00:00:00
lecturers really tell us something about
00:00:01
how we try to perhaps separate ourselves
00:00:04
from others get ahead in life try to to
00:00:07
increase our social Mobility it's really
00:00:09
trying to create about trying to create
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opportunities for ourselves in terms of
00:00:13
either economic benefits or or social
00:00:16
status benefits welcome to the ripple
00:00:18
effect the podcast that takes you on a
00:00:21
journey through the minds of work and
00:00:22
faculty I'm your host Dan Looney and in
00:00:25
each episode we'll be diving deep into
00:00:27
the inspiration behind the
00:00:28
groundbreaking research that Wharton
00:00:30
professors have conducted and exploring
00:00:33
how their findings resonate with the
00:00:35
world today well while retail overall
00:00:37
seems to be hitting some headwinds with
00:00:39
an up and down economy it appears that
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luxury retail is not sales appear to be
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strong and companies are even doubling
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down on bricks and mortar footprint that
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they feel is necessary where does luxury
00:00:50
retail stand right now with more on that
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pleasure to be joined by P yam who is an
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associate professor of marketing here at
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the Wharton School P great to talk to
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you how have you been and I've been I've
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been great then thanks for having me
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thank you and so the the where we stand
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with luxury retail right now it seems
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like there's a lot of interest about
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this from the public from the consumer
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right now what do you think is driving
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this this want around luxury retail at
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the moment in my opinion there's no
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better way to understand individual
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psychology or consumer psychology than
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than luxury goods luxury goods on the
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surface might seem like a a Superfluous
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way of spending your money or simply
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money burning but it really gets to how
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we want to see ourselves and how we want
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others to see ourselves it's really
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about signaling certain qualities or or
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certain characteristics about ourselves
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to to ourselves again it's signaling to
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ourselves to some extent at the same
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time it's signaling to others it's a
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it's a way of trying to to uh consume
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Goods in a way that makes us feel like
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we belong to a class
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have some kind of status and at the same
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time make it clear to others or or try
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to communicate to others that we belong
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to a certain class so it's it's a really
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meaningful way of trying to understand
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individuals and Society through the
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consumption lens and and I know you and
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I have talked in the past about the
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element to a degree of there being an
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aspirational element to luxury retail as
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well absolutely so this is nothing new
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in in the sense that we have of course
00:02:27
for centuries we wanted to Signal
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certain things about ourselves or the
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the desire to belong to a certain class
