During uncertain times, for luxury consumers: quiet is the new loud

3 important questions for consumer engagement

Recent global events, such as the COVID-19 pandemic, the War in Ukraine, and the tensions in the Middle East, have significantly shifted consumer priorities, particularly in the luxury market. These crises have prompted consumers to rethink their spending habits.

Indeed, the luxury industry, characterized by its appeal to wealth and status, faces unique challenges during crises, requiring a deeper understanding of consumer reactions and market shifts.

The main goal of our study is to answer the three following questions:

• How does consumer attitude toward quiet luxury vary, if at all, depending on the type of crisis (economic downturn, health emergency, political instability)?
• In the same vein, how does consumer attitude toward loud luxury shift, if at all, based on the specific nature of the crisis?
• To what extent do consumer attitudes toward quiet and loud luxury vary depending on the type of crisis affecting the market?

These three questions are important because by analyzing how attitudes toward these two distinct luxuries signals change in response to different crises, luxury brands can tailor their strategies to maintain consumer engagement, align their products with evolving preferences, and enhance their ability to navigate unpredictable market conditions.

Identifying quiet vs. loud luxury

Luxury, defined as anything beyond basic needs and often linked to wealth, indulgence, and self-expression (1), manifests in two distinct styles: "quiet luxury" and "loud luxury." Quiet luxury emphasizes subtlety and craftsmanship, with brands like Bottega Veneta favoring minimalist designs and discreet branding. In contrast, loud luxury, characterized by bold logos and rather attention-grabbing elements, is embraced by brands like Gucci and Prada (2).

Understanding the distinction between quiet and loud luxury is vital for brands seeking to adapt to evolving consumer values. Luxury perceptions are shaped by various factors, including price, uniqueness, social influence, and individual personality traits. For instance, overt narcissists may gravitate toward quiet luxury to reflect their unique tastes, while covert narcissists may prefer loud luxury to signal status (3). Affluent consumers often use luxury goods to differentiate themselves, and quiet luxury appeals to those seeking exclusivity.

However, different crises, such as economic instability and political conflicts, impact luxury consumption and consumer attitudes in general. Offering insights into how the luxury industry can navigate these volatile times is thus key.

The different types of crises under study

Our analysis of current knowledge indicates that it is valuable to explore how different types of crises may impact consumer attitudes towards quiet and loud luxury.

Health Crisis

Health crises like the COVID-19 pandemic have a profound effect on consumer spending habits. During the pandemic, consumers shifted their focus towards essentials, reducing their spending on luxury goods (4). However, the most affluent customers continued to purchase high-end items, with some luxury sectors, like high-end fashion and jewelry, remaining resilient (5).

Conflict Crisis

Conflict crises, such as wars or political instability, disrupt economies and social environments, influencing consumer behavior in different ways. Still, wealthy consumers may continue purchasing luxury goods despite the turmoil, while regions directly affected by conflict often experience a decline in luxury sales. For example, the 2011 Egyptian revolution and the Arab Spring dealt a significant blow to the luxury market in the region, leading to brands like Burberry and Ferragamo exiting, while those that remained saw sales plummet by as much as 70%.

Financial Crisis

Financial crises often lead to reduced consumer confidence and spending on luxury goods (6). During economic downturns, consumers tend to prioritize functional and utilitarian items over luxury purchases. However, luxury brands offering entry-level products or second-hand goods may see increased demand during financial crises. For some very affluent consumers, luxury goods serve as a form of investment, with items like Cartier or Boucheron high jewelry appreciating in value despite economic instability.

All in all, we anticipate that shifts in these attitudes will be most significant during conflict-related crises, followed by health crises, and then financial crises. To verify this, we examined a group of 153 millennial clients who purchase accessible luxury products.

Thinking like a millennial: getting the market's input

Millennials are the leading customer group for personal luxury goods, accounting for 45 percent of global luxury spending in 2023 (Statista). Our study focused on this demographic segment. Of the 188 respondents surveyed, 153 were millennials (average yearly salary: € 50,588; 69% female; 2% prefer not to say).

Participants were randomly assigned to one of six scenarios: (1) quiet luxury visuals paired with a health crisis description, (2) quiet luxury visuals paired with a conflict crisis description, (3) quiet luxury visuals paired with a financial crisis description, (4) loud luxury visuals paired with a health crisis description, (5) loud luxury visuals paired with a conflict crisis description, and (6) loud luxury visuals paired with a financial crisis description.

The visuals used aim at representing quiet and loud luxury and came together with the different scenarios each respondent encountered (“Envision a world where geopolitical tensions rapidly escalate…”). A pre-test confirmed that respondents perceived the first set of visuals as more subtle and discreet, although no significant difference in overall liking of the visuals was observed. To give an idea of the purchasing power at stake, note that the suggested retail price of the sunglasses featured in the questionnaire was €550.

The type of crisis does not have an effect on luxury consumer's reactions

First, we observe a clear preference for quiet luxury over loud luxury during times of crisis. Millennials, in particular, are 12% more favorable toward understated luxury compared to louder expressions of affluence. This aligns with existing research and reinforces the credibility of our findings.

