THE STATE OF LUXURY Luxury Consumer Trends, Segments, and The Psychology Behind Their Decisions
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CROBOX
THE STATE
OF LUXURY
Luxury Consumer
Trends, Segments, and
The Psychology Behind
Their Decisions
1
Crobox tells retailers what their customers love about their
products. By leveraging consumer psychology and AI, our
solution personalizes the way shoppers interact with products.
Retailers gain valuable datasets that clearly show which
product attributes their customers look for in their assortment
so they can apply the insights omnichannel.
With backgrounds in eCommerce, psychology, marketing, and
AI, we want to understand what drives shopper behavior both
online and off.
After winning 1st place in the LVMH Innovation Award in July
2020, we were inspired to help luxury brands understand their
customers from a psychological perspective.
Now more than ever, having an understanding of consumer
psychology helps luxury brands stay relevant and customer-
centric amidst a volatile market, where the COVID-19
pandemic has shifted buying behavior. With this idea in tow,
we decided to take a look at what factors influence modern
luxury shoppers: From trends and segments to their
psychology.
Our findings reveal that the modern luxury consumer subverts
traditional ‘luxury’ and redefines an entire marketplace and
product-demand.
This report draws primarily from academic research, popular
culture reports and news, and our team’s first-hand experience
working in (online) retail.
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TABLE OF CONTENTS
Foreword ………………………………………………………………………………………………….. 5
1. The State of the Lu ury Market ……………………………………………………. 6
2. Lu ury Consumer Buying Behavior …………………………………….……… 9
Going Digital ……………………………………………………………………………………………… 10
Streetwear Collabs …………………………………………………………………………………… 13
Quiet Luxury ………………………………………………………………………………………………. 15
Inclusivity & Diversity …………………………………………………………………………. 18
Going Green ………………………………………………………………………………………………… 20
3. The State of the Lu ury Consumer ……………………………………………. 22
Where? …………………………………………………………….…………………………………………… 23
Who? ……………………………………………………………….……………………………………………… 24
4. Lu ury Consumer Psychographics .................................................. 28
The Need for Uniqueness ……………………………………….……………………………… 31
Scarcity: Exclusivity, Rarity, and Excess Demand …………………. 34
Costly Signaling and Status ……………………………………..………………………..… 38
Prosocial Signaling ………………………………………………..…………………………… 41
Signaling Heritage and Legacy …………………………….……………………….. 45
Building the Self and Self-Narrative …………………………….………………….. 47
The Aspirational Self ………………………………………….……………………………… 50
Conclusion ………………………………………………………………………………………….…… 53
References ………………………………………………………………………………………….…… 56
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FOREWORD
The term “luxury” is constantly being redefined. In the 1700s, it
was a luxury to have a bathroom. Fast forward to the beginning
of 2020 and the beginning of the COVID-19 pandemic, it
seemed having toilet-paper was a luxury. As the term
continuously reinvents and redefines itself, so does the market
in 2021 and beyond. What’s clear from our research is that
understanding luxury consumers starts with the individual. In
light of this, we’ve unified academic literature, industry
reports, and our own research driven by our backgrounds in
psychology and retail to make this report a one-stop-shop for
all three.
This report helps luxury brands understand their customers on
a deeper level. Armed with the knowledge of how luxury
consumers shop based on their psychological processes, luxury
retailers can obtain a competitive advantage in a fragmented,
yet opportunity-rich, market.
5
1.
THE STATE OF THE
LUXURY MARKET
The luxury market is in flux. On the other hand, luxury
What was once a niche customers are no longer the
market with a specific target upper-echelons of society.
audience is shifting into a Millennials make up 35% of
fragmented market with a the luxury market and by
multifaceted consumer. On 2025 are predicted to make up
the one hand, the mindset of more than 50%. And whilst
luxury consumers in 2021 is it’s no secret that GenZ and
completely different from Millennials demand their
what it was twenty, or even brands to be ‘woke’, many
one hundred, years ago. luxury retailers have already
Luxury shoppers, like many tripped up trying to live up to
retail consumers across this new ethos with
multiple service verticals, seemingly insincere efforts.
care deeply about climate
change, have fostered social Next to this, designer
and political awareness, and streetwear collaborations are
will shift their loyalties if disrupting traditional luxury
brands don’t deliver on these marketing and
promises. 57% of consumers merchandising. 62% of
will boycott a brand because Chinese consumers bought a
of the brand’s political or designer collaboration item in
social stance. 2019. Streetwear and sneakers
are the new luxury products,
changing the face of product-
6
“The global coronavirus
pandemic has driven half of
shoppers to buy products they’ve
never bought online before, and
70% are buying more than
usual.”
Forrester (2020)
demand in a market originally store before the pandemic.
dominated by high fashion, Consumers in the UK (20%),
cars, wines, and jewelry. Italy (18%), and the U.S (16%)
show more preference for
Furthermore, the economy is shopping online. However,
fragmented and volatile. The the coronavirus pandemic has
spending power of Chinese pushed more people to shop
consumers (usually online than ever before.
generating 35% of total global
luxury spending) is already This is the state of the market
decreasing as the Chinese today. The luxury experience,
economy slows. COVID-19 has which traditionally focuses
stunted supply chains from on brick-and-mortar and the
China and around the world, experiential, now relies on
and, as a result, the market eCommerce. To stay
contracted 23% by the end of competitive and relevant,
2020. retailers are adopting a
digital-first mindset,
According to the LLC (2020), leveraging phygital,
luxury consumers in France omnichannel, and AI.
