One of the reasons I enjoy tongue in cheek writing about the luxury industry is that I also enjoy participating in the Experience Economy. The Experience Economy has emerged as a result of the commoditization of goods. As life has become increasingly busy, the goods used in the service industry became commoditized, and a new economy emerged where an inherent value is placed on the staging experience. The experience becomes the product. Think of this in terms of how you grocery shop. For some, the act of going into a grocery store, pushing a cart while listening to canned music, perusing the vegetables in the produce section glistening from the sprinkler system, far outweighs placing an order for a box of vegetables they can point and click to online for same day delivery. The experience of being in the store is, for them, preferable to electronic order placing. In either case, the customer is willing to pay for the experience. And they will pay far more than their fellow lesser-priced No Name grocery store shopper that experiences neither produce sprinklers nor home delivery.
In this sense, ‘you get what you pay’ for seems the apt adage except that the sudden democratization of the luxury experience means that more often than not, the mass consumer now has more access to a luxury experience than they might have had, say twenty years ago. So what exactly is the luxury that they are paying for, and if by a larger segment of the population being able to afford it, is it still considered a luxury experience?
As Samantha Shankman has observed, luxury is in the midst of a metamorphosis. While luxury once meant the most expensive or well-known product or experience, today it’s become a way of being or moving throughout the world. Often, the importance of quality in a transaction can be equated to a desire for a more luxurious and enjoyable experience. Despite the rise of AirBnB as a popular means of accommodation when traveling, luxury hotels still are regarded as a preferred choice for travelers who are willing to pay more for the experience and the benefits that come with it, including VIP and loyalty perks and in room service. Based on the cost of this type of top tier hotel experience then surely it must be considered luxury. Well, not exactly. According to Babs Harrison, luxury hotels are suffering a death of sorts, in favour of the ‘Transformational Experience’. Indeed, as Babs writes, “The very word ‘luxury’ has plummeted into a fog of meaninglessness. It is table stakes – and it is not a closing concept. It is so overused, many guests just cynically ignore it. Rightly so. Hotelier ‘luxury’ just isn’t what they want today.” And to add insult to injury, AirBnB is now moving into this territory and further muddying the meaning of the word.
So what does a luxury experience actually mean? The classic symbols—the Hermès Birkin bag, a couture dress by Dior, a watch by Rolex—aren’t in any danger of losing status. But around its edges, the concept of luxury is getting blurry, making it less clear where it begins and ends.
So does a luxury experience then depend entirely on perception? With the popularity of Instagram and other visually enhanced social media, how is a designer dress worn by someone decipherable from a dress that is purchased versus rented? When presented in an image, it’s impossible to say if the experience is real or fabricated. The ubiquitousness of the ‘luxury experience’ has rendered it almost meaningless.
It is safe to say then that the ideal luxury experience is one that matters to the person experiencing it. They in fact give the experience its own meaning, as they crave something meaningful in it. And that is where the rise of transformational experience in luxury has become a far more powerful concept. This means then that those who wish to have a true luxury experience in its traditional essence, want to leave the experience somehow improved by it. Suddenly the experience is no longer designed to be for ‘one size fits all’, but an experience that matters to the person who is having it. And in this sense, it returns to full fruition the exclusive nature of the meaning of the word ‘luxury.’ The sense that not everyone can have the same experience, and furthermore, that the person be willing to pay more for it than they normally would. As a result, we are marking the transition from the Experience Economy to the Transformation Economy. The Transformation Economy guides the consumer beyond mere ‘experience’ to a place where they benefit from a conscious relationship with the brand.
Rarity and exclusivity matters. For hotels, this can mean making the experience one that is not easily had by any visitor: private yoga instruction with the area’s best, instead of leaving the guest to do the sifting through a lot of often mediocre offerings. Most importantly, it’s an understanding that the new meaning of luxury experience is that luxury goods and services are about differentiating oneself from others. I’ll explore more of this trend in luxury in future articles.