Why luxury defines our society and what to expect in 2012
There are many themes and ideas threaded through our rich and complex times, so when I choose concepts to represent the heart of the year ahead, there is a lot to sort through and select. There were many dozens of ideas competing for the 12 themes I chose to represent what awaits us in 2012 (see slides below).
One of the most important themes of today that made the cut is ‘The New Luxury’ (Theme 8). I thought it would be worth expanding a little on what I wrote in the 2012 Themes on why this is important and what is unfolding in this space, following up on my post earlier this year on How is the culture of luxury changing?
What we describe as ‘luxury’ is in many ways central to our society. As we become more affluent, our expectations increase on every imaginable front. Beyond a certain income level, which in a developed world context is not particularly high, additional wealth and spending is directed to luxury and status. Luxury in the broadest sense is about sensory refinement and increasing discernment. This is internally focused, on the intrinsic qualities people perceive. Status is about what others perceive, so is entirely externally focused.
In the economic and related political turmoil of recent years, it is becoming less appropriate to ostentatiously flaunt wealth. This reshapes luxury to focus more on the subtlety than the visibility of luxury, and we are certainly seeing that play out in Paris, Milan, and the other centers that shape luxury in the shape of fashion.
A countervailing force is that of developing countries, where in particular in China, luxury is the fastest-growing market, with its visibility often its most important attribute. McKinsey have forecast that China will account for more than 20% of the global luxury market by 2015.
This has led many luxury retailers to move into what has been called the ‘masstige‘ market – prestige for the masses. Retailers have flocked to China with the latest luxury store tally in China: Gucci – 39, Dior Homme – 35, Hermes – 20, Louis Vuitton – 36, Burberry – 59. While the Chinese and Western luxury markets are fairly distinct, similar broadening of traditional luxury brands is inevitably taking away their cachet. Despite economic vicissitudes, the ranks of the wealthy are swelling daily across the world, driving demand for luxury and status to unprecedented degrees.
The true luxury and status is going to the brands that are not visible. The crass buy articles with prominent logos from well-known luxury brands. The discerning buy the highest quality products, preferably with no branding. Those in the know can recognize the quality, probably the brand, and often whether it is a fake. True luxury is in quality and discernment, not in brand.
I will spend more time looking at luxury into next year, as it is such a central aspect of our society and identity, and a vitally important hub for business in general and in particular the retail industry.
