Is a lack of product identity killing the luxury market?
The global slowdown in the luxury market can no longer be attributed to ‘normalisation’. Profit warnings at brands such as Gucci and Burberry along with the much-discussed administration of Matches and the struggles at YNAP and Farfetch have highlighted consumers changing attitudes towards luxury products. Kering and LVMH have cited their weak US performance on the loss of ‘aspirational shoppers’, once considered represent nearly 40% of luxury consumers worldwide. This mainly middle-class consumer group typically saves up to purchase the more affordable entry-level items such as accessories or statement pieces (1). While escalating prices, high interest rates and the cost of living are no doubt impacting, in a recent Instagram post fashion commentators Diet Prada suggested similarities in product direction were also to blame. They observed that design had ‘nosedived into the abyss of homogenisation. Every brand is making the same thing, the only difference being the logo.’ (@DietPrada, 26th March 2024). Could the psychological theory of hedonic adaption help explain how this lack of product diversity is contributing to luxury’s troubles?
Hedonic adaptation theorises that humans are conditioned to return to a relatively set point of being (2). That, despite major positive or negative occurrences, we will adjust to our circumstances and return to a relatively stable emotional baseline. Therefore, the joy of the new - whether it’s a new house, car, promotion or simply a pair of shoes, no matter how longed for - will eventually fade leaving us to crave something else in its wake. This constant quest for satisfaction, to appease this hedonic adaption is referred to as the hedonic treadmill. But how does this happen? Research shows that humans become desensitised to the stimuli placed before them, i.e. our emotional responses to objects or situations will dampen over time. Therefore, the more we see something, the less we will take notice of it, which in turn lowers our emotional response to it (3) and so back on the treadmill we get with the desire for a new new.
Design Homogenisation between Brands
So far, so good for consumerism you might think. While this may on the surface seem a desirable trait for the fashion industry and its need to sell us newness, the current homogenisation between brand offerings means our response to the perceived newness - the driver of fresh purchases - is lessened. For the aspirational shopper, with their need to save up, the process of hedonic adaption could be happening prior to purchase, greatly reducing the initial drive to purchase. Furthermore, as studies have shown that desensitization decreases sensitivity in general (4), it could also be theorised that our ability to even perceive newness will also be diminished.
The issue of sameness in the luxury market is compounded by the ever-increasing casualisation of dress codes and the adoption of streetwear silhouettes at designer level. The current trend of branding basic products means that design-wise there is very little to differentiate between a hoody at designer or mass-market level. For the consumer caught on the hedonic treadmill, this means a saturation of similarity, across all market levels, further reducing the response to designer brands.
In psychological terms, the opposite of homogenous is heterogenous, i.e. different in kind. For the fashion consumer, this would be defined as a product that can easily be distinguished by quality or design. However, the homogenisation of design is further compounded by a drop in quality in the luxury market as they seek higher margins on cheaper products. As luxury brands are increasingly able to sell goods just on logo recognition alone, it makes financial sense to leverage their brand identity this way. In an industry inherently addicted to margins this means quality has plummeted while prices escalate. Margins on a tracksuit will always be higher than on a tailored jacket, therefore the branding of basic products means quality is no longer a differentiator either.
The Hedonic Adaption Prevention Model (5) outlines practices to counter the process. For humans looking to get off the treadmill, the approach is two-fold. Studies suggest various techniques to slow hedonic adaption, such as lessening exposure, interrupting the activity, rotating new favourites and obtaining perceived peer appreciation (6, 7, 8, 9). Secondly, set points of happiness can be improved and raised, thereby countering the need for newness for satiety (10). Research proposes that carrying out intentional activities - for example, expressing gratitude, practising random acts of kindness and setting and pursuing meaningful goals - can generate sustainable increases in baseline happiness (6). Researchers go so far as to propose that up to 40% of our happiness level is under our control (11).
Make Less or Make Different.
But where does this leave the luxury market and what can luxury brands do to help themselves? To ensure the hedonic adaption process works for, rather than against them, reducing exposure to the stimuli would be the key. In a luxury market saturated by sameness, the only way to lessen exposure is either through scarcity or variety. The more heterogeneous a brand can be, the more they can leverage the hedonic treadmill in their favour. However, given the current status quo, without either quality or design acting as a differential, brands are going to have a tough challenge.
For more information on hedonic adaption and how to optimise it please contact us or email hello@factoryforecasting.com
References
1. Ludmir, C. (n.d.). Luxury Retail At Risk Of A Downturn In 2024. Forbes. https://www.forbes.com/sites/claraludmir/2023/10/16/luxury-retail-at-risk-of-a-downturn-in-2024/?sh=2a4839e16f5d
2. Brickman, P., & Campbell, D. T. (1971). Hedonic relativism and planning the good society. In M. H. Appley (Ed.), Adaptation level theory: A symposium (pp. 287–302). New York: Academic Press.
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9. Unanue W, Gomez Mella ME, Cortez DA, et al. The reciprocal relationship between gratitude and life satisfaction: Evidence from two longitudinal field studies. Front Psychol. 2019;10. doi:10.3389/fpsyg.2019.02480
10. Diener E, Lucas RE, Scollon CN. Beyond the hedonic treadmill: revising the adaptation theory of well-being. Am Psychol. 2006 May-Jun;61(4):305-14. doi: 10.1037/0003-066X.61.4.305. PMID: 16719675.
11. Lyubomirsky S, Dickerhoof R, Boehm JK, Sheldon KM. Becoming happier takes both a will and a proper way: an experimental longitudinal intervention to boost well-being. Emotion. 2011;11(2):391-402. doi:10.1037/a0022575