On Everything #74

On Everything is a weekly newsletter from Eugene Rabkin, our founder and editor.

Why Luxury Fashion Cannot Ignore the Aspirational Consumer

The story of luxury fashion over the past twenty years has been one of mass consumption. Not too mass, not in the way of the Gap, but much more mass than in all the years of luxury fashion’s existence. Big fashion brands have done a phenomenal job putting on exclusive airs while shoveling bags, small leather trinkets, and perfumes into the insatiable maw of the mass market. Sure, they have had to continuously pinch their nose as the hoi polloi stormed the gates of their polished retail temples (or most likely the duty-free airport shops), but they took their money nonetheless. As a former acquaintance who worked at a Dior boutique in Atlanta related to me, his manager told him, “I don’t care if it’s a stripper with a stack of soiled dollar bills. Money is money.” Once the aspirational party went on hiatus after the post pandemic binge (and I believe, it is only a hiatus and the hoots over the demise of the luxury market are greatly exaggerated), the luxury industry decided to shake off that mass market consumer with the disdain it quickly rediscovered as the core of the luxury modus operandi.

Somehow along the way the geniuses at companies like Kering and Burberry decided that they no longer need the middle class and that the rich will buoy them for the foreseeable future. And by rich they really mean the nouveau riche, because the old money has largely turned away from mass market fashion (really, which of them would want to be caught dead with the same bag as a teenage daughter of a suburban dentist?). In order to lure them, they decide to hike prices, open VIP-only stores while making the rest of the customers wait in line to enter one, and amp up the wining and dining of the elite consumer, ignoring the fact that (according to a study by Boston Consulting Group) more than half of global luxury purchases are made by approximately 330 million people who spend roughly $2,000 a year. Or as the Economist put it last week, “The industry now makes much of its money peddling its goods to shoppers who want to look richer than they are.” Meanwhile, the wealthiest clients, those who splurge $20k a year and up, account for only 10% of the business.