2023 the Luxury Conundrum

We've all red and blue pilled a little too hard. Now we're life long renters wearing YSL.

OMG - another Substack?

Yes. Another one.

I've created this to share my personal musings and insights on a variety of topics (some more related than others). I have found that my LinkedIn profile has become inundated with lengthy articles and posts, which can often be overwhelming and detract from my team at Better Half. With my Substack, I aim to consolidate my thoughts into a single, easily accessible platform, allowing you, whoever the fuck you are, to access my writings at your convenience. Through this, I will continue to point out the glaringly obvious in marketing, make fun of dumb things companies do, and hate on the New York rebrand. Design (and broader marketing) is a joke…so let’s just deal with it and move on.

THAT GETS ME TO MY FIRST AND FAVORITE TOPIC - LUXURY

We love to love it and love to hate it.

We’re all about caviar but also are binge-watching rich people behaving badly.

Over the past few years, luxury consumerism has been on the rise in the United States, driven by various trends, circumstances, and societal shifts. The growing number of high-net-worth individuals and the emergence of a wealthy millennial demographic has led to increased demand for luxury products and experiences. This group values exclusivity, quality, and brand recognition, and is willing to pay a premium for luxury goods and services.

With big-ticket items like housing being so completely inaccessible people are quite literally giving up on saving for a home and buying four pairs of tabis instead.

According to a report by the Urban Institute, homeownership rates among millennials are lower than in previous generations. In contrast to this, a survey conducted by Bankrate found that millennials are more likely than previous generations to spend money on experiences and luxury items, such as travel and fashion. The survey found that 30% of millennials have spent money on luxury fashion items, such as handbags, in the past year.

Cultural and societal shifts have played a role in the rising trend of luxury consumerism. The decline of traditional markers of status such as homeownership and long-term employment has led to a shift in how individuals signal their success and social standing. Luxury items have become a way for individuals to express their wealth and status, particularly among the younger generation

Moreover, advancements in technology and social media have made luxury items more accessible and desirable to a broader audience. Luxury brands have leveraged these platforms to create a sense of exclusivity and desirability around their products, using influencer marketing and product launches to generate buzz and appeal to aspirational consumers.

AND TO TOP THIS OFF the rise of the experience economy has also fueled demand for luxury travel, hospitality, and entertainment, as consumers seek unique and memorable experiences. This trend has led to the growth of luxury resorts, private clubs, and high-end travel services, catering to the affluent and discerning consumer.

OK OK OK OK

So why do we love capital ‘L’ Luxury? and why does wearing the latest Loewve sweater mentally put us in our villain era?

let’s back this way up to the basics with Jean-Noël Kapferer and Vincent Bastien’s the Luxury Strategy. Pioneers in the field of what quantifies luxury this duo identified a few key trends that are required for a brand to be considered luxury vs premium or mainstream.

Luxury brands adhere to a distinct business model that revolves around the pillars of exclusivity, perceived value, and brand identity. This model sets them apart from mainstream brands and provides the rationale behind their reluctance to adopt common discounting practices.

Luxury brands employ exclusivity as a key differentiator to bolster their brand image. Their limited availability and higher pricing engender a sense of prestige that is essential for their target customers' aspiration for an elevated lifestyle. In this regard, offering discounts would be counterproductive to the exclusivity element and risk damaging their image. Streetwear culture has extremely successfully modernized this with the invention of limited run drops.

Once exclusivity has been established luxury brands leverage perceived value as a key driver of their pricing strategy. Their unique and high-quality products and services, coupled with their emphasis on delivering exceptional customer experiences, result in a powerful association between the brand and the price points. Any discounting activity may be perceived as lowering the perceived value and compromising their brand equity.

Our cherry on top? Luxury brands' brand identity is their unique selling proposition, which distinguishes them from competitors. Hence, they invest significant resources in building and nurturing their brand's image and pricing strategy, where discounting is not typically utilized as it would dilute the brand's identity and positioning.

The luxury strategy has proven to be highly effective in driving the growth of the luxury goods market, as evidenced by the Bain & Company report that estimates a global luxury goods market value of over $350 billion in 2022. Furthermore, the top 10 luxury brands generated over $118 billion in revenue during the same year.

Why should you care?

You shouldn’t, but you’re going to. Because our weird little animal brains are going to tell us that the SSENSE 2023 guide absolutely must be adhered to, or else our peers are going to push us out of the nest.

but that’s the deep-rooted subliminal power of marketing. At its core, a bag is meant to carry your shit from point A to point B. However, that notion is not going to stop me from wanting a beat-up Birkin.

I once attended a dinner where a client claimed not to believe in marketing, yet he wore a Rolex, a Prada shirt, and was using an iPhone. I think about this often, and so should you.