(77%) and Canada (78%)
preferred buying products in-
7
Yet, technology will never be a 1. Emerging trends in
brand’s silver bullet. We’ve lu ury consumer
already seen that brands who buying behavior
don’t understand their
customers on a deeper level 2. The demographics and
fall behind. Being data-driven psychographics of
is great, but without that lu ury consumers
human touch, eCommerce
3. The psychological
data becomes redundant.
processes behind
According to Brun and lu ury consumption
Castelli (2013), luxury
products before the industrial
revolution attained their
status due to their superior
quality and design. Modern
luxury then positioned
products in line with the
brand and the emotional
experience the brand could
provide. 2021 will see these
two approaches merge, as
consumer shopping habits
shift to buying customer-
centric products.
Amidst a market of constant
flux and volatility, luxury
brands should re-invest time
and effort in understanding
the psychological processes
behind why shoppers buy
these luxury goods in the first
place.
This report aims to uncover
the state of luxury consumers,
by understanding:
8
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2.
LUXURY CONSUMER
BUYING BEHAVIOR:
EMERGING TRENDS
“In the great civilizations of the
ancient world, luxury goods were
always associated with wealth,
exclusivity and power, as well as
the satisfaction of non-basic
necessities.”
Brun and Castelli (2013)
9
Figure 1: Chanel’s Instagram page has the most followers than
any other luxury brand on social media.
personalized, seamless
GOING customer experiences.
DIGITAL For some legacy luxury
brands, this will be the ‘make
In the wake of the pandemic, it or break it’ trend. The
store closures, decreased foot brands that come out on top
traffic to brick-and-mortar, have adopted flexibility and
and general unease with stayed open to change. One
shopping in-stores drove key strategy these brands
more shoppers online than have adopted is product
ever before. People who were personalization, which
not used to shopping online involves leveraging new tools
are now going digital. Many on-site to:
brands have had to cater to
this new, less tech-savvy 1. Curate wardrobes or
segment. At the same time, styles for customers to
digital natives expect make them feel special
and nurtured.
102. Recommend relevant leveraged augmented reality
products or product in a mobile app to promote
lines in email their Kusama collection in
campaigns, on-site 2019 (see Figure 2). Spring
retargeting, or through 2021 fashion week is going
social media. ‘Phygital’, setting itself at the
intersection of the physical
3. Allow custom options and digital worlds.
on-site so that
customers can have a
hand in the product’s
creation (e.g., engraving
initials, tailoring).
According to a report by
Acquia (2019), 61% of
consumers don’t feel that
brands that should know
them don’t, even at a basic
level. On the flipside, 87% of
marketers are confident that
they are delivering a winning
customer experience. This
shows a mismatch between
the customer-centric
ambitions of the brand and
what they are actually
delivering to the individual Figure 2: Louis Vuitton
customer. AR app
Top luxury brands are also
investing in AI technologies Brands are scaling up on their
like chatbots, personalization social media activity as well.
engines, data-collection, For example, Chanel has
social media listening, invested heavily in their
marketing automation, Instagram page (see Figure 1,
conversion optimization pg. 10), and they now have the
tools, etc. Louis Vuitton most followers than any other
luxury brand. Mckinsey
11(2020) identifies Chanel as a programs, or exclusive
“hidden champion”, with events.
revenues over $10 billion.
Yet, true digital
Moreover, luxury retailers personalization doesn’t just
cannot forget about the mean investing in smart
importance of SERPs. technologies and digital
ForwardPMX (2019) reveals media. It starts by
that search engines are “the understanding the needs,
largest, most important wants, and behavior of
source of site traffic for individual people.
luxury brands”. In light of
this, Tiffany & Co. ramped up These trends have seen
their keyword research and exponential growth amidst
now dominate Google SERPs. the 2020 pandemic, and they
will be here to stay as
Experiential retail is another consumers get used to
digital trend that has always shopping in a digital world.
been part of the luxury
market, not only for modern
shoppers. Nevertheless, many
brands today are ramping up
their experiential retailing,
recruiting technologies like
augmented reality (AR),
artificial intelligence (AI), and
virtual reality (VR).
Luxury has always been a
lifestyle and experience,
rather than a momentary
purchase (Atwal, 2008).
Experiential retailing also
means providing a long-term
feeling of luxury, which is
translated online in the form
of relevant campaigns, loyalty
12Figure 3: Armani capitalizes on the sneaker trend.
• Collaborating with
STREETWEAR designers, artists, or
COLLABS other retailers, opening
up the brand to
different ideas and
Another trend that has been perspectives.
making headway both in the
retail world and especially in • Merging high-fashion
the luxury market is with urban culture to
streetwear. Balenciaga’s appeal to the emerging
Triple X sneaker instantly consumer base.
fueled hype and “consumer
• Introducing sneakers,
hysteria” and many retailers
hoodies, and t-shirts to
quickly followed suit
their offering to stay
(Highsnobeity, 2018).
on-trend by capitalizing
It’s no secret that the success on streetwear.
of streetwear is completely
Streetwear brands like Off-
changing the face of the
White, Supreme, Stussy, are
luxury market. The trend
so-called “luxury brands of
forces brands to disrupt by:
13the future” and luxury
retailers have already
collaborated to stay relevant
(e.g., Supreme x Louis
Vuitton).
14Figure 4: Hermès’ Birkin Bag is a legacy piece that represents
“quiet luxury”. With its inconspicuous logo and various shapes
and colors, it signals wealth and status to the “in-group”.