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the the you know the whether this is an
00:02:36
Elite Class whether this is an
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aristocratic class people always wanted
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to Signal certain things about
00:02:43
themselves in the past this was achieved
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mostly through materialistic consumption
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because that's what the the elite had
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they had the resources they had the
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money Torsten weblin had um observed
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that the elite the the rich actually do
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spend their money their resources in
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terms of time as well in a very
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leisurely way to be able to Signal
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certain things about themselves and they
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do it in a way that is very hard for
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others to replicate or very costly for
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others to replicate now that used to be
00:03:13
the way of living that used to be how we
00:03:15
signal certain things about ourselves or
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or desire to signal that we belong to
00:03:21
that class perhaps with the objective of
00:03:23
attaining further social Mobility but
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with the changes in society and the
00:03:28
changes in economics we we see now that
00:03:30
consumers are no longer relying on very
00:03:33
highly materialistic ways of trying to
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Signal their qualities they are moving
00:03:37
on to to other
00:03:38
dimensions so with the onset of
00:03:42
e-commerce how does that play
00:03:45
into what the future of luxury retail is
00:03:48
going to be because there's an element
00:03:50
that I mentioned at the top that it
00:03:51
seems like there's a connection between
00:03:53
lxury retail and the want to have bricks
00:03:56
and mortar locations to have that
00:03:58
experience to be there firsthand how
00:04:00
does the dynamic of e-commerce then
00:04:02
potentially play in so I would say that
00:04:04
e-commerce has not been as significant
00:04:07
in in the luxury markets uh maybe
00:04:10
compared to some of the other Goods The
00:04:12
Experience Feeling Good Feeling part of
00:04:16
a a certain class and and signaling that
00:04:18
to yourself is a very important part of
00:04:20
luxury therefore uh the stores the
00:04:22
experience that you go when you go into
00:04:24
when you walk into a luxury store that
00:04:26
has been always a part of um luxury con
00:04:29
consumption perhaps a bigger part than
00:04:31
when you go into a grocery store or when
00:04:33
you're shopping for let's say books uh
00:04:36
so in that sense e-commerce perhaps has
00:04:38
been a a lesser a lesser maybe less
00:04:41
important part of uh luxury consumption
00:04:44
but we are now starting to see more and
00:04:46
more luxury Brands try to integrate at
00:04:49
least some elements of sales some
00:04:51
elements of experiences into uh into
00:04:54
e-commerce and even to some of the new
00:04:56
technologies some of the new
00:04:58
environments including meta worth
00:05:00
the component of fakes and counterfeits
00:05:03
is one that's been around luxury retail
00:05:05
for a while and certainly companies have
00:05:07
tried to uh try to take that out as much
00:05:11
as they can but it is still there how
00:05:13
does that component impact the luxury
00:05:16
retail industry in general especially
00:05:18
when you think longer term and the
00:05:20
benefits they may G gain from it at
00:05:22
times it's a very important part of
00:05:24
luxury consumption of course luxury
00:05:26
consumption or consumption of luxury
00:05:28
goods is it has to be created in a way
00:05:30
that it's hard to replicate by others by
00:05:33
the very definition if I want to show
00:05:35
that I have the wealth or the status to
00:05:37
be able to attain certain Goods it must
00:05:39
be again by definition that it's hard
00:05:41
for others to be able to buy that so
00:05:44
counterfeits has been a growing problem
00:05:46
in the sense that today's counterfeits
00:05:48
are are much better much higher quality
00:05:51
almost identical to the real thing that
00:05:54
The triaa triaa Fakes the the um real
00:05:59
fake fakes they are actually very much
00:06:02
comparable to the real product as a
00:06:04
result of that it becomes much harder
00:06:06
for people to Signal the the status
00:06:09
signal their ownership of certain uh
00:06:11
Brands certain Goods uh and there are
00:06:14
really high quality counterfeits in a
00:06:16
market so it puts pressure on on Brands
00:06:20
