Significant numbers of luxury consumers are shunning the ostentatious, moving away from the strong branding and overt signalling of status that luxury brands can deliver. With surging global wealth, and brands making their products so much more accessible through the malls and down sized versions ( think about how many luxury brands have stores in major malls near you ) the sheer number of luxury consumers has increased exponentially. It’s fact that today, China accounts for a massive 30% of the planet’s luxury goods consumption.
There now appears to be two almost opposing directions in the discourse of luxury. The “new luxury” who enjoy the signalling power of stand-out branding, let’s call them the conspicuous consumers, and the “less fuss luxury” who seek subtlety and do not want obvious branding… the inconspicuous consumers. Possibly, the inconspicuous consumer has “decoupled” luxury from status associations, and enjoys luxury for what it is rather than its power to signal.
Certainly the results for Hermes in China for 2014-2015 seem to say that there is a very strong movement to the inconspicuous. Hermes and their low key approach, with the absence of strong branding and emphasis on quality, is supported by intimate boutique environments and quality customer service. They have seen sales in Asia ( excluding Japan) rise by 17% in comparison most high end brands ( LVMH included) who have only seen first half organic growth in Asia ( excluding Japan) around 3%.
Hermes believe Chinese consumers are more keen on niche top-end brands now, as opposed to 2-3 years ago. Thus, they are less keen on logo laden mass luxury rivals. Torsten Stocker, retail partner at A T Kearney Hong Kong says “Hermes’ more classic style fits well with the high end Chinese consumer’s shift to less ostentatious items”. Hermes China’s president Weiming puts it more succinctly, “the Chinese consumer is becoming more brand quality knowledgeable rather than show-off focused”.
The inconspicuous consumers are spending not so much on luxury goods, but more on connoisseurship, becoming knowledgeable in a field, be it wine, cuisine, chefs, restaurants, or resorts for example. Boston Consulting Group’s 2012 report on luxury consumption showed that of the 1.8 trillion US dollars spent on luxury, 1 trillion of that was spent on the luxury experience as opposed to luxury goods. More interestingly, analysis of the 1 trillion on luxury experience showed that more than half was spent on travel and hotels.
That trend of major expenditure on the luxury experience continues this year with bigger numbers according to Virtuoso travel, a luxury travel agency, with signs of a move from designer hotels to [Air BnB] home stays, and a search for eccentric cafes and hidden markets.