There are endless and sometimes
justifiable discussions about many bubbles percolating these days at the cusp
of bursting, notably stock market, student loans, real-estate market (again),
commodities, currencies, etc. The word ‘luxury’ has morphed into a label that’s
applied and slapped on to everything from private jets to dog food enabling
firms from family-run to large corporations to increase prices exponentially in
excess of its actual value. Uttering the word ‘luxury’ has an inflationary
effect for a product or service that’s frequently only marginally superior to
the basic, no-frills model except with more aesthetic appeal, not substance.
The word ‘luxury’ fulfills an almost pathological desire to appear wealthy.
Renovated tenements in gentrified neighborhoods are now
luxury rentals. It’s the same building, same units now equipped with new
‘luxury’ designer appliances and perhaps a smartly outfitted
security/concierge. And let’s not forget
the empty lot next door that soon will become a new glass building blotting out
the sunlight in your luxury unit and adding yet more residents to a hyper-dense
community. It’s all an illusion. The issue is to what extent the next economic
downturn will erase the word ‘luxury’ from the marketing lexicon for the
aspiring consumer.
Luxury has been cheapened. It was
formerly for the genuinely wealthy to have luxury everything. In fact the
aspiring wealthy never existed. Your working class elders probably owned a
Brooks Brothers suit or coat – 2 maybe 3 high-end and high-quality items in
their entire wardrobe that they wore regularly. But they never aspired to be
outfitted head-to-toe day in and day out with luxury threads; a quality garment
for sure but never becoming a designer label whore. The luxury mantra has
seduced the middle-class and even working poor to somehow wear that over-priced,
under-performing 100% polyester hoodie with some designer label splashed across
the front and/or back to insure that others don’t think that their part of the
unwashed.
That’s why high-end firms perform the
tricky high-wire act of selectively democratizing their brand without
tarnishing it by offering an occasional ‘entry level’ product or service such
as the ‘affordable’ Maserati or a particular BMW series and often slapping
their label on more affordable accessories like watches, baseball caps,
T-shirts, handbags, wallets, colognes & perfumes with the usual premium
price
The word ‘aspiring’ also refers to
firms because these same firms aspire to build a broader customer base by using
these entry level luxury products and services as a psychological placeholder
for future purchases. The consumer reaches up while the aspiring firm reaches
down (to a limited extent) to connect at the point of sale.
What happens in the next economic
crisis when the aspiring luxury buyers are unemployed, under-employed and can
barely meet their basic needs? The luxury bubble bursts and aspirations fall
short because now the consumer’s arms simply can’t reach high enough.
Copyright Indo-Brazilian Associates LLC 2014. All rights reserved.
Available for speaking engagements and workshops. Contact us at:
http://www.indobrazilian.com
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