The Evolution of Luxury in 2014 & Beyond

The world of luxury continues to evolve. Luxury consumers have shifted their mindset …and their wallet. We experienced the shift from a community where Affluents wanted to be noticed to more of a sense of community where value and personal worth takes precedent. As noted in A Tale of Two Markets: A Global Perspective on Affluents and the Business Elite, the mid-2000s boom was marked by a shared sense of what luxury meant – the imagery of yachts, private jets, and classic (if sometimes ostentatious) brands was pervasive. 

The world of luxury continues to evolve. Luxury consumers have shifted their mindset …and their wallet. We experienced the shift from a community where Affluents wanted to be noticed to more of a sense of community where value and personal worth takes precedent. As noted in A Tale of Two Markets: A Global Perspective on Affluents and the Business Elite, the mid-2000s boom was marked by a shared sense of what luxury meant – the imagery of yachts, private jets, and classic (if sometimes ostentatious) brands was pervasive. With the recession, luxury evolved, becoming more idiosyncratic and self-defined, more intimate and personally-meaningful. It became less about the logo and more about what the logo meant to the individual. Luxury also became more subtle and understated, and value became a key theme, with messages such as “heirloom-quality” having strong appeal. Mobile devices became the new “mass” luxury, and morphed luxury expectations more generally, particularly regarding minimalist design and practical utility. New expectations became layered on top of older ones, rather than replacing them.

Looking to the future of luxury, we expect several established trends to continue building momentum, including the importance of value, and the “tech-ification” of luxury. But we expect new trends to emerge as well. For example, a recent U.S.-based research on Ultra Affluents ($250K+ HHI; top ~3% of the population) found they increasingly describe luxury in terms of…

• Quality, which has historically been the foundation of luxury, but which consumers increasingly question. While quality is increasingly important, more than half now feel that luxury brands have lowered their quality standards, and many describe traditional luxury brands as “watered-down” or “outsourced.”
• Excellent design, reflecting in part the growing role of streamlined technological products into modern conceptions of luxury.
• Excellent reputation, reflecting in part a new approach to evaluating quality. Luxury is no longer “tested” by seeking out established brands or media “taste-makers,” but rather by exploring quality ratings across sources, including customer reviews and social media.
• Splurge, reflecting a growing ease and light-heartedness about luxury. Note also the decline in indulgence, a term with connotations of “sinfulness.”
• Unique and rare, which reflect an authentic and meaningful scarcity. In contrast, the declining importance of terms like exclusive, refined, privileged and status reflect disinterest in excessive formality, as well as a skepticism about faux-scarcity manufactured for marketing purposes.

To reiterate, luxury spending among Affluents is up, particularly in the U.S. and Asia. But consumers’ qualitative desires about luxury continue to evolve. Today they are more likely to desire luxury experiences over luxury objects, and crave that which is authentically rare and unique rather than something marketed as ‘exclusive’ or ‘privileged’. More than ever, luxury marketers must know their audience, personalize their approach, and speak directly to them.”, notes Steve Krauss, Chief Insights Officer, Audience Measurement Group, Ipsos MediaCT.