QUIET
LUXURY
According to the BCG
Report (2020), a quieter
style of luxury is
emerging (discreet/
inconspicuous vs. loud/
conspicuous). Quiet
brands infer the prestige
of their products,
without “shouting”
about it, which many
modern luxury
connoisseurs find
appealing (Yeoh, 2020).
Louis Vuitton is an
example of a brand that
“shouts” (from logo to Figure 5: Prada ad from 1992 by high-
celebrity endorsements). end photographer Albert Watson
Whereas Hermès is an featuring model Helena Christensen.
15Figure 6: From the pradasphere. Prada 2020 ad campaign
“Seditious Simplicity”, bringing fashion to the streets and
celebrating “Realness” by breaking down the barriers of high-
fashion.
example of a quieter style of Prada’s 2020 campaign goes a
luxury, where the product completely different way,
speaks for itself. placing models in streets, and
showing more implied, quiet
Typically, luxury products are luxury (see Figure 6). Quiet
directly observable and luxury dominates their entire
associated with “the lifestyle campaign messaging.
of the privileged elite” (Brun
and Castelli 2013). For
example, if you look at Prada’s
ad campaigns from twenty
years ago, they exude
traditional luxury (see Figure
5).
16“Prada Resort collection proposes an
alternate viewpoint on classicism - the
idea of simplicity as a rebellion, of the
extraordinary to be found within the
ordinary, the new inside the familiar - so
a fresh perspective is found here, a
different take on the very covert of
fashion advertising.”
“Seditious Simplicity” - Prada Group
With more millennials and
Gen Z taking up the market
share, quiet luxury is a trend
that will be here to stay. This
is especially true given the
current climate of increased
environmental and social
awareness, where individuals
feel less inclined to mark
their wealth or status in a
world moving towards social
equality.
17Figure 7: The Hello Hive Diversity app makes it easier for luxury
retailers to hire more diversely.
recruitment app called Hello
INCLUSIVITY Hive (Figure 7) to hire more
& DIVERSITY diversely. The LVMH group is
also committed to tracking
organizational KPIs to
As luxury becomes empower women in the
democratized (Burri, 2017) company and have equal
and available to a wider gender representation in top
audience, brands must management positions
represent the diversity of the through their ElleVMH
audience they cater to. As a program.
result, luxury retailers are
refining their brand ethos and According to Mckinsey’s State
corporate social of Fashion report (2019): “A
responsibility when it comes commitment to values on a
to the environment, gender group level can have an
ratio or pay gap, and diversity impact on its brands’ culture
clauses. [but] brands may also risk
being perceived as
For example, Steve Madden, hypocritical if they do not
Jimmy Choo, Versace, and carefully ensure consistency
Michael Kors use a in their messages and
18actions.” While inclusivity
and diversity are trending,
these are values that should
be embedded into the
company culture, and not
just used as a marketing
stunt. Luxury consumers
know when a brand is being
authentic or not, and
organizations that have failed
to make real changes to their
corporate structures fall
behind.
19Figure 8: Vivienne Westwood with Greenpeace and Andy Gotts in their “Save the
Arctic” campaign, to raise awareness about Arctic drilling.
To really pledge for
GOING GREEN sustainable practices and
engage the environmentally
Sustainability is now a must- conscious luxury consumer in
have responsibility clause for 2021, brands have started
brands rather than a committing to go green: From
marketing stunt. Luxury their supply chains to stores.
shoppers can see the
The resale market is also
difference. For example,
growing. Although not
Vivienne Westwood
depicted as one of the most
integrates sustainability into
important trends for buying
their brand ethos. They don’t
behavior, it supports that
simply advertise using
shoppers are buying in more
sustainable materials with no
eco-conscious ways.
follow up. Instead, they’ve
Naturally, many Gen Z and
partnered with Greenpeace
Millennials also buy
and Andy Gotts in their “Save
secondhand clothes because
the Arctic” campaign, to raise
they are considered rare or
awareness about Arctic
vintage.
drilling.
20The resale trend is, thus,
something that shows:
• Sustainability: A
concrete move towards
buying with the
environment in mind.
• Disruption: Luxury
brands will have to
balance being exclusive
and rare (e.g., Burberry’s
burning of products to
prevent resale) with
new resale trends.
• Collaboration: To
penetrate the resale
market, luxury brands
will have to collaborate
(e.g., Gucci’s
partnership with The
RealReal).
21Figure 9: From New York Times style magazine 2011, featuring Mia
Farrow in The Great Gatsby 1974 movie.
223.
THE STATE OF THE
LUXURY CONSUMER
LUXURY CONSUMER
DEMOGRAPHICS: THE
WHERE AND WHO
Before the pandemic, Asian
here?
shoppers used to carry out
Mainland China, the U.S., and most of their luxury shopping
Japan are predicted to be the outside of their home
main drivers of luxury market countries (since travel was
growth in the next few years. part of the luxury shopping
Despite the Chinese economy experience). However,
slowing down and the impact Mckinsey (2020) charts how
of COVID-19 in Asia, Asian COVID-19 has changed this
shoppers are still driving mindset: Most Asian lu ury
global luxury growth. Bain & consumers now want to
Co. (2020) predicts that support their local brands
Chinese luxury consumers and shop at home.
will account for 50% of global
luxury spending by 2025.
23
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xHENRYs: High Earners, Not
ho?
Rich Yet.
There’s a common trope of
In fact, the luxury consumer
who the luxury consumer is:
has never just been the ‘rich’.
The champagne-sipping,
According to Vigneron and
glitter-frayed dress-wearing
Johnson (1999), buying luxury
woman of the roaring ‘20s.
products is prestige-seeking
This is further instilled by The
behavior. Meaning, lower-
Great Gatsby - where the idea
income consumers will look
of the leisure class
and “conspicuous
consumption”
(otherwise known
as the “Veblen
Effect” see pg. 38)
was revealed.
