The luxury market is one of the most rapidly expanding industries around the world. Despite the financial crisis in 2008, the market for personal luxury goods has grown three times in size over the last 20 years. The industry has undergone, over the last decade, two major changes that have reshuffled the luxury landscape.
First, there has been an evolution in terms of consumer demand and preferences. Luxury consumers differ widely in accordance with their values and need to display status. Researchers classify luxury products as of several branding styles, where each is appealing to a specific type of consumer. Luxury brands vary according to the prominence of the logo on display on products, and can be categorised as quiet (low conspicuousness, such as Bottega Veneta) vs loud (high conspicuousness, such as Gucci). Individual differences, such as independent self-construal (value uniqueness); interdependent self-construal (value conformity) and consumer values such as bandwagon (need for social approval) or snob (desire to differentiate) motivations, can also influence preferences for different types of luxury goods.
Second, today, the Internet provides easy access to luxury brands and attracts a great deal of the general population who aspire to follow the upper class lifestyle. Despite the rapid utilisation of digital channels, online luxury consumption has been largely under-researched. A reason behind this is that luxury brands have been cautious to open e-stores, as they remove the perceived barrier to exclusivity. Nevertheless, some of the biggest luxury retailers, such as Hugo Boss and Dior have recently launched their online shops. Furthermore, recent reports show that 44 per cent of all luxury acquisition is affected by the digital and successful online luxury e-stores such as Net-A-Porter, Yoox or Farfetch are indicators that consumers are now inclined to shop online for luxury brands.
In our research, we investigate how these changes relate to different types of consumer personalities, such as desire for social approval (bandwagon consumption) and differentiation (snob consumption), values of uniqueness (independent self-constural) and conformity (interdependent self-constural). The research looks into luxury consumption preferences for different types of luxury goods (quiet vs loud) and shopping preferences (online vs offline) as a function of different types of consumer personalities. Behaviour is examined in the physical space and an online shopping setting, taking a glance at the interaction between the two.
Consumer’s change in branding preference
We found that consumers with high desire for social approval, conformity and high need for status recognition show significant preferences for easily recognisable luxury goods (such as Louis Vuitton or Gucci). Following these consumers’ high desire for social approval, highly recognisable goods are thus more appealing to them. Conversely, consumers who value uniqueness show preference for less visible branding. This demonstrates that they favour quietly branded items (such as Bottega Veneta or Chanel’s Mademoiselle turn lock) that are usually consumed by the minority who have high knowledge and ability to recognise discreet branding and no desire for others to identify what brands they wear.
In addition, individuals who want to be unique and different (independent self-constural) are willing to pay premium for quietly branded goods, however do not show preference for hidden logos alone when goods are not highly priced. This novel finding could reflect changing consumer preferences, due to the rapid expansion of the prominently branded counterfeited luxury goods market. Consumers might choose to reject consumption of easily recognisable goods to avoid association with growing consumption of counterfeits. This change of preference is likely to be causing increased popularity for hidden branding, hence conflicting the idea of uniqueness that was previously associated with quiet products. A product category, which could benefit from this change is that of personalised luxury goods and managers should place more attention to such products which are likely to be appreciated by consumers valuing uniqueness.
Consumers’ changing online and in-store behaviours
Finally, we found that individuals who are socially oriented and display preference for loudly-branded goods buy items in the store after conducting research online (webrooming). This can be explained by three reasons. Firstly, feedback and comments online allow these consumers to depict items, which are most popular and offer a social signalling opportunity. Secondly, after conducting their research, the process of buying is made in the store, as it enables status reinforcement. Finally, self-esteem is enhanced by being seen in the physical store, in particular at times when the store is most crowded.
In addition, our findings show that those who desire to associate with others and crave status (bandwagon consumers) buy items online after examining them in store (showrooming). It is interesting to observe that conformity seeking consumers engage in both types of shopping behaviour (webrooming and showrooming).
Altogether, these results therefore provide evidence that webrooming and showrooming can be mutually reinforcing behaviours, which are influenced by a social setting, for individuals who favour loudly branded luxury goods. Managers should acknowledge that due to the complementary nature of online and in-store shopping, one cannot provide a luxurious service simply through pure in-store experience, but rather should build a relationship between the two medians.
Numerous brands are already integrating aspects of in-store shopping with the convenience of digital innovations. For instance, Burberry has used iBeacon technology in order to bridge the gap between online and offline shopping. In addition, luxury consumers are nowadays displaying more knowledge about the products they wish to purchase, thanks to the information readily available on the Internet. Therefore, sales persons must be trained and equally knowledgeable in order to offer additional assistance to retain the high quality service of the luxury experience.
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Karolina Dovgialo is an Account Executive at an advertising company Y&R London. Her research focuses on the impact of brand prominence on peoples’ behaviour and purchase intentions. Previously, she completed her MSc in Social and Public Communication at the LSE.
Benjamin Voyer is a Visiting Fellow at LSE’s department of Psychological and Behavioural Science, and L’Oréal Professor of Creativity Marketing at ESCP Europe Business School. Professor Voyer is a behavioural scientist and interdisciplinary researcher, using innovative quantitative and qualitative research methods to investigate how self-perception and interpersonal relations affect behaviours in various contexts (consumption, organisations, cross-cultural, research methods…).