In last week’s feature article, we defined approachable luxury as “value created by reducing one or more barriers to entry (price, availability, others) while preserving one or more luxury attributes (materials, artisanship, design, heritage, others)”. We also described four main pathways to approachability:
Impulse-level purchase from a luxury maison.
Entry-level model from a luxury manufacturer.
Lower-end sibling brand.
Reduced cost structure.
Image: VanderWolf Images / Shutterstock
In this article, we’ll provide a framework for evaluating approachable luxury: three questions you can ask about any purchase. Then we’ll apply that framework to two examples.
The psychology of luxury retail
I’ll come back to this topic in the future, because it’s a rich area for exploration. But for now, the key point is this: there are at least two good reasons that luxury maisons charge such high prices for their goods.
One reason is that they must do so, because they have such high cost structures.
The other reason is the Veblen effect, which is a topic I’ll undoubtedly return to on multiple occasions (honestly, it could be its own newsletter). A Veblen good is “a type of luxury good for which the demand increases as the price increases, in apparent contradiction of the law of demand, resulting in an upward-sloping demand curve”. If you think that sounds like the Holy Grail of retail, congratulations: you now understand, in broad strokes, the last few decades of growth of the luxury industry.
The excellent Tanner Leatherstein (the nom de web of Volkan Yilmaz) explained both these reasons at once—along with how they relate to one another, and to psychology—in one of his leather dissection videos:
Brands like LV, which position themselves as modern luxury labels… engineer an aura around the products and their logos. They’re not just selling a bag. They are selling a symbol of status. That illusion is reinforced through prominent logos and high prices that signal exceptional value even when it’s not immediately visible on the product itself. Those high prices enable the brands for extravagant spending on celebrity campaigns, fashion shows, and those ever-evolving, temple-like storefronts—all designed to keep that image elevated. This model heavily relies on human desire for status and recognition. It’s expensive and carries risks because the core product is the perception which must be accepted by society; otherwise everything is smoke and mirrors.
A framework for considering approachable purchases
In considering an approachable luxury purchase, ask yourself three questions about how and why you’re paying less for something than you might:
What remains luxurious? What about the product and/or the experience of purchasing and owning it is just as luxurious as its more expensive brethren or competitors? Are these product attributes the most important qualities to you?
What becomes cheaper? What did the vendor change to bring down the price? Is it something that you may be able to live with, like a scarcity of high-end boutiques, or a lack of overhead from expensive luxury branding? Or is it something more consequential to you, like lower-end materials, less artisanal production, or the like?
What are the consequences? What are you trading away? Durability? Will the product last for years, or even a lifetime? Service? Will the manufacturer be around to repair the product in years to come? Sustainability? Where do the materials come from? Who performs the labor? Ritual? For many, the story of how they bought a thing is an important part of their joy in owning it; does the shopping ritual give you that joy? Status? Will others notice your purchase, if that’s something you care about?
This framework can help you look at any approachable luxury product and make an informed decision. If you can ask yourself these three questions about an approachable luxury product and honestly be comfortable with the answers, then you’re onto something.
Applying the framework
With our three questions in mind—what remains luxurious, what becomes cheaper, and what are the consequences—let’s take a look at two of the products mentioned above—both examples of the “impulse-level purchase from a luxury maison” pathway to approachable luxury—as illustrations of how to use this framework.