In the 1990s and
beyond, luxury
consumers looked
like the Gucci-
totting female
celebrities of the
2000s, who
would show-off
big brand logos
(in 2007, 80% of
luxury consumers
were female). But
many luxury
consumers these
days have
completely
disrupted this Figure 10: From Alpha Globe Photos:
image. Largely Victoria Beckham, 1997 carrying her Louis
Millennial, these Vuitton.
‘new’ luxury
consumers are
24
W“Millennial consumers account for the
largest share of luxury brand site visits,
while Gen Z adults - a mere slice of the
largest and most ethnically diverse
generation - are the more over-
represented age bracket among luxury
brand site visitors vs. their share of the
population”
ForwardPMX Luxe (2019)
at buying a luxury product to COVID-19 has also caused
represent the status they HENRYs to tighten their
may not already have. purses. Currently, these
millennials (as HENRYs
ForwardPMX (2019) found usually are) account for 35% of
that online luxury shoppers the market but are expected
had an almost equal gender to make up 50% by 2025.
split (53.4% female, 46.6%
male). Most visitors to luxury To support this, Highsnobeity
sites also had both high (2020) states that people
education and income. In the under thirty will make up
U.S, HENRYs are said to earn more than half of the lu ury
between $100K-$250K. market in the coming years.
These consumers reject being
First introduced by Deloitte defined by labels like
in their 2019 study on luxury “sneakerhead” or “hype beast”,
goods, many HENRYs don’t and the market will have to
actually ‘feel’ rich: They have respond to the way individual
high debt, little savings, and consumers shape it, rather
are working full-time. than brands or marketers.
25
xThis is a huge shift, and one
that makes understanding the
why behind the buy all the
more important.
264.
LUXURY CONSUMER
PSYCHOGRAPHICS: THE
WHY BEHIND THE BUY
27
Figure 11: From Oglivy China. The biggest luxury spenders come
from Chinese GenZs and Millennials.UNDERSTANDING However, this doesn’t mean
luxury shoppers are spending
THE WHY stupidly, instead, making
irrational decisions is what
While demographics consider makes us human (read more
the “who”, psychographics about the psychology of the
reveal the why. Psychographic irrational consumer). Without
variables include (but are not jumping to conclusions and
limited to), interests, values, relying on cognitive biases
ethics, opinions, and hobbies. when we shop, we would be
mechanical, rational robots
So what are the who don’t enjoy ourselves. We
psychographics of luxury would probably over-
consumers? What’s obvious rationalize so much that we
about luxury consumption is would never buy anything.
that it’s irrational. Meaning,
many luxury purchases aren’t This is the crux of luxury
carried out for a utilitarian, consumer psychology:
conscious purpose, but for Purchase decisions are
one that is hedonic. Luxury hedonic. Which is what
goods incite pleasure and separates buying luxury goods
excitement, and luxury from buying a fridge or a
consumers will often make screwdriver (utilitarian
subconscious or emotional purchases). Luxury buying
decisions before purchasing. behavior is based on
Personal E!ects on Prestige Consumption
Perceived Self-
Hedonist
Emotional Value Actualization
Personal
E!ects
Perceived
Quality Value Reassurance Perfectionist
Figure 12: Source Vigneron and Johnson (1999).
28“Luxury goods are considered to be
products that nobody needs, but
everybody wants. Luxury is the expression
of imagination, hopes, and dreams of the
consumer, not his/her real needs.”
Zaharia (2015)
emotions (Dubois & purchase behavior for
Duquesne, 1993). Millennials is usually self-
directed - or for gift-giving -
In Vigneron and Johnson’s and often impulsive. These
(1999) conceptual framework individuals want to possess
(Figure 12), they map out two products that will make them
threads of personal effects or others feel good (hedonic
that luxury consumption motivators).
enables. The hedonist thread
leads to self-actualization, Furthermore, buying luxury
imbuing the product with products triggers dopamine
emotional value. And the (Radon, 2012). Dopamine is
perceived quality value of mostly triggered through
the product leads to anticipation of a reward, and
reassurance. not always from the actual
purchase itself. So if the
To support this, Deloitte’s anticipation is bigger -
2017 study shows that 20.5% because the purchase is more
of Millennials bought a high- of a financial and emotional
end luxury item for a investment - then individuals
particular occasion (e.g., a experience heightened levels
wedding or a party) and 18.5% of dopamine.
bought one when they wanted
“to treat” themselves. Buying an expensive luxury
Psychologists agree that good begets pleasure and
29excitement. Along with these decisions of individual
hedonic emotions, the customers. Because of this,
consumer will feel power we’ve compiled several
from spending big and psychological clusters that
satisfaction from obtaining customer segments likely fall
an exclusive, rare, or quality under.
product. This is what makes
the hedonic appeal of luxury Here are the overarching
products one important themes of luxury consumers
driver of behavior. today:
What’s more, Millennials and • The Need for
GenZs - unlike Boomers or Uniqueness
GenXs - reject the values of ◦ Scarcity:
timelessness, heritage, or the Exclusivity,
unattainable qualities of Rarity, and Excess
luxury brands. Instead, they Demand
want more inclusive rather
• Costly Signaling and
than conspicuous products,
Status
reflected in the emerging
trend of quiet luxury (BCG,
◦ Prosocial
signaling
2020).
