Managing the Challenge of Luxury Democratization: A Multicountry Analysis

Abstract

Once the preserve of the elite, many luxury brands are now targeting the rapidly rising global middle classes. This “democratization of luxury,” understood as the perceived reduction in distinctiveness, exclusivity, and self-differentiation of luxury goods due to wider availability and access, has changed the luxury industry landscape substantially, and yet it remains an underexplored phenomenon in academic research. Building on the theory of network effects, this study focuses on how democratization influences the relationship between conspicuous signaling and luxury purchase intentions. Analysis of primary data (n = 1,156) from luxury consumers in developed (United States and Spain) and developing (China and India) markets with distinctly differing economic trajectories reveals the varying negative moderating influence of democratization. These negative effects of luxury democratization are more pronounced in developing markets (Study 1). Further, the findings highlight that consumer indulgence can help mitigate negative externalities associated with luxury democratization (Study 1) and identify its underlying mechanism through positive affect (Study 2). The multimethod approach demonstrated in this study sheds new light on consumer perceptions of luxury democratization and offers actionable implications for international luxury firms on managing this challenge in developed and developing markets.