What's the deal with Conspicuous Consumption?

Have you ever wondered what drives people to showcase their wealth and status through extravagant purchases? That phenomenon is known as conspicuous consumption! It's all about those lavish displays of luxury that not only satisfy personal desires but also convey messages about social standing. Let's dive into the intriguing world of conspicuous consumption and explore its impact on our culture and lifestyles.

People are attracted to items they can proudly display. This behavior in economics is known as?"conspicuous consumption." During the pandemic, the wealthy were deprived of parties and cultural events where they could showcase their status and be seen by others. The article explores the concept of conspicuous consumption and its connection to the spending habits of affluent individuals.

What is Conspicuous Consumption?

Conspicuous consumption is the practice of buying goods to showcase wealth or status, often to impress others or oneself. It can take many forms, including jewelry, cars, clothing, and cosmetics, typically by those with excess disposable income. Coined by sociologist and economist Thorstein Veblen, the term highlights the tendency to purchase items primarily for the sake of demonstrating affluence or gaining social recognition.

Conspicuous consumption serves as a form of social currency, with more expensive items signifying higher status. This is particularly evident among the wealthy and ultra-wealthy, who often compete to maintain their lifestyles and social standings. Additionally, it reflects rational choice theory, as individuals purchase goods primarily to enhance their self-esteem rather than for their practical utility.

The Evolution of Conspicuous Consumption: From Rome to Today!

Conspicuous consumption has existed for centuries across various cultures. The Romans were pioneers in this behavior, donning clothing adorned with pearls and precious stones to display wealth and intimidate adversaries. In today’s digital age, conspicuous consumption is increasingly prevalent on social media, streaming services, and video games.

Conspicuous consumption is increasingly prevalent in marketing, as advertisers aim to sell high-priced or unattainable products.

Impact of COVID-19 on luxury goods sales

Chris Olshan, global CEO of the Luxury Marketing Council, quoted.

“Why do I put on a $200,000 timepiece if I have a clock on my microwave and haven’t left my house in four months?”

He believes brands must justify the value of new products to gain attention and investment. Using an expensive watch as an example, he stated,

"It has to be something more than just another Swiss watch. Even if you tell your customer that you can get rescued off an island if you press a button on the watch, the customers don't care. A product's value must be supported by something more."

Swiss luxury watchmaker Audemars Piguet, which planned to launch a $161,000 watch tied to a Marvel character in 2020, opted for an unprecedented approach by hosting a virtual event to unveil the character.

This trend prompts the question: "What is the point of $30,000 watches or $5,000 handbags when you're just a small thumbnail on Zoom?"

Will consumers alter their conspicuous consumption habits?

Consumers may not alter their consumption habits, as conspicuous consumption has long been ingrained in human behavior. For marketers of luxury products, a key question is whether individuals will modify their conspicuous consumption. This matters significantly, as any change could negatively impact the luxury market, leading to increased demand for lower-priced goods or a shift in focus towards other status symbols, such as repaying student loans or donating to charities, while spending less on luxury items. According to McKinsey's (2020) report, luxury brands must adapt their value proposition and business model to navigate this crisis effectively.

Concluding thoughts

The COVID-19 pandemic has led to an economic slowdown, yet there are opportunities to adapt. As of 2025, brands are emerging stronger by applying resilience lessons from 2020. This crisis has transformed the luxury industry, which will continue to thrive.