Is luxury democratized? - Publicis Groupe

The luxury goods market has undergone significant transformation in recent years. With rising living costs and economic uncertainty, consumers are increasingly re-evaluating their spending habits. Research shows that 68% of consumers worldwide have adjusted their spending over the past year to adapt to the circumstances.^[1]

According to McKinsey data, the global fashion luxury industry is facing a sharp decline in 2024 — for the first time since 2016 (excluding 2020), the creation of value in the luxury sector has decreased, impacting even the leading brands.

Source: Media in Canada

At the same time, a new trend in consumer behavior is emerging in the market — consumption polarization, where people shop at Lidl in the morning and buy an Armani bag in the evening. This behavior reflects a desire to normalize life and maintain self-worth or social status, even in economically challenging times.

Consumption polarization is also accompanied by a psychological phenomenon known as the “lipstick effect.” This highlights the complex interaction between

the economy and consumer behavior — the desire for self-affirmation and societal pressure drives people to seek comfort in small luxuries during times of economic tension.

In this context, one of the most successful examples in 2023 was the cosmetics brand Rhode, which skillfully embraced the so-called “small luxuries culture” in its messaging. The brand positioned its products as refined yet accessible everyday indulgences — for example, lip glosses named Vanilla Custard and Chocolate Mousse, evoking associations with delicious desserts. In its visual communication, Rhode also incorporated aesthetically rich images of food and beverages, creating the sense that luxury is not distant or unattainable — it becomes tangible, sensory, and enjoyable in everyday rituals.

Image: Rhode

Who is the luxury consumer?

According to Business Insider forecasts, by 2030, 80% of all luxury purchases worldwide will be made by the younger generations — Alpha, Gen Z, and Millennials. Moreover, more than half (55%) of Gen Z and Millennial consumers say they prefer a few high-quality luxury items over a large quantity of fast fashion. Interestingly, 50% of those who hold this view are consumers with low or middle incomes. ^[2] This confirms that luxury is no longer solely a privilege of the wealthy.

What qualities are valued in luxury goods?

A 2023 GWI survey in the U.S. revealed significant generational differences in perceptions of what makes a luxury brand valuable. For Gen X and Baby Boomers, the most important qualities are: heritage, timelessness, sophistication, elegance, and luxury.

Meanwhile, Gen Z and Millennials prioritize a different set of values: sustainability, playfulness, boldness, aspiration, and ethics.

These differences clearly mark the emergence of a new understanding of luxury: for younger generations, it is no longer about status symbols or external opulence, but rather a responsible, personal, and emotionally meaningful experience. As a result, demand is growing not only for luxury products but also for purposeful luxury experiences.

Current trends indicate that brands must adapt and transform in order to effectively engage with younger audiences. In today's uncertain environment, there is a unique opportunity to redefine what luxury means in the modern world.

Next, I explore the most current trends in how the meaning of luxury is evolving, becoming more accessible and appealing to a broader audience.

High fashion’s compromise with the mass market
Luxury fashion brands are increasingly shifting focus from an exclusive elite audience to a wider and younger consumer base. One of the most visible changes in approach is the collaboration between high fashion designers and the mass market — for example, H&M has been developing such collaborations for over 20 years. But today, this strategy is more purposeful: H&M aligns with the values of the younger generation by offering sustainable materials, artisanal quality, and emotionally rich narratives.

The collaboration between high fashion and the mass market is shaping a new fashion segment — affordable luxury, which delivers high-end design and quality to a broader public. It gives consumers the opportunity to purchase products that offer the aesthetics and emotional value of luxury.

Sustainability Is Redefining Luxury
For luxury brands, sustainability is becoming increasingly important — especially to younger generations. 43% of Gen Z and 39.5% of Millennials say they like the idea of renting luxury items short-term rather than paying large sums to own them.^[3]

After the COVID-19 pandemic, the demand for clothing rental services surged as more people returned to in-person work and re-engaged with social life. This approach appeals to consumers — luxury is no longer seen as something one must own, but rather as an experience to be enjoyed.

One of the most popular examples is Vivrelle, a U.S.-based high-fashion handbag and accessory rental company that operates on a subscription model. For a monthly fee ranging from $45 to $309, users can rent accessories from brands like Chanel, Gucci, or Dior, paying only a fraction of the item’s actual value.

Virtual Luxury: Borderless Accessibility
The digital space is becoming a new realm where a broader audience can freely experience the world of luxury brands and the emotions associated with it. For example, Loewe successfully adapted to the TikTok platform by embracing its casual, playful communication style and breaking traditional luxury marketing norms. The brand’s content was informal and featured creative contributors from outside the fashion world, thus building a connection with Gen Z and making the brand feel more human and relatable.

At the same time, luxury brands are entering youth-favored digital platforms such as Roblox, Fortnite, and Minecraft, creating interactive brand spaces and experiences. These platforms emphasize user-generated content and social interaction — values that directly align with Gen Z’s priorities: creativity, engagement, and a sense of community.

One of the most striking examples is Gucci Town on the Roblox platform, which attracts millions of visitors and strengthens the brand’s emotional connection with the younger audience.

Mass Market Competing with the Luxury Segment
Mass-market brands are also strategically transforming the concept of luxury to their advantage, solidifying their position and expanding the definition of what is considered luxury today.

For example ASDA, one of the largest retailers in the United Kingdom, which challenged luxury food brands with its campaign “The Bold Taste Test.” The campaign demonstrated that high-quality products can be offered at accessible prices. In blind taste tests comparing ASDA products to those of luxury brands, consumers rated ASDA's products equally or even preferred them, recognizing them as a form of “affordable luxury.”

A striking example of how an everyday object can achieve iconic status is IKEA’s blue Frakta shopping bag — nearly half (45%) of UK households own this bag, and one-third have used it for more than five years. Despite its widespread use, the Frakta bag has become a cultural phenomenon. In October of last year, IKEA opened a pop-up concept store called Hus of Frakta (House of Frakta) on Oxford Street in London, visually resembling a luxury fashion gallery. The store highlighted special products created to honor the legacy of the Frakta bag and its iconic blue color. With installations, collaborations with designers such as Zandra Rhodes and Marimekko, and design exhibitions, IKEA transformed this practical bag into a symbol of culture and aesthetics.

Image: Ikea

While the democratization of luxury offers opportunities to broaden audiences and increase accessibility, it does not mean that all brands are obliged to follow this trend. The future of luxury is not uniform — it is flexible and open to various paths of development chosen by both brands and consumers. Luxury is becoming increasingly personalized — it manifests differently for each consumer, evolving into an individual and personal experience, regardless of income or social status.

[1] GWI 2024 Europe

[2] GWI 2024 Europe

[3] Foresight Factory 2023