◦ Signaling heritage
The biggest caveat we’ve and legacy
recorded from our research is
• Building up the Self
that every lu ury brand will
and Self-Narrative
have a different target
audience, made up of
◦ The aspirational
“self”
individuals with different
desires, interests, and values.
Psychologists agree that
there is no “one size fits all”
strategy when it comes to
psychographic segmentation
for luxury consumers. This is
why brands should work to
understand the subconscious
30
xTHE NEED FOR
UNIQUENESS
The need Luxury purchases represent
for an e tension of the self since
uniqueness they are emotionally driven
is a and hedonic. Psychologists
agree that luxury consumers
psychological
buy rare products because
process that is attributed to
they want to be unique and
the way luxury consumers
stand out. This means that
shop. Many individuals will
brand exclusivity is an
seek to be similar to their
important factor for luxury
peers (as you see with Social
consumers, coupling their
Proof ). However, according to
need for uniqueness on a
Snyder and Fromkin (1980),
personal level with the
“uniqueness theory” suggests
uniqueness of the brand.
that individuals tend to want
to be dissimilar to others and The need for uniqueness
will be motivated to establish operates on two levels:
how they are different.
Personal level:
Snyder (1977) states that
consumers who have a high • Di erentiation
need for uniqueness will: • Individuality
• Self-expression
1. Emphasize their
independent self with Brand level:
the products they buy.
• Innovation
2. Seek differentiating • Tailored/custom
brands. experience
• Unique offering
3. Be more prone to adopt • Belonging to the “in-
new products. group"
31
ff
x“Buying a luxury product will often feel
like an emotional extension of the self.
These purchases are largely hedonic,
which means consumers will inject a
little bit of their unconscious selves into
the buying process”
Joris Fonteijn, Chief Behavioral Officer,
Crobox
both external (signaling to want to be (Kaupinnen-
others) and internal (making Raisanen et al., 2008). Luxury
the person one step closer to products will be bought as
their ideal self ). The product vehicles for self-e pression
is the attention-grabbing cue (on a personal level). And the
that signals how the brands people buy these
consumer is either apart products from can make them
from, or above others. feel special and unique.
However, luxury brands will
Interestingly, research by also make individuals feel
Kaupinnen-Raisanen, Bjork, like they belong to an in-
Lonnstrom, and Jaufrett group of similar luxury
(2008) revealed that more consumers.
men than women were found
to link luxury brands to self- On one side, brands that
expression and self- foster uniqueness appeal to
presentation. the luxury mindset. On the
other, these brands also show
In spite of this, it can be how this uniqueness is an
inferred that many identity that others share.
individuals will feel drawn to Individuals tend not to want
luxury brands to represent to feel idiosyncratic or
who they are, or who they isolated. To reinforce this,
32
xKaupinnen-Raissen et al., will have a hard time
(2008) revealed that when appealing to the modern
shoppers established this consumer.
self-expression and self-
presentation, it was only This psychological process
insofar as it related to a larger will most likely stick around.
social group: As the luxury landscape tilts
“This means that those who self-monitor
may need cues from others on how to
blend in. However, blending in does not
only mean being similar to others but
also being different in ways perceived
acceptable by society.”
Kaupinnen-Raisanen et al., (2008)
Brands that want to towards accessibility,
successfully appeal to their consumers will want to stand
shoppers' need for out both on a personal and
uniqueness have the brand level, prompted by the
responsibility to provide ways behavior of the in-group.
their customers can
differentiate themselves from
others and be seen as one-of-
a-kind, whilst still referring
to a socially accepted group
or fashion. This means that
luxury brands that sell too
haute-couture or fringe items
33Figure 13: Net-a-porter privileges for their loyal customers include
personal shopping assistants, complimentary delivery, and
priority access.
exclusivity by leveraging this
Scarcity: E clusivity,
psychological principle.
Rarity, and E cess
Furthermore, luxury products
Demand are attractive because they
are rare, unique, or exclusive,
Products that are scarce,
which means they can be sold
innovative, and customized
at higher price-points. Yet,
will appeal to an individual’s
modern luxury shoppers need
need for uniqueness, both on
these price-points to be
a personal and brand level
justified, and their superior
(Lyn and Harris, 1997).
quality should be highlighted.
Scarcity is the psychological
According to Deloitte (2017),
principle that explains how
19.7% of people bought luxury
people respond to things that
goods because they liked to
are limited, scarce, or rare
treat themselves, with 18%
(read here for more). Many
saying because they are of
luxury brands keep up the
high quality. 39.1% of
perception of their unique
consumers say the one thing
34
x
xthat draws them the most to a whispering, the quality of
luxury brand is the quality of products is inferred. For
a product (Deloitte, 2017). example, Mansur Gavriel
Quality and self-expression includes the country of origin
thus go hand in hand. in their product description
(Figure 14), which infers the
To support this, in a premium materials and
neurological study, test superior design of the shoe.
subjects were shown the The country of origin is such a
prices of different products strong effect that it has
before their simulated buying created “Champagne from
journeys (Karmarkar and France” (Brun and Castelli,
Knutson, 2014). What 2013). Satisfying consumers’
happened was that the need for uniqueness in 2021
subjects’ prefrontal cortex lit ties into product quality,
up (responsible for decision-
making), as did the insula
(processing pain). This
shows that spending
money can often counter
the effect of dopamine.
On purchases that are
more of financial
investment, this friction is
something that retailers
want to stay away from.
Justifying price-points by
highlighting the quality of
a product is how brands
have successfully
leveraged Scarcity to
influence product-
centric purchase
decisions.
Figure 14: Screenshot from Mansur
However, to mitigate the Gaviel (Made in Italy).
risk of shouting vs.
