In a recent article in BBC Capital, Elizabeth Currid-Halkett highlights the changing behaviour of elites in how they signal their wealth. Since the advent of mass-production, there has been a ‘democratisation of consumer goods’ making ‘them far less useful as a means of displaying status.’ The middle classes can now afford many of the same consumer goods, which used to signal wealth, leading to the rise of a trend that Currid-Halkett terms ‘inconspicuous consumption.’
This ‘inconspicuous consumption’ is how the elite now bolster their status – prizing knowledge and building cultural capital with the spending habits that follow this. The US Consumer Expenditure Survey data shows that since 2007, the country’s top 1% (people earning upwards of $300,000 per year) are spending significantly less on material goods, while middle-income groups (earning approximately $70,000 per year) are spending the same. The top 1% devote the greatest share of their expenditure to inconspicuous consumption – like education.
Inconspicuous consumption is by its very nature not so easy to spot as material goods. Therefore, the elites have turned to ‘less expensive, but equally pronounced signalling – from reading The Economist to buying pasture-raised eggs.’ Knowing what these relatively inexpensive social norms are is part of being a member of today’s elite, it shows that you have gained the cultural capital necessary to gain entry.
For brands, understanding this change in behaviour is particularly important, especially for luxury brands. Luxury brands’ traditional core audience is changing their spending priorities – shifting away from material goods to more hidden investments, with purchase decisions being ever more driven by the cultural capital something represents, rather than simply its substantial price tag.
As the focus of the elite shifts, the middle classes are maintaining their spend on consumer goods, but the trend for prizing cultural capital above material goods may spread. Therefore, luxury brands need to make sure they not only maintain their status as highly desirable products, but also connect to their audience in culture. If a brand can produce a quality luxury product, while connecting in culture they will ensure their continued success.