it makes it harder for individuals to be
00:06:22
able to to consume the goods in a way
00:06:24
that are meaningful to them what does
00:06:27
that imply that means that people are
00:06:28
now going to look for different ways to
00:06:31
to try to Signal their um their status
00:06:34
they will look for perhaps different
00:06:36
ways of consuming goods and one of the
00:06:39
ways that they try to consume Goods is
00:06:41
perhaps actually perhaps surprisingly
00:06:44
moving away from consumption or trying
00:06:46
to reduce the the amount of consumption
00:06:49
luxury goods consumption uh compared to
00:06:52
what we might have observed in the older
00:06:53
days right in the past what again is you
00:06:57
know the the idea of uh signal
00:06:59
conspicuous consumption this is all
00:07:01
about money burning this is all about
00:07:03
buying items that are very hard for
00:07:05
others to buy expensive goods and and
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lovishly consuming those items so having
00:07:10
many many of these this is an idea of a
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maximalist type consumption now what we
00:07:14
have been seeing more and more in
00:07:16
especially Western societies a move away
00:07:19
from that very levish consumption people
00:07:21
still do buy luxury goods but they are
00:07:23
trying to reduce the number of items
00:07:25
that they buy in perhaps a meaningful
00:07:28
way and still a conspicuous way it's not
00:07:31
that they are not trying to show that
00:07:34
they are buying luxury it's still very
00:07:36
conspicuous it's still very much a
00:07:38
signal of belonging to a certain class
00:07:41
but it's a a very opposite very um
00:07:43
different Trend than what we used to see
00:07:45
it's much fewer items sometimes that
00:07:49
goes along with buying even higher
00:07:51
qualities or or more expensive items and
00:07:54
with this idea of refraining from
00:07:56
consumption or reducing the amount of
00:07:58
consumption you are very much doing the
00:08:01
same thing that you were trying to do
00:08:02
before show that you belong to a certain
00:08:04
certain class and have certain St but I
00:08:06
guess for the retailer by limiting the
00:08:09
number of items they may have on a
00:08:11
particular run of a product they
00:08:14
obviously add to the value of it just by
00:08:17
the number of items that they're
00:08:18
actually going to put out on the market
00:08:20
in the first place yes so for the
00:08:22
retailers for luxury managers this of
00:08:24
course this these new trends in society
00:08:26
or how people are trying to Signal their
00:08:29
status signal certain qualities about
00:08:31
themselves these new trends will have
00:08:34
implications so of course they might
00:08:36
want to focus more on perhaps fewer
00:08:39
items in reducing assortment uh at the
00:08:42
same time changing the price of of the
00:08:44
products in a way that makes people
00:08:47
makes it easier for people or
00:08:49
facilitates signaling status signaling
00:08:51
for people so we we expect to see of
00:08:54
course changes in prices as well as the
00:08:57
assortment but that being said said this
00:09:00
trend also gives a few different ideas
00:09:03
for I think luxury goods producers in a
00:09:06
sense the idea of counterfeit uh
00:09:09
counterfeits and their damage has mostly
00:09:11
been focused on how perhaps we should
00:09:15
stop counterfeit users from uh using
00:09:18
counterfeits how we should go and and
00:09:20
just like uh playing a game Chase every
00:09:23
single counterfeit now what we see in
00:09:26
based on our research is that the damage
00:09:28
of coun Fitters go beyond just those
00:09:32
individuals who switch to counterfeit
00:09:33
use the the behaviors the habits the
00:09:36
consumption patterns of consumers who
00:09:39
purely consume luxury goods is also
00:09:41
changing so if that's the case a luxury
00:09:44
manager has to think even beyond the
00:09:46
consumers who consume a counterfeit we
00:09:49
need to think about how those who never
00:09:52
consume counterfeits are changing their
00:09:54
their behaviors and their signaling and
00:09:56
their consumption patterns as well how
00:09:58
much do luxury retailers in the scope of
00:10:01
all of this going on also have to be
00:10:04
wary of the brand itself because the
00:10:07
brand whatever it is has an innate value
00:10:11
and in many cases a higher value than
00:10:13
some other brands and by that that not
00:10:18
necessarily direct connection with
00:10:20
counterfeits there can be a negative
00:10:22
impact on the brand as well correct
00:10:24
absolutely yes uh so when there's a
00:10:26
counterfeit in the market and when that
00:10:28
counterfeit is uh simply replicating
00:10:31
your product to a very very high quality
00:10:34
degree and makes produces an identical
00:10:36
product it reduces potentially the value
00:10:39
of your brand as well because it reduces
00:10:42
the ability of again people who buy the
00:10:44
real thing to to show that they belong
00:10:48
to to to a certain class or have certain
00:10:50
status what do you think are the areas
