The past few years have seen an uptick in interest in mindful consumption. (A colleague and I wrote a book about it in 2010.) This movement incorporates a range of focal points — from "pure" ingredients to downsizing, sustainability to sharing — and its impact is being felt around the globe and in virtually every category.
I find it especially interesting to consider the impact of this shift on a sector not traditionally associated with mindfulness and restraint: luxury. For ages, luxury centered on elitism, scarcity and prestige. It was outer-directed — all about "keeping up" with the upper crust or showing off "trophies" that broadcast one’s status and success. While that type of luxury consumer still exists, it’s increasingly common for luxury to be driven from within. This new luxury is centered on values, experiences, and smart solutions.
This trend is being accelerated by our newest generation of luxury consumers: Millennials. With direct spending already estimated at $1.3 trillion in the US alone, Millennials are projected to become the largest segment of the luxury consumer market by 2018-2020. Here are four ways in which the concept of luxury is being upturned:
1. Luxury is now about expressing one’s aspirations, not showing off one’s bank account.
More and more, what people purchase speaks to how they perceive themselves — and wish to be perceived. Today’s luxury buyer wants to live well, but also emphasizes responsible consumption and support for positive social change. A study by my company, Havas Worldwide, found that fewer than half of global consumers admire people who can afford to buy whatever they want, and more than two-thirds admire those who make an effort to reduce their consumption or who buy locally as much as possible. What and from whom we buy has become an expression of what we believe in.
Our shifting notion of luxury means a much broader spectrum of goods now falls within the category. Luxury can be a sustainably crafted pair of Timberland boots, an organic soap-making kit or a premium Fair Trade chocolate bar. In many cases, it’s just a bit of escapism — a way to break away from our routines and inject a bit of authenticity into our increasingly artificial worlds.
2. A luxury label is less important than provenance, authenticity, innovation and fun.
The new luxury consumers are less interested in climbing the luxury ladder (trading up from a Brooks Brothers suit to a Desmond Merrion Supreme Bespoke, for instance) than in finding a product or brand that suits their lifestyles and makes them feel discerning rather than ostentatious. Rather than pay an exorbitant markup for a particular label, they want to know more about the brand — how its materials are sourced, how its products are crafted. China’s Shang Xia is taking advantage of this shift. While it can draw on the cachet of its majority ownership by luxury label Hermès, it also is careful to communicate its authentic local roots, with products crafted by or in association with Chinese artisans using local materials (e.g., bamboo, porcelain, cashmere, zitan wood).
3. Experiences trump ownership.
In our recent study on the sharing economy, we found that nearly twice as many people agreed as disagreed that they would rather spend money on a new experience than on a new product. Millennials, especially, enjoy the conversational currency that comes from trying new things, and a lot of their luxury spending goes toward unique experiences rather than something that comes home in a shopping bag or shipping carton. So we’ll see, for example, luxury splurges at music and movie festivals, most of which now offer VIP versions. Lots of young people will flock to the SXSW festival next spring, but those who shell out $1,745 (walkup rate) for a platinum badge will get access to all kinds of extras, including parties, mentorship sessions, special lounges and express passes.
4. The new consumer has an appetite for discovering premium goods and services.
Rather than shop in the Nieman Marcuses of the world — where salespeople too often alternate between intimidating and fawning, depending on the cut of one’s clothes — young affluents (and would-be affluents) are showing a preference for discovering luxuries in a manner that is far more casual, experimental, and fun. As a consequence, we’re seeing the growth of "curated collections" online — sites where people can go to get advice and ideas about things to buy and places to go.
And we’re seeing more high-end subscription services that allow people to sample premium goods without any commitment to purchase. One such service, Eleven James, claims to "redefine how luxury watches are discovered and enjoyed." Members pay between $250 and $1,600 a month to "borrow" high-end watches to enjoy for two to four months at a time.
Andrew Benett is global chief executive officer of Havas Worldwide and Havas Creative Group.