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Luxury fever

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Australians have a rising appetite for the good things in life. More and more of us crave prestige cars, trophy homes, designer clothes, exotic holidays, gourmet dining and exclusive wines. Even people on modest incomes aspire to own a Louis Vuitton handbag or a Mercedes-Benz sports.

Our chic desires have not gone unnoticed with iconic international retail brands flocking to our shores in droves. Luxury stores such as Fendi, Christian Dior, Chanel, Prada, Tiffany & Co, Salvatore Ferragamo, Burberry and Gucci have set up shop in Australia.

Emulating the lifestyles of the rich and famous is not confined to Australia. Top-end goods are in high demand across the globe. In many developed countries, an almost insatiable appetite for high-end merchandise is fuelling a boom in luxury spending.

Branded capitalism is big business and it’s growing. The overall luxury industry is closely tracked by consulting group, Bain & Company. In its latest annual report on the market, Bain & Company reveal that worldwide sales of luxury goods in 2016 surpassed €1 trillion in retail sales value.

For much of human history, the biggest problem faced by Homo sapiens has been scarcity - not having enough of what was needed. The economic definition of a need is something that is required to survive. Our forebears’ needs were very basic - food, water, clothing and shelter.

In contemporary society, our basic needs are being met - you have only to look at the growing rate of obesity to confirm that. So, our focus now is on higher order wants. A want, in economics, is one notch up from needs and is something that people desire to have, rather than must have.

Today we suffer from an over-abundance of goods and the more we have, the more we want. In their 2005 book, Affluenza: When Too Much Is Never Enough, Australian economists, Clive Hamilton and Richard Denniss, pull no punches in claiming that our society is addicted to overconsumption.

Our houses are bigger than ever, but our families are smaller. Our kids go to the best schools we can afford, but we hardly see them. We’ve got more money to spend, yet we’re further in debt than ever before. What is going on? The Western world is in the grip of a consumption binge that is unique in human history. We aspire to the lifestyles of the rich and famous at the cost of family, friends and personal fulfilment. Rates of stress, depression and obesity are up as we wrestle with the emptiness and endless disappointments of the consumer life.*

That our non-stop quest for newer and shinier stuff has not delivered greater happiness is not a surprise. As I have opined on previous occasions in this blog, life experiences (like a barbeque with friends) give us more lasting pleasure than material things (like designer shoes).

Yet, as a nation, we continue to splurge and have traded up to higher levels of quality and taste. Many of us have become manic shoppers hooked on debt. Materialism clearly comes at a high price and keeping up with the Joneses requires some cunning choices to keep up appearances.

Consumers - not just in Australia but around the world - shop selectively for luxury goods. A Harvard Business Review article, Luxury for the Masses, put it this way:

Consumers tend to trade up to the premium product in categories that are important to them but trade down - buying a low-cost brand or private label, or even going without - in categories that are less meaningful to them. Consequently, people’s buying habits do not invariably correspond to their income level. They may shop at Costco but drive a Mercedes, or they may buy private-label dishwashing liquid but drink Sam Adams beer.

Notwithstanding record spending by Australian households and record debt, we still talk about the “Aussie battler”. This, according to Clive Hamilton, is erroneous.

We love this idea of the battler … But we are not battlers in any sense. You don’t battle to live in Australia. The only battle is to get your BMW through the traffic. Deep down we feel uncomfortable with our affluence and feel guilty about it - so we cling to this myth and focus on the things we don’t have.

You have only to scan the seventh annual Global Wealth Report (2016) to confirm this myth. Australians, according to the Report compiled by Credit Suisse, are the second richest people in the world. The “lucky country” posted an average wealth of US$375,600 (AUD$508,900) for every Australian. We are second only to Switzerland with an average net worth of US$562,000. The global average is just US$52,800 for each person.

In Australia, perhaps it’s a case of - I shop therefore I am.

*From the publisher’s website

 

 

Regards
Paul J. Thomas, CEO

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CEO Paul Thomas