The term “luxury” invokes a range of connotations – both positive and negative. It’s intrinsically linked to wealth and social class (rightly or wrongly). Luxury goods are historically thought of as indicators of social status – in buying them, consumers signal their membership of an elite and exclusive club. We can all name the world’s most prestigious luxury brands – designers like Dior, hospitality providers like Shangri-La and vehicle manufacturers like Mercedes.

But a change in luxury consumption is occurring – and it impacts all these companies.

A recent article in the Harvard Business Review (HBR) caught my eye. It was about the rise of “inconspicuous luxury” and asserted that consumers are opting for more discreet luxury brands over traditional offerings that are instantly recognized as indicators of wealth.

It fascinated me, so I started to look deeper into the topic. The key to understanding this shift might be found in a great book I read few months ago, The Naked Ape by renowned zoologist Desmond Morris. Morris specialized in analyzing humans as a zoologist would any other animal. Although his peers often criticized his methodology, thinking of humans as you would lions, rhinos and even frogs is an eye-opener when you apply it to the evolution of human behaviors.

Law of the jungle

Anthropologically speaking, we are pretty rational animals who have succeeded in evolving through the ages, bringing us to modern civilization. And we’ve achieved this social cohesion through tribal patterns that have created a social hierarchy, for better or for worse.

The concept of luxury has always been closely associated with social class. From a multi-million-dollar yacht to a Louis Vuitton handbag, luxury goods have been an instantly recognizable way to show social status or power – and zoologically speaking, these are key elements of leadership.

But the world is changing. Overtly luxurious products, resplendent with brand logos and iconic design, are being marginalized in favor of more inconspicuous ways for consumers to demonstrate social currency. Whether that’s Louis Vuitton placing its logo inside a bag instead of splashing it across the front, or Chanel reducing its presence in retail stores, luxury brands are reacting to consumers’ desire to illustrate their social standing in a far more subtle way. So, why is this happening?

The financial crisis of 2008 is an interesting starting point. Since then there has been an increased focus on wealth and a growing awareness that there’s widening social inequality in the west. Terry touched on this issue earlier in the year and explored the risk it poses to innovation, but it’s also impacted consumerism. Now, many consumers are keen not to look too “flash” or advertise their bank balance.

Though it might sound paradoxical, Morris believes that dissolving class markers also have a role to play: “Education, combined with improvement in mass communication and especially in the process of mass advertising, led to a major breakdown in class barriers.”

This homogeneity is only set to accelerate. The number of consumers globally deemed “middle class” will hit 3.2 billion in five years’ time, nearly double the 1.8 billion recorded in 2009, according to luxury retail market research company Albatross Global Solutions. Concurrently, luxury brands – and their imitations – are becoming more attainable as innumerable e-commerce sites offer deals on once rare items. Those who consider themselves “leaders”, zoologically speaking, feel threatened as luxury becomes democratized – so they look to differentiate themselves in new ways that are harder to spot by those outside their own elite “club”.

The devil’s in the detail

Luxury product and service providers are, of course, accommodating this shift in consumption habits. Let’s take the example of the hospitality industry. Years ago, when air travel was less affordable, checking in at a five-star hotel was a major status marker. Now, it is possible to stay at a five-star hotel for a relatively low price, but the service may be less personal as the hotel caters for the larger numbers of visitors who find cheaper deals. However, a new range of luxury hotels are putting an emphasis on the experience rather than the criteria they all have to meet to earn their five-stars. Juremehia hotels, as cited in the HBR article, offer “tea service with honey collected from a rooftop hive and access to turtle rehabilitation projects in their Frankfurt and Dubai locations respectively.”

The focus on experience over exclusivity is indicative of a wider trend among luxury consumers. Figures from Albatross assert that quality is now the biggest definer of luxury for consumers across the globe. Nearly 90% of consumers name the characteristic as the defining aspect of luxury, ahead of exclusivity at 52%, according to the research, which featured in a recent Marketing Week article.

Adapt or die

Luxury brands that don’t bend to the changing needs of consumers may find that they never regain the prestige they once had. For instance, French jewelry creator Mauboussin was once known as an expensive, high-end brand, worn by chic Hollywood stars like Marlene Dietrich. But in recent years the company has offered cheaper products while refusing to soften its overtly lavish character. As a result, its historical clients are no longer interested in the brand.

Fellow jewelry company Tiffany & Co. endured a similar problem, but the company is working to refine its brand to appeal to consumers seeking a more understated luxury experience. While Tiffany’s high-end goods were performing well, its lower-priced “fashion” line was struggling, prompting the brand to market the line with a simple “T” instead of its full name. This helped boost sales as consumers opted for the more understated approach.

As consumers, we identify ourselves through the purchases we make – that will never change. Successful luxury brands realize that the desire to present the best possible version of ourselves drives the luxury industry – and whether it’s overtly or inconspicuously displayed, we hope that people notice.

We’re only human, after all.

Aurelia has left The Frameworks.

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