35Figure 15: Source Brun and Castelli (2013)
especially for luxury The need for uniqueness
connoisseurs. drives all parts of this circle,
either on a brand-level
For example, Brun and (unique, rare, exclusive
Castelli (2013) developed a products) or on a personal
framework for understanding level.
luxury profiles (see Figure 15).
The framework represents For example, Hermes rejects
two social dimensions of celebrity endorsements as a
luxury consumption: marketing strategy. They
purposefully limit their
1. Lu ury for distribution of products to
Connoisseurs: This is explicitly fall below consumer
the quiet luxury trend demand. In doing so, they
or “luxury for oneself”. remain a brand that can only
It describes luxury as a be accessed by the few
personal pleasure. (Rarity). They stay true to
their “in-group”, even at the
2. Recognizable Lu ury:
expense of limiting their
This is part of Costly
sales. This is the core of
Signaling (see pg. 38) or
Exclusivity as an extension of
“luxury for others”.
the need for uniqueness: To
limit the access of products to
36
x
x“Many luxury retailers offer tailoring or
customization. These products aren’t as
conspicuous and thus tend to appeal to a
luxury consumer who wants to impress
other insiders, instead of the external
world.”
Patrick Oberstadt, Consumer Psychologist,
Crobox
a niche group of people
(connoisseurs).
Hermès also creates
legends around their
products, full of myths
and monsters. So while
they control demand by
limiting supply, they also
create a brand that is
unique and can only be
accessed by a select few.
Their products infer
decades of
craftsmanship and
legacy, filling the
psychological need for
uniqueness that many
Figure 16: Hermès Cosmographia
of their shoppers seek
Universalis product description.
in a quiet way (Figure
16).
37Figure 17: Fendi webshop. Fendi is a good example of a brand that
“signals”, i.e., their brand logo and aesthetic are visible in most (if
not all) of their products.
COSTLY SIGNALING
AND STATUS
People used logo written all over it and is
to shop for explicitly lavish.
luxury
products This may appeal to the luxury
because it consumer, who buys Veblen
made them stand out. A Louis goods, or products whose
Vuitton bag is conspicuous - prices increase as demand
it has the brand name and increases, to mark
themselves as different or
38“Early work in the area (e.g., Veblen, 1899)
clearly reveals an orientation towards the
role that luxury played in determining
social class. However, in more recent
times, as the wealth of the middle classes
has increased this has led to the concept
expanding to incorporate a ‘masstige’*
element. As a consequence, it is now
useful to think of luxury in terms of
‘absolute luxury’ and ‘accessible luxury.’”
Custance, Copley, Perry (2015)
Other examples of Veblen we’ve already seen how these
goods include Longchamp consumers reject
bags, Bentleys, or top-shelf conspicuousness in 2021.
wines and spirits. These
would be later described by In fact, in a report by High
Sivanathan and Pettit (2010) Snobeity only 6% stated they
as “affirmational goods”, for purchased a luxury product as
individuals to signal their a direct expression of their
wealth and validate their wealth. Along with the
status and self-worth. emerging trend of quiet
luxury, consumers are drawn
The psychological process of towards products with low
buying Veblen goods is part of brand prominence. These are
Costly Signaling (Vigneron ones that sell products that
and Johnson, 1999). However, are “modest, unobtrusive,
this may not be in line with discreet, purist, and
the new luxury consumer, as minimalistic” (Heine, 2012).
39
*Masstige = prestige and mass; the “oxymoron of accessible luxury” (Brun & Castelli 2013),
where brands obtain a careful balance between selling their products to the masses whilst
still remaining elite.“When both the market is increasing and
the offering (amount of luxury items) is
too, you get more diversification (specific
products that fit the needs of specific
segments). Less conspicuous products
just make people work harder for others
to see them, which is also a form of
exclusivity. The people that matter (the
in-group) respect it more because they
"get it" whilst the rest may not see it.”
Joris Fonteijn, Chief Behavioral Officer,
Crobox
Coupled with the psychology
of Costly Signaling and the
growing trend of quiet luxury,
consumers are finding new
ways to signal how they paid
premium prices for quality
products through prosocial
labels.
40Figure 18: Farfetch is in partnership with Thrift+ a donations
service that offers shoppers a way to donate their secondhand
clothing.
Prosocial Signaling psychological process behind
Veblen goods can be
Sustainability (or green) translated into what
labels are part of ‘prosocial sustainable goods mean for
signaling’. This is a way (most, but not all) luxury
luxury consumers can show consumers.
off their status and belonging
For example, GenZ and
to an in-group of pro-
Millennials will purchase
environmentalist shoppers.
luxury products to signal how
The theory suggests they will
they belong to a value system,
explicitly buy well known
shared with like-minded
products with green labels to
consumers (Trunzo, DeLeon, &
signal how they’ve paid a
Dreesen, 2020). 89% of these
higher price point for quality
consumers can tell “when the
products. In this way, the
people behind a brand are
41part of the culture they seek away from and spoken firmly
to represent - or whether against consignment and
they’re just co-opting it”. resale before.
For luxury brands, this means Consumers demand that
their customers need to see brands make concrete efforts
real, authentic efforts towards to establish their green goals,
sustainable goals before and only then will they buy
investing in a brand. Moncler, into prosocial signaling, i.e.,
for example, has a separate costly signaling of desirable
section on their webshop behavior.
dedicated to sustainability
(see Figure 19). And Gucci has For example, in Berger’s
recently partnered with The experiment (2019), his results
Real Real to tap into the indicated that people were
second hand clothes market. more willing to pay a
Note that this is very premium price for green
disruptive for a luxury brand, products when the choice was
especially one that has stayed made public rather than
Figure 19: Screenshot of the Moncler sustainability landing page.
