Where does the desire to buy luxury fashion really come from? It has become trendy for major brands to embrace inclusivity in response to the rise of Millennials and shifting socio-political currents. PR storms following the release of culturally insensitive products and campaigns have also spurred some brands to become more inclusive. See Dolce & Gabbana’s blunders in China, and Gucci’s missteps in the United States. And yet despite these shifts, consumer demand for fashion remains unmistakably and fundamentally rooted in exclusivity. So how exactly does it work?

Luxury brands are receptacles of idealised traits projected onto them by consumers. They achieve this through a mix of claim, association and posture. Example: "Chanel is the quintessential symbol of Parisian elegance." Consumers pay to acquire these traits through their purchases. Example: "I am very elegant when I go out with my Chanel handbag." Others then recognise these purchases, attributing the desirable traits to their owners. Example: "She has a beautiful Chanel handbag and she is really elegant with it."

Psychoanalysts refer to “projective identification” or the process by which the subconscious mind projects positive or negative traits onto external objects, like handbags, as the force behind our primitive drive for ownership, which is by definition exclusive, sanctioned by the institution of private property.

Chanel is the quintessential symbol of Parisian elegance.

At the social level, the psychology of luxury goods is simple: “I have something good that you don’t have, hence I’m better, sexier and more desirable than you.” This, too, is fundamentally about exclusivity, with ownership marking the border between those who have and those who don’t, and providing a key input to defining where our identities sit within the social hierarchy.

Here, envy plays an important role. Envy is the angry feeling that occurs when we see someone else possessing or enjoying something desirable. Recognition for being the owner of a desirable product or brand — through logos, design traits or shapes — is a key lever through which luxury brands reinforce the link between their goods and a customer's sense of identity. But other people's admiration also reinforces the construct through envious recognition: "If others aspire to have what I have, then what I have is really good, hence I am good."

Social media has amplified the dynamic of identification through recognition and envy to the point of paroxysm. People’s lives used to be private; now they are shared with the world. We post countless images every day on Instagram, Facebook, WeChat and other social media platforms. Many of these are selfies. Exhibition and appearance have become a central pillar of the global zeitgeist. This creates huge pressure to look your best and luxury brands benefit greatly from this. While social media is often linked to the rising trend towards inclusivity in brand communications, it is actually a far more powerful force for reinforcing fashion’s exclusivity dynamic.

If others aspire to have what I have, then what I have is really good, hence I am good.

Luxury goods are about differentiation and flocking. Buying them is a way of both standing out from some people and joining others. In other words, one defines one’s identity both in positive (“I am X”) and negative (“I am not Y”) terms. But whether at the individual or the group level, there is always a border, there are those who are “in” and those who are “out.”

In human society, there is a strong aspirational drive in the desire to be part of the right group. Individuals project their idealised values on the group they want to join. The aspirational element of this construct was famously and paradoxically displayed by Groucho Marx in his letter to the Friars Club of Beverly Hills: “I don’t want to belong to any club that would accept me as one of its members.” This aspiration is particularly strong with new luxury consumers, who have only recently enjoyed a significant improvement in their social standing. To them, buying luxury products means both appropriating “good” and access to the “right” group.

Exclusivity is at the core of luxury demand. And yet it has become fashionable for brands to embrace inclusivity. This strategy may be skin deep. Under the surface, inclusivity comes with serious risks. True inclusivity exposes brands to "hijacking" by the "wrong" group of consumers. Too much disconnect between a brand's values and how aspiring (and existing) consumers would perceive others that own the brand can be disastrous. The example of Burberry — once tainted by its associations with working-class "chavs" — speaks volumes. Several years after the issue was addressed, Burberry still ranked low with British consumers in terms of desirability.

Luxury brands can also be diluted when they are adopted by too wide a consumer group, ceasing to appear special in the eyes of consumers. People buy luxury to feel special. Luxury brands that become ubiquitous fail on this fundamental promise: “If I have what everyone else has, I am no longer special — I’m just normal.”

Generational change and digital media may be shifting the cultural emphasis from “standing out” (individuality) to “belonging” (community). But in the minds of luxury consumers, “belonging” is really about “standing out through belonging to the right group.” In the 1960s, the hippies eschewed luxury goods, along with other symbols of commercial consumption and social hierarchy. Millennials, on the other hand, may like the concept of inclusivity, but they are also very keen on luxury goods and the exclusivity dynamic that underpins them, whether they admit it or not.

Luca Solca is head of luxury goods research at Bernstein.

This article appears in BoF’s latest special print edition. To receive a copy — including the complete index of BoF 500 members — sign up to BoF Professional before December 1, 2019 and enjoy additional benefits including unlimited access to articles, daily members-only insights and analysis and more with your annual membership.

Related Articles:

[ Louis Vuitton to Add 1,500 Jobs in France on Luxury Demand BoomOpens in new window ]

[ China's Gen-Z Shoppers Fuelling Luxury Market MomentumOpens in new window ]

[ Why Luxury Fashion Can't Resist an ExclusiveOpens in new window ]