The evolution of indulgence: a new look at luxury spending

Luxury is no longer just about what you own – it’s about who you’re becoming.

Wealth trends evolve slowly but that rhythm was disrupted in 2008 as the economic crash changed how the wealthy purchased products and services.

The 2009 Wealth Report predicted a shift in luxury consumer behaviour, from conspicuous consumption towards intentional, experience-based spending, saying “there is a tangible shift towards something more considered in terms of consumption and lifestyle”.

The rise of discreet, understated wealth

That prediction has played out clearly in the shifting shape of luxury.

Between 2020 and 2021, wellness (the theme of 2020’s Wealth Report), longevity and “emotional luxury” emerged as top spending drivers, leading to the rise of “stealth wealth” and “quiet luxury” – expensive, unbranded and deliberately understated.

Martin Raymond, co-founder of research consultancy The Future Laboratory, describes it as “a more quiet, sustained, careful, conscious-based wealth”.

A renewed search for value

Post-pandemic, wealthy consumers began scrutinising whether the products they were buying still represented good value.

“Luxury brands became way too expensive and way too repetitive,” says Erwan Rambourg, Managing Director, Global Head of Consumer and Retail Equity Research at HSBC. “It isn’t that the young generation lost interest in luxury. They lost interest in a broken value proposition.”

This led to what Rambourg describes as a “transfer of consumption” from goods to experiences – particularly travel, fine dining, hotels and homes.

The price of personal transformation

This new era sees the wealthy gravitate towards brands that enable personal transformation through self-improvement, health optimisation or longevity.

“It’s often about life-changing moments that might be extreme travel or a rare encounter with a person or an object,” Raymond explains.

Brands best positioned for the transformation economy offer access to at least one of three pillars: belonging, purpose or wellness. “Brands are taking advantage of this need and rebuilding spaces that allow you to explore and self-actualise,” Raymond concludes.