. LUXURY SHOPPERS BUY LESS
Just like over a century ago, an expensive watch, an expensive car, and an expensive handbag can give other people some information about us even before we say something. “I have money and I want to show this to the world” – seems to be the message of those showing off their branded products. But in the last 20 years, the AAA fakes have entered slowly, but strongly on the black market. This business attracted more and more people, most of them are persons that don’t necessarily have the means to purchase the original items at their original prices. Even if some branded clothing or accessories are over-priced, they were still a “tool” for the elite, for the wealthy to brag about.
How the study concluded: “spending on luxury goods is like burning money in public, to convince others that you really have a lot of money“. And that was exactly the point. But, if on the market, you have the possibility to burn fake money that looks like real money, and people would still think that you have money, why not do it? Or at least this is what more and more people had in mind when purchasing counterfeited items.
In this context, it emerged a new alternate trend of minimalist consumption. This means basically that luxury shoppers are buying fewer items, but they are buying better. Of course, minimalism has been for quite some time and we see it in furniture, electronics, architecture etc. This concept “affected” also the luxury industry. People are buying less and less, and we are talking here about the real luxury shoppers that buy the original products.
HAS THE PANDEMIC INFLUENCED THE “MINIMALIST LUXURY”?
Yes, it has most definitely impacted this industry. Besides this trend that was growing already in the past decade, the pandemic showed that people were acquiring luxury clothes mostly for social interactions. Ans the pandemic took away these social encounters. So why would you still purchase a $1000 pair of shoes, if you have nowhere to show it? Probably this is what most women thought since the sales of sweatpants skyrocketed and sales of elegant shoes plummeted? But, as the study shows, the trend was there already – not the sales increase of the sweatpants though.
LUXURY MANAGERS SHOULD FOCUS MORE ON THEIR PRODUCT
What is the solution then? As we saw the past year, a lot of luxury brands tried to come up with something new and adapt to this new market, they launched their collections online or with the help of a video game for example. But this trend of minimalism in luxury is just this: a trend. And like all trends this shall too pass. What the luxury managers can do is that they can focus more on the product they sell and differentiate it from all the fakes one on the market.
Companies should communicate to their public how they can spot an original from a fake one, because the real luxury shopper will always opt to buy from the real brand, not from counterfeit. They should also try to make their products visible to others, they should think about their portfolio and perhaps narrowing it down to their core products. Focus on less, increase the quality/value and think about pricing. Times and we must adapt. And this trend shows something very interesting about the human nature – although not something new: the fact that consumption serves this purpose of trying to differentiate ourselves from others.