The Luxury Sharing Economy
“Millennials have been reluctant to buy items such as cars, music and luxury goods,” states investment firm Goldman Sacks. “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.'”
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 piece of diamond or gemstone jewellery or watches, there's Covett, providing shared ownership and a white-glove concierge service, including insurance and cleaning.
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 Leisure Class, 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.
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 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. “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.