I have been trying to adjust to my new academic schedule for the past three weeks, so I completely forgot about this newsletter until a couple of days ago when guilt engulfed me. Pardon me if I am all over the place with this piece, I moved a mountain to force myself to write something, anything just to get me out of the rut.
Last week we were discussing a landmark case, Dunlop v Selfridge 1915 in my contracts lecture when the conversation shifted to a list price. In the aforementioned case, a list price was necessary to maintain the luxurious status of the commodity. Our professor gave us an example of how the cost of a Rolex watch never decreases to keep up with its demand.
These luxurious commodities are Veblen goods which are an exception to the economic theory of demand. The theory states that the price and demand of a good are inversely proportional. A cheaper product will sell more compared to its more expensive counterpart. However, this applies to low-income goods which are a staple in people’s lives and cannot be replaced at the same price like rice and wheat. I am not going to go into the nitty-gritty of economics here, but it is interesting to think about why these goods exist. I could consider the point that highly-priced products guarantee quality, but that is not the case at all times
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We’re aware that buying exponentially expensive products which the majority of the common man cannot afford is a status symbol. A line that divides the elite from the ordinary. A differentiating factor. A targeted luxury goods consumer might not care about the craftsmanship, attention-to-detail or the high value of the product, but he cares about the elitism he projects. In ancient China, the practise of foot-binding was rampant among the affluent. It was an extremely painful process that stunted the growth of feet so that they could remain an unnaturally small size. This was an indication of belonging to the privileged class because this implied the presence of servants to do all the menial work in a household.
However, I do not understand the obsessive need to show your prestige via these goods. Is there any need for products that cater to this divide of inaccessibility or is there an inner feeling which gets satisfied on being perceived a certain way?
C. R. Snyder describes the innate desire of humans to be distinctive in his theory of uniqueness. Yet, there are only a set number of biological ways which can differentiate one from the next person, therefore humans look outwards at material things which can satisfy this demand. Delving into the psychological needs of people and analyzing their consumption patterns, there can be a myriad of reasons why people spend so much even if they cannot afford it.
A study suggests individuals look towards luxury to nurse their psychological wounds. Retail therapy does exist, and people swear by it. Even though I cannot relate to buying a Balenciaga bag to cure my mid-day blues, I can understand the desperate need for dopamine that I get when I buy something exponentially out of my budget. Another demographic of consumers consists of low-income individuals who go for high-status goods for a taste of elitism. Think of a person who has been saving for decades for the new Audi. This is a different category of consumers who are not attracted to the ‘conspicuous’ attribute of luxury. Instead, they opt for the ‘quiet’ luxury.
Brands like Fendi and Louis Vuitton are known for in-your-face ‘flashiness’. The brand symbol is what sells the product. Visual markers on the good that identity the brand, are loud and gaudy which allegedly satisfy the need for uniqueness.
Fendi
But this does not corroborate why brands like Bottega and The Row have a thriving business. With a more discreet look, their brand logos are hidden entirely out of the view, usually hidden inside the goods.
Bottega
I am not entirely sure what are the selling points of these ‘quiet’ brands but this article by McKinsey talks about the shifting focus of new consumers to ‘sustainability. This trend of ‘minimalist’ luxury has emerged post-pandemic where people are re-evaluating their needs and what they want out of a meticulously crafted product.
Wrapping up, there is a whole, unpopular area of research in psychology and consumer trends which analyze the reasons behind each luxury brand’s performance which was fascinating for me to discover since I couldn’t care more about these goods. But it makes sense if you think about the interconnectedness of these products with society. If you’re more interested in the social aspect of luxury, Dana Thomas’s book, Deluxe: How Luxury Lost Its Luster is a great read.
Brain Food for this Week
Here I plug in whatever I am consuming. Someday I would love to write a collection of essays like Briallen Hopper talking about all the things I love in literature, pop culture and music, but that is for the future.
Reading 📖 : Lolita by Vladimir Nabokov (I finished The Nature of Passion by Ruth Prawer Jhabvala last weekend, will not recommend it)
Watching 🍿 : What We Do In The Shadows on Hotstar (S3 came out recently and it is funnier than ever, will highly recommend if you’re looking for a hilarious sitcom)
Thank you for reading! Feedback is always welcomed.
Warm Wishes.
Well written
I normally don't read long newsletters but this one is so well written fgs..you earned yourself a subscriber 🍻