42private (i.e., when it was environment...is willing to
signaled). forgo comfort for the greater
good” (Mesoudi, 2017). Thus,
In another paper on prosocial the Prius signals an ecological
signaling using green labels, product that is costlier and
Mesoudi (2017) uses the more conspicuous, and, as a
example of a Toyota Prius. He result, more appealing to the
suggests that although this luxury consumer because of
luxury good is less what it signals to others.
Figure 20: First experiment on perception ratings. The ratings are
from 1-5 (Mesoudi 2017).
comfortable compared to fuel- People were asked to rate a
powered models in a similar photograph with a person
price segment, it has been wearing a shirt with no label
hugely popular with (the control), a Lacoste label
consumers. This is because (luxury label condition), or a
“only an individual who truly Bio label (green label
cares about the condition; see Figure 20). Pro-
43environmental attitudes may consumer behavior could be
not be associated with wealth signaled by showing off
in Zurich, which may show electric cars. Whereas in
why people don’t associate another, individuals may
the person wearing a Bio label attend charity balls to carry
as immediately more out prosocial signaling.
wealthy. Luxury brands should
understand their target-
Mesoudi (2017) tested these audience in terms of what
“Bio” labels on Lacoste t- kinds of prosocial behaviors
shirts in Zurich. Interestingly, lead to Costly Signaling.
the experiment showed no
difference in perception when
the green label was placed on
a luxury product. This could
be a result of the location:
Swiss consumers may be less
inclined to signal their
wealth, “a hangover from
their Calvinist past” (Lewis,
2005). This takes us back to
Brun and Castelli’s (2013)
circle of luxury profiles (see
Figure 15 pg. 35) showing how
nuances exist within
individuals.
Prosocial signaling works
for the “in-group” of
sustainable, luxury shoppers.
These are the connoisseurs
that signal their wealth and
status through proscocial
behavior. Yet, these behaviors
will always depend on the
cultural backdrop of the
group doing the signaling. In
one culture, prosocial
44Figure 21: Porsche leveraging brand heritage on Twitter.
Signaling Heritage
and Legacy
Leaving a legacy doesn’t take
a retailer decades of brand
presence anymore.
Sometimes, it’s enough to
leverage hype and exclusivity,
which streetwear
collaborations do well. Legacy
brands also follow suit. Patek
Philippe, for example, signals
their heritage by echoing the
timelessness of their watches
(Figure 22). This may appeal
Figure 22: Patek Philippe
to their traditional shoppers,
advertisement
but is a hard-sell for the
modern luxury consumer.
45Instead, Rolex (the leading Signaling and showing off
watch brand, with more than their status.
triple revenue over Patek),
signals their heritage by
highlighting their watches’
quality and authenticity. In
an article by Forbes (2018),
the author suggests how
authenticity for luxury brands
is difficult, yet 91% of
consumers demand it. The
brands that succeed to appeal
to HENRYs are able to signal
status and wealth in an
inconspicuous, or implied
way, preserving their
authenticity.
To support this, Kauppinen-
Raisanen et al., (2020) carried
out a study of 215 young
consumers from Italy, France,
and Finland. Their findings
revealed that, across
demographics, connoisseur
consumers preferred lu ury
brands that whispered.
In order to signal wealth,
status, and heritage, brands
are starting to adopt a
product-centric approach:
Highlighting the special
attributes and qualities of
their products. This drives
behavior for luxury shoppers
looking for more rational,
subtle ways of Costly
46
xFigure 23: From CR Fashion. Dennis Rodman wearing luxury
brands to stand out on Jay Leno in 1997.
BUILDING THE SELF
Hedonic which are all self-driving
purchases factors.
go beyond
triggering a When consumers purchase
momentary something with symbolic
release of status, they build their self-
dopamine. image and construct a
As we’ve seen throughout this narrative about who they are
report, these purchases or wish to be. Luxury products
signify something important help create this self-image of
in one’s life. Lu ury products worth. They are perceived to
are the ultimate symbols of only be accessible to those of
the self. They symbolize a certain status. Therefore,
status, wealth, or uniqueness, when a luxury product is
purchased, the individual is
47
xmade it to the “in-group” of through their consumption,
high-status luxury behavior, and ideals. Those
consumers. buying luxury goods might
believe that by buying a
However, these expectations luxury product, they will
of obtaining worthiness and achieve the desired status, or
status are not always met, build their perceived ideal
resulting in imposter self, only to find out that the
syndrome. Imposter purchase makes them feel
syndrome occurs when the inauthentic and undeserving.
purchase of luxury products
triggers a feeling of Think of it this way: I buy a
inauthenticity instead of Porsche because I think it will
worthiness to be part of the make me appear wealthy,
in-group (Goor, Ordabayeva, classic, and obtain a certain
Keinan, & Crener 2020). status. Upon purchasing the
Porsche, I am disappointed
Individuals constantly build that I have become none of
their “perceived ideal self” these things and now have a
“If luxury retailers can foster and build
relationships with their individual
customers post-purchase, then they can
make their brand a safe space where
shoppers will feel worthy of belonging to
the in-group, and not imposters. Plus,
nurturing customers will more likely
increase the possibility of a second
purchase.”
Joris Fonteijn, Chief Behavioral Officer,
Crobox
48product that reminds me of group of people (the
this conflict. “in-group”).