Second, we find no significant differences in millennials' attitudes toward quiet luxury across the three different types of crises. Also, attitudes toward loud luxury show no significant variation across health, conflict, or financial crises.

Finally, our analysis reveals that the type of crisis significantly influences how consumers perceive quiet versus loud luxury. During conflict-related crises, consumers are over 15% more favorable toward quiet luxury than loud luxury, highlighting a pronounced preference. This difference is a little less noticeable during health crises, where the preference for quiet luxury is about 10% higher than loud luxury. However, during financial crises, there is no strong preference, with attitudes toward quiet and loud luxury being roughly equal.

What could we do better in future studies?

We recognize a couple of limitations in our study. First, our sample of millennials is international (35% of respondents are non-Europeans), which may influence the results. The impact of crises on consumer behavior can indeed differ across regions. For example, while Western markets such as Europe and North America may experience a decline in luxury consumption during crises, emerging markets in Asia have often continued to grow, mitigating the recession’s effects in other regions. However, the Chinese luxury market has recently experienced a downturn, marking its first contraction in five years. This is largely due to economic instability and weakened consumer sentiment. The international composition of our sample could thus influence attitudes toward loud luxury, especially since certain cultures have a stronger preference for conspicuous consumption (7).

Second, this study places consumers in isolated crisis scenarios, examining one crisis type at a time. However, in reality, multiple crises—such as a conflict and financial crisis—may occur simultaneously. The same applies to overlapping health and financial crises. In these cases, how would attitudes toward loud versus quiet luxury shift? It seems plausible that the difference in consumer attitudes would become more pronounced and significant, but this remains to be tested in future research.

Implications for luxury brands navigating crisis periods

This study offers valuable insights into the shifting attitudes of millennials towards quiet and loud luxury in times of crisis. Our findings suggest that, during crises, millennials tend to favor quiet luxury, which aligns with broader trends in literature that emphasize a growing preference for understated luxury among younger generations. This preference for subtlety reflects a desire for resilience, responsibility, and long-term value, which becomes more pronounced during uncertain times. This also aligns with the perception that, in moments of crisis, overt displays of wealth may be less desirable, with consumers seeking sophistication and discretion over attention-grabbing styles.

Interestingly, while overall attitudes lean more favorably towards quiet luxury, the type of crisis – whether health-related, conflict-driven, or financial – does not drastically change millennials' preferences for understated designs. However, our results do highlight a more pronounced preference for quiet luxury during conflict crises, suggesting that in highly volatile and uncertain geopolitical situations, consumers are more likely to reject conspicuous consumption in favor of understated elegance. In health crises, this preference persists but is less significant, and in financial crises, attitudes towards quiet and loud luxury converge, indicating that economic downturns neutralize preferences between the two types of luxury goods.

The research findings carry important implications for luxury brands navigating crisis periods. By recognizing that consumer preferences may shift more significantly in response to some crises than others, brands can better tailor their product offerings and marketing strategies. For instance, during geopolitical conflicts, luxury brands might benefit from emphasizing craftsmanship, subtlety, and exclusivity, while adopting a more flexible approach in times of financial uncertainty.

As crises become an increasing feature of the global landscape, understanding these nuanced shifts in consumer attitudes will be essential for maintaining relevance in the ever-evolving luxury market.

References

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(2) Greenberg, D., Ehrensperger, E., Schulte-Mecklenbeck, M., Hoyer, W. D., Zhang, Z. J., & Krohmer, H. (2020). The role of brand prominence and extravagance of product design in luxury brand building: What drives consumers’ preferences for loud versus quiet luxury? Journal of Brand Management, 27(2), 195–210 - https://doi.org/10.1057/s41262-019-00175-5

(3) Jiang, L., Cui, A. P., & Shan, J. (2022). Quiet versus loud luxury: The influence of overt and covert narcissism on young Chinese and US luxury consumers’ preferences. International Marketing Review, 39(2), 309–334 - https://doi.org/10.1108/IMR-02-2021-0093

(4) Achille, A., & Zipser, D. (2020). A perspective for the luxury-goods industry during—and after—coronavirus. McKinsey & Company. (accessed 17/06/2024) - https://www.mckinsey.com/industries/retail/our-insights/a-perspective-for-the-luxury-goods-industry-during-and-after-coronavirus

(5) Pang, W., Ko, J., Kim, S. J., & Ko, E. (2022). Impact of COVID-19 pandemic upon fashion consumer behavior: Focus on mass and luxury products. Asia Pacific Journal of Marketing and Logistics, 34(10), 2149–2164 - https://doi.org/10.1108/APJML-03-2021-0189

(6) Andronic, A. G., & Alexandru Ioan Cuza. (2021). Consumer behaviour in purchasing luxury goods during financial crises. SEA - Practical Application of Science, 9(25), 9–11 - https://seaopenresearch.eu/Journals/articles/SPAS_25_1.pdf

(7) Leek, S., & Christodoulides, G. (2009). Next-generation mobile marketing: How young consumers react to Bluetooth-enabled advertising. Journal of Advertising Research, 49, 44–53 - https://doi.org/10.2501/S0021849909090059