Luxury ain’t what it used to be. Blame the internet, the rise of on-demand services, and the shift in consumer values as younger generations become more important buyers of high-end goods—all are challenging traditional notions of what luxury is.
The classic symbols—the Hermès Birkin bag, a couture dress by Dior, a watch by Rolex—aren’t in any danger of losing status. But around its edges, the concept of luxury is getting blurry, making it less clear where it begins and ends.
What, for example, should you make of a Louis Vuitton hoodie created in collaboration with a skate brand? Is a $2,500 dress still a luxury item when you’re renting it for a fraction of that price? Does the shine of luxury fade if you get a bargain on used coat and then resell it a few months later? Does a New Yorker tote bag rival pricey handbags by signaling an exalted sensibility?
These questions aren’t just hypotheticals. Luxury labels are turning to sweatpants and sneakers for sales growth. The designer clothing rental company Rent the Runway is spreading across the US. Online resale sites such as The RealReal and Vestiaire Collective keep growing. And social and environmental awareness has become a potent marker of affluence and status.
The changes are forcing the traditional luxury makers to adapt, particularly as a new normal of slower global growth takes hold. They’re also offering opportunities for success to the designers and businesses ready to capitalize on the transformations taking place.
Here’s what we know about the new luxury, gleaned in part from insights shared by luxury insiders at a June 2018 conference organized by the French-American Chamber of Commerce (FACC) in New York.
Luxury is a Graphic T-Shirt
“The idea of what is luxurious is changing; I think it’s about brand rather than luxury,” said Lazaro Hernandez, cofounder of American fashion brand Proenza Schouler, at the conference.
One of the clearest themes to emerge from the event, which brought together executives from several French and American businesses to talk about the shifts taking place in the industry, was that even for them it’s becoming harder to define what counts as luxury.
Hernandez and Jack McCollough, Proenza Schouler’s other cofounder, argued that an exquisitely crafted product—one of the pillars of traditional, aspirational luxury—matters less to young shoppers than it did to previous generations. More often today it’s the brand—the image, and the storytelling—that attract, which means luxury brands can often sell non-luxurious products without any damage to their prestige.
“I think a true luxury brand today can work in so many different price points,” Hernandez continued. “You can sell a t-shirt for $300, $200 and still be considered a luxury brand these days. Those parameters of what is considered luxury and what is not, I think, are sort of disappearing.”
While fashion and luxury aren’t one in the same, as menswear critic Charlie Porter has astutely noted, many leading luxury brands have followed consumers toward less formal dress, which these days means a lot of athletic wear, especially sneakers, and casual, logo-heavy streetwear. Louis Vuitton hired fashion designer Virgil Abloh, known for his streetwear leanings, to design its menswear. Balenciaga’s creative director, Demna Gvasalia, has found success with items such as sneakers and hoodies.
No matter how expensive and well-crafted they are, a Balenciaga t-shirt or a pair of its sneakers would not have generally been called luxurious a few decades ago—especially as they can be deliberately ugly, reflecting the desire of designers and shoppers alike to break from old standards of taste and stand out on Instagram (paywall). But as Gvasalia told the Financial Times (paywall), young shoppers are now prioritizing uniqueness over the traditional markers of high-end craftsmanship.
Not everyone agrees that what we define as luxury is fundamentally any different today. Another speaker at the conference, Alain Bernard, president and CEO of Van Cleef & Arpels Americas, said his definition is unchanged from 20 years ago; quality and elevated design are still necessities.
But these diverging viewpoints underscore that there is no settled criteria for what defines luxury at this point. Steve Shiffman, CEO of Calvin Klein Inc., talked about how a $25,000 dress designed by artistic director Raf Simons and a $5 pair of Calvin Klein underwear work as part of the same brand. Luxury can be both inclusive and exclusive, aspirational and attainable, he said. What matters most is that the products are objects of desire.
Luxury is for Rent
“Millennials have been reluctant to buy items such as cars, music and luxury goods,” states investment firm Goldman Sachs. “Instead, they’re turning to a new set of services that provide access to products without the burdens of ownership, giving rise to what’s being called a ‘sharing economy.'”
Millennials and Gen Z already account for 30 percent of global luxury sales, and they’re on pace to hit 45 percent by 2025, according to consulting firm Bain & Company. For a lot of these consumers, ownership is overrated. Why purchase movies when you can stream them on Netflix? Who needs a car when there’s Uber?
Similar services are popping up in luxury too. Now, you can rent a Narciso Rodriguez dress for an evening, or a Marni jacket for a month, with Rent the Runway. If you want to show off your discerning taste with a Rolex or a Patek Philippe watch, but don’t have several thousand dollars to spend, there’s Eleven James.
But rental dilutes luxury’s emotional power, Gary Wassner, CEO of Hilldun Corporation and chairman of Interluxe Holdings, which invests in emerging luxury and fashion brands, argued at the conference. Ownership is an essential part of the experience.
“There are words that we’ve always associated with luxury, and they’re not necessarily good ones, but ‘covet,’ ‘possess—'” he said.
Olivier Reza, CEO of Eleven James, interjected, calling those words marketing terms used by brands.
“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.”
Exclusivity has been an integral part of luxury’s draw for the few who can afford it. But these services are making the category accessible to a much broader range of customers.
