In an era of rising prices, consumers are redefining what it means to spend on luxury. Inflation has infiltrated every corner of the economy, from groceries to gas, leaving households with tough decisions about how to allocate their money. Amid these financial pressures, discretionary spending on non-essentials is taking a new form, as priorities shift and habits adapt.
The Luxury Market Faces New Realities
Luxury goods and services, once seen as recession-proof, are now being re-evaluated by consumers. A report by Bain & Company revealed that the global luxury market grew by 21% in 2022, fueled by pent-up demand post-pandemic. However, the same report highlights a slowdown in 2023, as inflation cuts into disposable income and changes consumer sentiment.
“Luxury is no longer just about indulgence,” says Laura Simmons, a market analyst. “For many, it’s about making a statement or investing in quality that lasts. But even those principles are being tested in today’s economic climate.”
The Rise of “Accessible Luxury”
One noticeable trend is the rise of accessible luxury. Consumers who once splurged on high-end designer brands are now turning to more affordable alternatives that still offer a sense of prestige. Brands like Coach, Michael Kors, and Kate Spade, often positioned as entry-level luxury, are seeing increased interest.
“I used to buy designer handbags twice a year,” says Michelle Carter, a marketing executive in New York City. “Now, I’m looking for items that give me the same feel of luxury without the guilt of overspending.”
Experiences Over Objects
Another major shift is the growing preference for experiences over physical goods. Even as inflation drives up the cost of travel and dining out, many consumers prioritize these activities over buying material items.
“Experiences create memories that last,” says Dr. Alan Rivera, a behavioral economist. “In uncertain times, people want to invest in happiness and connection rather than things.”
A recent survey by Skift Research found that spending on experiences like travel and dining has remained resilient despite inflationary pressures. This suggests that consumers are willing to cut back on other areas to preserve their lifestyle aspirations.
The Secondhand Surge
Inflation has also boosted the appeal of secondhand markets. Platforms like Poshmark, The RealReal, and Depop are thriving as consumers seek luxury items at a fraction of their original cost. Thrifting, once seen as a necessity for those on tight budgets, is now a mainstream choice across income levels.
“Why pay full price when you can get the same item gently used?” asks Sarah Jones, a frequent user of online resale platforms. “I’ve found designer clothes and handbags at incredible discounts.”
This trend also aligns with growing environmental awareness. Consumers are increasingly drawn to the sustainability of secondhand shopping, making it a win-win for their wallets and the planet.
The Impact on High-End Services
Luxury isn’t limited to goods; it extends to services like personal trainers, private chefs, and spa treatments. These industries, too, are feeling the pinch of inflation. However, rather than disappearing, they are adapting.
Many service providers are offering scaled-down or a la carte options to cater to cost-conscious clients. For example, instead of a full-service spa day, customers might opt for a single treatment like a massage or facial. Similarly, personal trainers are shifting to online sessions, which are often more affordable than in-person workouts.
“We’re seeing a shift toward value-driven luxury,” says Elena Morales, who runs a boutique spa in Los Angeles. “Clients want to indulge, but they’re more selective about where they spend.”
The Role of Social Media
Social media continues to play a significant role in shaping perceptions of luxury. Platforms like Instagram and TikTok are rife with influencers promoting both high-end and accessible luxury items. This has created a phenomenon where consumers mix and match splurges with savings, such as pairing a designer bag with an outfit from a fast-fashion retailer.
“Social media normalizes the idea of attainable luxury,” says Simmons. “It’s not about being wealthy; it’s about curating a lifestyle that looks aspirational.”
Budgeting for Non-Essentials
For many households, budgeting for non-essential spending has become a balancing act. Tools like budgeting apps and financial planning software are helping consumers prioritize their purchases while still allowing room for occasional luxuries.
“I’ve learned to plan for indulgences,” says Thomas Lee, a teacher in Chicago. “It’s about making intentional choices rather than impulsive ones.”
One popular strategy is the 50/30/20 rule, which allocates 50% of income to needs, 30% to wants, and 20% to savings. By sticking to this framework, consumers can enjoy occasional luxuries without jeopardizing their financial health.
Inflation’s Long-Term Effects
While inflation may eventually ease, its impact on consumer behavior could be long-lasting. The shift toward thoughtful spending and prioritizing value over excess may redefine the luxury market for years to come.
“Economic pressures have forced people to rethink their relationship with money,” says Rivera. “Luxury is becoming more about personal fulfillment and less about showing off.”
This redefinition of luxury could lead to a more inclusive and sustainable market, where quality and experience take precedence over brand names and price tags.
The Bottom Line
Inflation has undoubtedly reshaped the way consumers approach non-essential spending. From embracing accessible luxury to prioritizing experiences and secondhand shopping, people are finding creative ways to balance indulgence with practicality. This new era of thoughtful consumption challenges traditional notions of luxury, proving that even in tough times, it’s possible to enjoy life’s finer things—on a budget.