Psychologists suggest that 3. Bring themselves to a
imposter syndrome causes better emotional state
friction in the customer’s with feelings of self-
experiences of a brand and worth (their “ideal
may backfire the positive self”).
effects of dopamine.
Luxury brands should aim to
To counter this, individuals facilitate building the ideal
should be made to feel self in a realistic way. They
confident in their purchases, should help their shoppers
brands need to reinforce the feel worthy of the products
idea that the product helps they purchase.
the customer in reaching
their perceived ideal self. In However, before concluding
other words, the product this chapter, there’s one last
helps them become a part of concept that brings the
the “in-group” rather than an perceived ideal self to
imposter. fruition. The aspirational
self shows a perceived ideal
Building a self-narrative is a self that can be achieved by
psychological process that the individual.
brings together the main
points of this chapter. It counters the psychological
Psychologically, luxury friction of imposter syndrome
shoppers want to achieve by showing products that,
their ideal self, thus, when purchased, will bring
purchasing a luxury product the individual closer to this to
is about building this self to: this perceived ideal self.
1. Make the themselves
stand out more (need
for uniqueness).
2. Bring the themselves
closer to another
49Figure 24: From Glamour, “Does Gucci’s New Lipstick Ad Make You
Uncomfortable? Good.”
The Aspirational catching up with L’oreal’s
famous tagline “because
Self you’re worth it” but for a
higher (luxury) segment.
Luxury marketing has
stepped away from the For example, Gucci has been
“unattainable self” and praised for their use of social
started helping individuals media to close the gap
realize their perceived ideal between catwalk high-fashion
selves. However, to remain and the everyday shopper.
exclusive, brands do not
For example, Gucci markets
construct a self that is too
their lipstick as attainable to
“attainable”. If more people
the everyday individual (see
have access to something,
Figure 24). By showing
this breaks down the barriers
perfection within
that luxury needs to remain
imperfection, they remain
appealing to their customers.
true to their brand messaging,
Thus, brands are marketing
which is both unique and
more towards the aspirational
provoking.
self: An ideal self that can be
built up in a realistic way,
50“The aspirational self is so strong that
many people want to be millionaires for
just one day, or treat themselves to
expensive, luxurious lifestyles
momentarily (like spa days, or renting
expensive cars). Luxury marketing or ads
throw customers a lifeline to be part of
an in-group, by showing individuals
goods they can obtain, that represent
something to them as unique
individuals.”
Joris Fonteijn, Chief Behavioral Officer,
Crobox
This is key to marketing to a 1. Luxury brands can still
luxury consumer, who builds appear exclusive by
their self based on the showing the ideal self
products they buy: Brands can that individuals aspire to
help them achieve their be.
aspirational “self” and making
shoppers feel worthy of being 2. Luxury brands can appeal
part of the in-group of luxury to the emerging
consumers. demographic segment of
GenZs and Millennials
This strategy works twofold: who want quiet,
sustainable, and inclusive
products, that will show
realistic ways to achieve
this self.
51This is how brands like Gucci
have stayed customer-centric
in a market where cognitive
dissonance often occurs.
Where transparency is
becoming more important,
and “beauty” ideals are being
deconstructed, luxury brands
that cater to the aspirational
self are seen as more
appealing and relevant.
Figure 25: From #TFW Gucci’s
Instagram campaign archive.
Furthermore, Gucci’s meme
campaign (Figure 25)
generated more engagement
on Instagram than any of
their other campaigns, and
their lipstick campaign
(Figure 24) was celebrated for
depicting real lips, not
airbrushed or photoshopped.
For luxury connoisseurs, the
lipstick ad is a reaffirmation
of Gucci’s brand. And for non-
connoisseurs, it shows that
even an imperfect person
(since there’s no indication if
the ad features a model) can
wear Gucci, which makes the
ideal self more attainable.
52CONCLUSION
The retail market in 2021 continues to be dynamic. More people
are shopping online than ever before. Trends like AR, VR,
phygital, and data-driven strategies will set brands apart from
their competitors. However, without the human in technology
and data, luxury brands will fail to resonate with their
consumers.
What we’ve covered throughout this report is just touching the
surface of luxury consumer psychology. eCommerce buying
behavior is constantly adapting and changing. Herein lies the
opportunity to come out on top.
For many luxury legacy brands, adopting a digital-first mindset
is difficult. Understanding the psychological processes behind
luxury consumption is, therefore, a must before positioning
and promoting these products online.
To recap, these processes are:
• The Need for Uniqueness
◦ Exclusivity, Scarcity, Rarity, and Excess Demand
• Costly Signaling and Status
◦ Prosocial signaling
◦ Signaling heritage and legacy
• Building up the Self and Self-Narrative
◦ The attainable “self”
53CONTRIBUTORS
Nikole Wintermeier, Content Copywriter
With a background in literature, culture studies, and
communications, Nikole has analyzed trend reports,
news sites, and academic research to enable writing
this report. She is committed to understanding
consumer behavior and learning how psychology can
help discover the why behind the buy.
Joris Fonteijn, Chief Behavioral Officer
With over 10+ years of experience applying psychology
in retail, Joris understands how to leverage behavioral
theories to optimize the customer experience. His
background in social psychology allows him to analyze
buying behavior from both a data-driven and
psychological perspective.
Patrick Oberstadt, Consumer Psychologist
As Consumer Psychologist at Crobox, Patrick puts
psychological hypotheses to test on client’s platforms.
His background in both experience design and
consumer psychology lends him the knowledge to
experiment with psychology on-site and the authority
to understand consumer behavior on a deeper level.
54Learn what your customers
love about your products
LEARN MORE TODAY
Or contact us directly at
info@crobox.com
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