Ain’t it rich? Luxury is now for the masses

December 18, 2018

Luxury and scarcity

Luxury is alive and well, but it has evolved as brands have evolved, and expanded to a new, larger market: the rest of us. 

Historically luxury, which was defined by rarity, was for the upper crust. Aristocrats and industrial magnates.

Luxury items consisted of rare gems and metals, spices and fabrics that had to be imported from half a world away, large estates, and crafted objects like furniture and carriages that required rare materials and the dedication of the rarest craftsmen.

Mass production allowed the middle classes to own more goods, such as cars and watches, but only because these items were no longer rare. Rolls Royce and Patek Philippe were still unattainable.

I recently attended a Cartier exhibition, where some of their finest commissions were displayed, from Princess Grace, Elizabeth Taylor, and other icons responsible for making the Cartier brand famous.

That was an example of the luxury business of the past.

Cartier’s National Gallery of Australia Exhibition 2018

Not your grandfather’s luxury

But the introduction of cheap airfares and the rise of social media opened the world to the middle classes and created the Experience Economy.

Younger generations no longer wanted to simply acquire things. They wanted to share experiences. The Bucket List, a Jack Nicholson movie, became a metaphor for middle class aspiration.

Brands at first sought the lowest common denominator. Budget airlines, budget hotels, cheap cruises. But then companies competed in a race to the top, as they realised their biggest margins were in luxury, and there was a growing market for this.

So airline marketing campaigns show off their Business and First Class cabins. Ritz-Carlton expanded from just 23 hotels in 1992 to over 120 today. Maserati took an ad during the Super Bowl.

The Ritz-Carlton story

 

A metaphor for middle-class aspiration

Even casual flyers who can’t afford a Business Class fare might travel once or twice in Business Class after amassing enough frequent flyer points. Hotel and rental car upgrades became common practice. But this wasn’t just to please customers. It was also to create new expectations and aspirations.

Airbnb started as a cheap alternative to hotels, offering both savings and experience. I’ve been a member from the beginning and it actually grew out of Couch-surfing, which was perhaps an overly idealistic platform for allowing backpackers a free place to crash.

Airbnb not only allowed hosts to monetise their hospitality, but it ensured guests a basic level of comfort and service.

Not only were millions of people willing to pay for this, but Airbnb realised the experience was more important than the price. In other words, while there were still travellers whose main criterion was the cheapest room, most were willing to pay more for a rare, or luxury, experience.

So if you go on Airbnb now it says: Book unique homes and experiences.

You can rent a tree house at the summit of Kilauea Volcano in Hawaii for US$289 per night. Or click the Experiences button and you can book a private crash course in art history from a qualified art historian at the Paris Louvre for €47.

Airbnb Treehouse on Kilauea Volcano, Hawaii

 

Unique is the new rare

So if your own business doesn’t have any luxury offerings, consider adding some.

And if you already offer luxury, but it’s traditional luxury based on rarity and at a cost only the Elizabeth Taylors of the world can afford, I urge you to follow companies like Airbnb and focus on uniqueness instead, and get your own products or experiences on people’s bucket lists.

Darren Taylor

Darren Taylor

MD & Head of Strategy and Research

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