Remember the overly expensive watch or pair of shoes you bought, and later you now wish you had the extra money to spend on something else? Perhaps for a vacation or a thrilling day activity?
Marketers study the deeply rooted factors that play into individual consumption and consumer behavior. Psychological and unconscious factors lead to purchases, and some marketers believe consumers choose products to define their uniqueness, and identity. In a recent article by Ana Andjelic (@andjelicaa) on AdvertisingAge, the discussion is on how the sharing economy is boosting the luxury market, while disrupting the traditional model of buying luxury goods.
Luxury in the sharing economy traces back to the late 80’s and early 90’s. For example, NetJets, a private aviation sector which allows individuals to plan a flight, has fractional aircraft ownership. Following destination clubs which emerged in 1990 as part of the luxury experience market. From the get go, prosperous individuals saw the value in experiences they had, over the numerous assets they owned.
“Our friends would rather hear about that ice marathon we ran in Alaska than about yet another pair of Louboutins we bought. Hunting for a unique experience makes us unique -- much more than owning material goods does.”
The luxury experience market proves that consumers prefer experiences over possessions. And why buy when you can have the same experience through renting (at a fraction of the cost). According to the Boston Consulting Group, $460 billion was spent on unique travel adventures, in comparison to $170 billion spent on personal luxury goods in 2013.
What does this mean for the luxury goods sector? In order to keep up with the surpassing luxury experience sector, brands will have to change with the market.
I myself have seen the transition of owning assets over to experiences. Holding back from the latest pair of heels or the newest fancy watch, I’ve found myself saving money, so I can jet off to a new country or adventure. This year, it’s Cabo San Lucas. My experiences, and what I take from them, speak louder than the my possessions. With increasing value and benefits, materialism no longer defines one’s unique personality. We all want access to luxury, we just don't want to own it. This is how the sharing economy taps into this.
“As the notion of ownership of goods has changed and the desire to own goods like homes and cars has decreased significantly among younger generations, luxury brands will have to find a place in the new sharing, less acquisitive generation."