00:10:52
that that luxury retail focuses on as we
00:10:55
move forward here knowing where we are
00:10:59
are kind of as consumers looking for
00:11:01
these products uh as we move ahead so I
00:11:04
think minimalism is a big growing Trend
00:11:06
it seems like this becomes a more
00:11:08
meaningful consumption from the the
00:11:10
lands of the consumers they seem to to
00:11:13
want to consume perhaps fber items in a
00:11:15
more meaningful way more conscious way
00:11:17
this also goes along with the with the
00:11:19
trends of sustainability or and going
00:11:22
becoming anti
00:11:24
consumers um that's one of the trends
00:11:26
and and we see Brands I think paying
00:11:28
attention to the these new trends a
00:11:30
second thing we have as a society moved
00:11:32
away from trying to Signal values or
00:11:35
trying to attain social status Chase
00:11:38
social status and social Mobility
00:11:40
through materialism right we have moved
00:11:42
away as a society from becoming this
00:11:46
very production manufacturing oriented
00:11:49
um culture to a much more um service
00:11:53
economy oriented uh population Society
00:11:56
so with that came different Val values
00:11:59
of signaling different status groups
00:12:01
different signals for instance having
00:12:03
education having a better job being able
00:12:06
to live a different life because
00:12:08
material goods are now much more
00:12:09
accessible to a broader set of people so
00:12:13
people are paying attention to again
00:12:15
signaling cultural assets their cultural
00:12:19
capital they are paying attention to to
00:12:21
showing that they know um certain things
00:12:24
they are much more knowledgeable about
00:12:26
the quality of goods and that sometimes
00:12:28
also turns into what we refer to as
00:12:30
quiet luxury so what does that mean that
00:12:32
means that a brand um with a big logo
00:12:37
you know producing a big logo product is
00:12:39
perhaps less preferable to those
00:12:41
consumers because I want to signal that
00:12:43
I know something and I may want to to
00:12:46
speak to individuals who other few
00:12:48
individuals who know the same thing so
00:12:51
now the the logos are smaller and and
00:12:55
the brand names are perhaps much less
00:12:57
visible and that's another another Trend
00:12:59
we see this and an industry executive
00:13:01
actually told me at some point that this
00:13:04
is a very important way that people tend
00:13:07
to to signal to themselves um the the
00:13:09
quality and and their own values um for
00:13:13
example this person mentioned that women
00:13:16
uh in typically who are going through
00:13:18
their careers when they first start the
00:13:20
career they have a big job they get this
00:13:23
sort of achieve this this uh first step
00:13:25
in their life and they will go and buy a
00:13:27
handbag that that has the logo like this
00:13:30
big visible logo but as they
00:13:32
move further in their career and they
00:13:35
become more and more successful at some
00:13:37
point when they get to that Milestone
00:13:39
achievement they will go and buy a
00:13:40
follow-up handbag and that handbag will
00:13:43
be again much more of a quiet luxury
00:13:45
that will be much less visible because
00:13:47
the type of people that they may want to
00:13:49
signal that they've achieved something
00:13:52
is a different group than when they
00:13:53
started out or they have um a desire to
00:13:57
Signal certain achievements to to
00:13:59
themselves so this idea of quiet luxury
00:14:01
and how consumers move how they change
00:14:04
their patterns of consumption throughout
00:14:06
throughout their life throughout their
00:14:08
their consumer life cycle is also very
00:14:10
interesting and an important pattern for
00:14:12
for managers to understand so it also
00:14:14
has to impact doesn't it the companies
00:14:16
themselves when you're thinking about
00:14:18
all these components going on and the
00:14:19
message that they are trying to send out
00:14:22
about these products the marketing
00:14:23
patterns that they are putting out into
00:14:25
the public and and the different avenues
00:14:27
that they're trying to reach the
00:14:28
consumer as well absolutely so if you
00:14:30
think of this as segmentation you may
00:14:32
want to focus on different consumer
00:14:33
segments the the consumer who's looking
00:14:35
for quiet luxury or the consumer who's
00:14:38
after minimalism is going to be a
00:14:40
different consumer or in terms of their
00:14:42
luxury consumption life cycle they will
00:14:45
be at a different place compared to
00:14:46
someone who's looking for the big logo
00:14:48
item or the more sort of easily visible
00:14:51
conspicuous conspicuous items these are
00:14:54
I would say um two important uh Trends
00:14:58
one of another important trend is again
00:15:00
as we move away from materialism or
00:15:02
consumption of material Goods we are
00:15:04
seeking experiences we are moving
00:15:07
towards
00:15:08
experiences uh people are thinking that
00:15:10
experiences are are scarce and and they
00:15:13
are more valuable in some ways to to
00:15:15
them in terms of uh consumption value so