Luxury is a New Yorker Tote Bag
The power of luxury has always resided in its ability to convey status. That’s the basis of Thorstein Veblen’s well-known 1899 polemic, The Theory of the LeisureClass, which held that the rich use their wealth to flaunt their class status with consumer goods: “Conspicuous consumption,” he called it. Impractical fashions such as high heels and top hats demonstrated that the person wearing them didn’t actually have to work, and marked them as part of the leisure class.
But conspicuous consumption is on the decline, argues sociologist Elizabeth Currid-Halkett in her book, The Sum of Small Things: A Theory of the Aspirational Class. That’s because many consumer products have become much more widely available to all classes, thanks to globalization and advances in technology.
The result is that conspicuous consumption has been supplanted by a less conspicuous variety that makes “social, environmental, and cultural awareness” the new social capital. Quartz’s Dan Kopf explained:
So instead of spending money on consumer products, Currid-Halkett finds that the rich increasingly focus their spending on “nonvisible, highly expensive goods and services” that allow them to have time to gain that social capital and foster it in their children. Such goods and services include child care, gardeners, and, most importantly, education.
Far from ignoring this shift, the luxury industry is adjusting where it can. Luxury brands are becoming more vocal about their commitments to sustainability, and making a point of showing off that consciousness by dressing celebrities in sustainably produced gowns. Luxury executives are mingling with A-listers at events that promote environmental and social awareness. Luxury retailers such as Net-a-Porter, Saks Fifth Avenue, and Neiman Marcus are now selling wellness products along with their high-end handbags.
None of this is to say that a Louis Vuitton Petite Malle or the mythically unobtainable Hermès Birkin no longer conveys status. But it does mean that carrying an NPR tote, munching an organic avocado toast, with a yoga mat dangling from your shoulder conveys a palpable status—especially on Instagram. The course isn’t likely to reverse either, as education and the other goods and services that nurture this form of signaling continue to get more expensive.
Luxury Lives on Instagram
If you needed any indication of the power that social-media influencers wield in fashion today, consider that the Council of Fashion Designers of America—the governing body of the US fashion industry—just gave out its first-ever influencer award. Its inevitable recipient: Kim Kardashian West.
The explosion of social media flips the old paradigm, where brands mostly created their own public image from the top down, through advertisements and by building relationships with fashion magazines and editors such as Vogue’s Anna Wintour.
But now anyone with a smartphone can become an “influencer,” crafting their own share of a brand’s image through the pictures they post and what they say. It has shifted the balance of power, and while brands still retain much of it, influencers are increasing in clout.
Brands now ignore influencers at their peril. Tribe Dynamics, a company that identifies influencers and estimates the “earned media value” of their activity around brands, has been hired by luxury giant LVMH (paywall) and others as they move more of their ad spending online. At the FACC conference, Conor Begley, the cofounder and president, recounted an example of the way influencers are shaping the images of luxury brands. Begley said he was invited to speak to a room of executives at one of the five largest luxury brands in the world (he declined to name which):
I’m showing them a bunch of data on Chanel. The number one influencer for Chanel is a guy named Jeffree Star. For those of you that don’t know Jeffree Star, he has pink hair, he’s tattooed from like head to toe—and his neck too—he will routinely smoke weed in his videos […] We show them this data, and somebody from this luxury brand says, ‘Hey, we know this is really important, but we wouldn’t want Jeffree to be our number-one influencer.’ I talk about inclusivity versus exclusivity and not really controlling the conversation, etc. We go home, we look at the data; he was the number-one influencer for that brand as well, they just didn’t know it.
Star is a makeup artist and social-media personality with a large following. Shortly after that meeting, Begley said, Star caused a stir by posting a YouTube video in which he cut up a $5,000 Chanel bag with a glowing-hot knife. Chanel doesn’t need to make Star the face of its brand, Begley pointed out, but it would probably be good for the label to create a relationship with him, since he’s having an impact on how his many fans perceive Chanel. Gucci, in fact, has done just that, and made custom products just for him.
One consequence of influencers’ growing clout is that magazines are losing their grip as the exclusive gatekeepers in fashion. They used to be a brands’ best way to broadcast its message to an audience of potential customers. Now the internet and social media have changed that, and brands have to target small communities online in ways that speak to them.
(Interestingly enough, though, magazine editors are now often influencers themselves (paywall), with their own personal followings separate from the companies they work for.)
Luxury Isn’t Exclusive
One theme that runs through many of these changes is that they’re breaking down barriers which once made luxury a walled garden, or at least lowering them several feet. Rental and resale make luxury items more affordable and accessible. T-shirts and slide sandals that proclaim a high-end brand put those brands within reach of more shoppers, both culturally and economically, than expensive evening gowns. Luxury labels now have to consider all their customers because of social media.
The industry is also paying more attention to the non-white and non-wealthy. It has no choice: Younger luxury consumers are more diverse, and the financial and cultural power of hip-hop and streetwear keeps growing. Luxury businesses are also responding to the demands of consumers today who want the brands they buy to reflect their own values. “For them the term [“luxury”] has connotations of elitism and exclusivity,” Alexander Gilkes, cofounder of auction house Paddle8, told the New York Times (paywall). “Instead, they want a luxury that is inclusive, honest and democratic.”
The word “inclusive” came up repeatedly at the FACC talk. As a mindset, it’s a tricky one for luxury labels to maintain, when part of what makes a product desirable, whether it’s a Chanel bag or a rare pair of Jordans, is that not everyone can get it. But the world is changing, and luxury will have to change with it. It’s a challenge, but also a great opportunity for the companies that meet it.