The New Luxury

Luxury is taking up causes. Giorgio Armani has aligned the launch of his new fragrance, Acqua di Gio with his Acqua for Life Challenge, committing to the goal of providing safe drinking water to 900 million people. Yves St. Laurent is selling its limited edition Muse Two Artisanal bag, made from recycled materials from, and made by impoverished women, in Burkina Faso. These are newer additions to earlier social champions such Bono and Ali Hewson who created EDUN with the vision of creating sustainable trade and promote economic development in Africa; and Stella McCartney’s long-standing commitment to using environmentally sustainable fabrics.

Historically, luxury has been defined by four important ingredients. First the item was of high quality. Second, it was exclusive, which always translated to expensive. Third, it provided some measure of pleasure or comfort. And four, its ownership brings the owner some type of esteem or stature.

Luxury brands have qualified as luxury because they have qualified against all four criteria. Be it early eighteenth century Wedgewood china, Cartier jewelry, Loro Piana cashmere, or the Aston Martin V12 Zagato, these items have been marked as luxury because they satisfy the Five Es – expert, exclusive, expensive, esteem, exquisite.

But luxury is perhaps adding a new E to that list – Ethical. Be it Tiffany’s commitment to sustainable gem stones, Gucci’s commitment to film conservation, or Prada’s commitment to young artists, there is an interesting emergence of luxury’s need to, in some fashion, make the world a better place.

We know that luxury has been able to retain its stature because it also went mainstream. Satisfying the esteem quality required that “commoners” recognized the value and aspired to own; and how delightful that this also expanded the consumption opportunities. Luxury needs the mass-market in order to be luxury. And it has done this with great elegance and panache: combining the high-end, haute couture aspirational credibility, while at the same time delivering product through a rich combination of exclusive showcase stores, department stores, and discount stores. The esteem we achieve through ownership trumps the quality of the product we may actually own.

Luxury has been hurt somewhat by the recession. The obvious is that middling ranks have curtailed their purchasing quite dramatically. While improving of late, there is now increasing focus on satisfying need and quality. The wealthy consumers shied away from exposing their extravagance, which curtailed their display. What is most interesting is that the recent resurgence of luxury purchase has been infected with consciousness of the wider world.

In a recent article in The Wall Street Journal (May 12, 2011), Christina Binkley makes the point that while the truly wealthy were not financially affected by the recession, their purchasing behaviours have been. Binkley characterizes it as “broad-based caution” – the truly wealthy do not need a high price to rationalize a purchase, they are less committed to luxury brands, and are distrustful of marketing. Seeing the extent to which luxury retailers severely slashed prices revealed their grotesque margins and impaired the “expensive” qualification. The overblown marketing of luxury brands has perhaps impaired the “exclusive” qualification.

Binkley notes that while luxury consumers were not necessarily financially affected, they were affected by the visibility of the recession. To support her point, Binkley anecdotally quotes Lyndie Benson (wife of Kenny G the music star) commenting on how one just has to be aware of what has happened in the economy – “If you’re conscious at all, it just seeps in”.

If the recession has had an impact on the luxury market it is that it has forced the luxury consumers to see and experience the rest of the world. That sighting has awakened a degree of conscience.

And luxury brands are not stupid. They recognize the lingering effects of the discounting, the ubiquitous marketing, the contradictions of mass and luxury offering. They recognize that the Four E’s are under threat and require reinvention and support.

Hence the intrusion of the Fifth E – ethics or empathy. For luxury to be luxury it how has to demonstrate it is genuinely committed to making the world a little bit better. This fifth E accomplishes a number of things. It provides a way to diminish, or balance the shame or guilt of sybaritic luxury consumption. It provides a way to ensure that there is a sustainable supply of ingredients and supplies. It supports a way to pre-empt potential criticism of insupportable labour practices, or impacts on local communities. And it injects a way to assert distinctiveness and differentiation in a market increasingly competitive and seemingly “the same”. Injecting a cause can accomplish all of this.

But cause redefines luxury. Luxury will always have to be expert quality, exclusive, expensive, and satisfy esteem. These are table stakes. Differentiation amongst the luxury brands now demands reflecting empathic ethics. Luxury brands now need to see the world outside their limited views, visibly take a stand on social and environmental issues, and make it easier for their consumers to do some type of good while consuming. This will most assuredly resonate with the rest of us, reinforcing yet again the power of luxury brands and our desire to possess them.