00:15:18
with that we also see many luxur Brands
00:15:20
turn to experiences some luxury brands
00:15:23
are opening restaurants some luxury
00:15:25
brands are are focusing on curating uh
00:15:28
holiday or or experiences for for
00:15:31
individuals that is also in line with
00:15:34
what people people are looking for or
00:15:35
how they are looking to perhaps uh
00:15:38
signal their social status seek for
00:15:40
social mobility in life that's another
00:15:43
big Trend that we are observing in
00:15:44
luxury markets but it seems like that
00:15:47
the the growth that we have seen around
00:15:48
luxury retail especially in the last few
00:15:51
years that's something that's going to
00:15:53
be with us for a while and maybe to a
00:15:55
degree this is kind of a connection with
00:15:58
the younger generation right now that
00:16:00
that's that that component that they're
00:16:02
looking for as they grow and and and
00:16:05
move into different segments of their
00:16:07
lives absolutely so I as I mentioned
00:16:09
earlier I don't think that there are
00:16:12
that many products that speak to human
00:16:15
psychology consumer psychology or the
00:16:17
psychology of an entire society as
00:16:20
luxury goods uh luxury goods really tell
00:16:22
us something about how we try to perhaps
00:16:24
separate ourselves from others get ahead
00:16:27
in life try to to increase our social
00:16:30
Mobility it's really trying to create
00:16:32
about trying to create opportunities for
00:16:33
ourselves in terms of either economic
00:16:36
benefits or or social status benefits so
00:16:39
in that sense I don't expect much to
00:16:41
change the way that we try to Signal or
00:16:44
status or signal how we are different
00:16:46
from others may change over time we may
00:16:49
be focusing more on perhaps in some case
00:16:52
material Goods in another case
00:16:54
experiences in another case perhaps we
00:16:56
focus more on signaling or cultural
00:16:58
capital we want to show that we know
00:17:00
something that others do not
00:17:02
know we may change the the channel or
00:17:06
the format through which we show things
00:17:08
about ourselves but these are all
00:17:10
speaking to the same psychology of again
00:17:13
trying to to Signal status and there
00:17:16
will be price tags that are attached to
00:17:18
it because it's hard hard for people to
00:17:20
to perhaps replicate or or um attain so
00:17:24
there's going to be an industry and
00:17:26
there's going to be an industrial
00:17:27
reaction like goods are not going away
00:17:30
as we have bigger growing middle class
00:17:33
in developing countries the the need for
00:17:36
perhaps again luxury goods will continue
00:17:39
to grow and we'll continue to see
00:17:41
signaling in one way or another so we
00:17:44
talk a lot about this in the scope of
00:17:46
the United States but you just opened
00:17:47
the door to the larger discussion of how
00:17:50
this kind of aspirational mindset plays
00:17:53
out in other countries around the globe
00:17:55
and and it's very similar to what we see
00:17:57
here in the United States so there there
00:17:59
are some parallels and sound differences
00:18:01
so we have seen a number of countries
00:18:03
especially in Asia grow dramatically in
00:18:06
in luxury consumption and this is again
00:18:08
this has something to do with the
00:18:09
growing middle class growing number of
00:18:12
individuals who now have the means to be
00:18:14
able to Signal something and the growing
00:18:17
Society or changing Society where people
00:18:20
want to to show that they are different
00:18:22
than others or show that they belong to
00:18:24
a certain class so uh these elements I
00:18:27
think these human Psych olog or the
00:18:29
potential benefits of why you may want
00:18:31
to engage in in luxury consumption are
00:18:33
are similar but the means through which
00:18:36
whether it's these two trends for
00:18:38
instance Maximus going out the whole way
00:18:41
burning money I think some of the the
00:18:44
new markets or growing markets are still
00:18:46
going through this phas as opposed to
00:18:48
minimalism and they will probably move
00:18:50
towards minimalism as again these
00:18:53
countries become continue to become
00:18:54
maybe moving away from manufacturing to
00:18:56
to services or start valuing some of the
00:18:59
other hard to achieve uh qualities that
00:19:02
may relate to education that may relate
00:19:04
to having certain careers uh so we'll
00:19:07
see these changes probably in these
00:19:09
countries in these markets as well P
00:19:11
great to talk to you again thanks very
00:19:12
much thank you so much for having me you
00:19:13
got a penar yielder I'm associate
00:19:15
professor of marketing here at the
00:19:17
Wharton School thank you for listening
00:19:19
to the ripple effect we hope you found
00:19:21
this episode informative and engaging
00:19:23
don't forget to subscribe and leave us a
00:19:26
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00:19:28
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00:19:32
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