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‘Cracking the luxury code with Millennials’ (part I)

Anne in't Veld
Anne in't Veld is a first-year Economics student at Tilburg University who has recently joined the Asset|Blog Committee. She is particularly interested in macroeconomics and philosophy.

‘Nobody knows what luxury is anymore’ – Marc Bain

Gucci, Chanel, Louis Vuitton, Hermes, Rolex, Tiffany, Dior, Armani, Prada, and Balenciaga are at the top of the list of the most luxurious online brands, thanks to their high ranking in share of search interest, web traffic, social media audience and social media engagement (Luxe Digital). Yet, the classical definition of luxury goods has been reshaped by these brands in such a way that ‘the concept of luxury is getting blurry, making it less clear where it begins and ends.’ 

Goods for which demand increases more than proportionally as income rises, and are a contrast to “necessity goods”, where demand increases proportionally less than income do not fully represent the concept of luxury as it is currently harder to define, and designers and businesses are ready to capitalize on the ongoing transformation in the fashion industry.

Why are luxury goods in the fashion industry different now?

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Although quality and elevated design are still part of the luxury good criterion checklist, consumers are nowadays prioritizing fundamentally different aspects over the traditional notions of luxury. Even if the classical luxury symbols such as Rolex watches or Dior dresses are not losing their status, consumers now prefer the products they purchase to be unique, exclusive, aspirational and attainable. A representative example is Balenciaga t-shirts and sneakers which no matter how well crafted they are, they would have never been considered luxury appropriate decades ago.

 

How are brands taking action over the changes in consumer preferences?

 

Since most consumers are now affluent millennials and influencers, brands try to redefine modern luxury fashion with socially-conscious approaches to marketing, innovative digital initiatives and maximalist aesthetic that appear to be “Made for Instagram” (CEO Marco Bizzarri and creative director Alessandro Michele – Gucci). Due to their target audience, digital marketing initiatives are crucial for high online engagement rates and Gucci has evidenced that by its revenue.

 

Luxury for rent = Diluted luxury?

 

Another crucial aspect that constructs a luxury item is the emotional power that comes along with the purchase of the product, says Ary Wassner, CEO of Hilldun Corporation and chairman of Interluxe Holdings. However, exclusivity has been an integral part of luxury’s draw for the few who can afford it. As a result, millennials are now turning to a new set of services (renting) that provide access to products without the burdens of ownership, giving rise to what’s being called a ‘sharing economy.’”

 

“I’m not even thinking marketing,” Wassner countered. “I’m thinking historically, the emotional aspect of owning a luxurious product that used to give the consumer a sense of accomplishment, of success.”

 

Despite the negative opinions on the “diluted luxury”  brought by renting luxury items, such services are making the category accessible to a much broader range of customers.

 

Reference list:

Bain, Marc. “Nobody Knows What Luxury Is Anymore.” Quartz, Quartz, 2 Aug. 2018, qz.com/quartzy/1303457/nobody-knows-what-luxury-is-anymore/.

Beauloye, Florine Eppe. “Top 15 Most Popular Luxury Brands Online (2019 Updated).” Luxe Digital, 2 Jan. 2019,  luxe.digital/digital-luxury-ranking/most-popular-luxury-brands/.

 

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