Luxury Brands Don’t Target the Rich, They Target the Status-Seeking

The Illusion of Exclusivity

When we think of luxury brands like Chanel, Louis Vuitton, Gucci, we often imagine the ultra-wealthy casually adding a ₹5 lakh handbag to their collection. But here’s the reality: these brands aren’t primarily selling to the wealthy elite. They’re targeting middle-class, status-driven consumers, people who are willing to stretch their budgets to purchase a symbol of success.

So, who are luxury brands really targeting? Not those with generational wealth. But those who are trying to look like they belong there.

Even the industry’s leaders acknowledge this strategy. In 2023, the CFO of LVMH the conglomerate behind Louis Vuitton, Dior, and Fendi openly stated,

“We don't sell products to rich people; it's for people who have money and want to indulge themselves.” This honest admission underlines what luxury really is: a feeling, not a financial bracket.

The Financial Psychology of "Looking Wealthy"

Luxury brands capitalise on one critical consumer insight: people are willing to spend disproportionately on items that elevate their perceived social standing.

Here’s how that plays out in numbers:

• A 2022 report by Bain & Company noted that nearly 60% of global luxury sales come from what they term "entry-to-affluent" consumers individuals who are not wealthy but are aspirational spenders.

• In India, the luxury goods market is projected to grow at a CAGR of 8.5% over the next five years, primarily driven by urban millennials in the ₹8–30 lakh annual income bracket, many of whom spend 10–15% of their annual income on luxury items.

• Surveys indicate that buyers often finance luxury purchases via credit cards or EMIs, with some even using Buy Now Pay Later (BNPL) services for products priced over ₹1 lakh.

In short, consumers aren’t just buying a handbag, they’re financing a statement.

Middle-Income Buyers: Strategic or Strained?

The core of the modern luxury buyer is a financially aware, image-conscious individual making calculated decisions. But make no mistake: many are walking a financial tightrope.

• Credit card spending in India rose by over 30% in FY24, and analysts have pointed to a sharp increase in luxury-related expenses during limited-edition drops or festive seasons.

• BNPL services like ZestMoney and LazyPay reported a 40% spike in usage around Diwali 2023, particularly for luxury accessories, electronics, and fashion.

• A 2023 Mintel report found that 52% of Indian luxury consumers between 35 years old had either delayed EMI payments or cut back on necessities after a luxury purchase.

Yet these consumers aren’t reckless. They often build their wardrobe around 1–2 iconic pieces, a Balenciaga bag, a Dior belt that become style anchors. These are then paired with affordable fashion brands like Zara, H&M, or even thrifted finds. It’s a deliberate strategy to project wealth without having to be wealthy.

Luxury Brands: Financially Engineered to Sell the Dream

Luxury fashion houses know exactly what they’re doing. Their marketing and pricing strategies are built on finely tuned behavioural economics.

• Entry-Level Price Points: Brands introduce small-ticket items like perfumes, wallets, and cardholders as “gateway” products. These account for up to 30% of a brand’s revenue, according to McKinsey’s 2023 State of Fashion report.

• Price Anchoring: A ₹2 lakh handbag makes a ₹25,000 belt feel affordable by comparison. This anchoring effect nudges buyers toward purchases they can rationalise as “modest luxuries”.

• Scarcity and Drop Culture: Limited releases and waitlists create artificial scarcity, triggering FOMO and encouraging impulse purchases often on credit.

• Geographic Placement: Brands open stores in high-footfall malls and Tier-1 cities to stay accessible without diluting their exclusivity. India’s DLF Emporio and Mumbai’s Palladium Mall are designed to feel luxurious yet reachable.

All of these elements work together to generate one powerful sentiment: desire with urgency.

Quiet Luxury and the Discreet Billionaire

Here’s the paradox: truly wealthy individuals are often uninterested in loud displays of wealth. They favour brands like Loro Piana, The Row, or Brunello Cucinelli—labels that exude luxury without logos.

Why?

• According to a UBS Wealth Report, 70% of ultra-high-net-worth individuals prefer to spend on experiences or investments rather than visible luxury items.

• Many view logo-heavy fashion as trying too hard, a trait often associated with new wealth or “strivers”.

For them, status comes from privacy, not projection.

When Fashion Becomes Financial Strategy

Luxury fashion isn’t just about aesthetics, it’s about economics and social signalling. For the middle-class buyer, it’s a calculated risk. For the brand, it’s a profitable science.

In the world of luxury, every logo carries interest, sometimes emotional, often financial.

So next time you see someone carrying a designer handbag, ask yourself:

Did they pay for it in full? Or are they still paying it off?

More importantly: Are they wealthy? Or are they investing in the illusion of wealth?