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Introduction
Over the past two decades, the pursuit of luxury possessions has stimulated the growth of the luxury market in which a 2015 report reveals that the industry was worth US$251 million (Statista, 2015). Recently, the industry has been affected by declining demands in key markets such as Hong Kong and China following a crackdown on bribery in China (Neate, 2017). The overall market outlook for the luxury industry continues to be challenging, with slow growth in several developed nations (Deloitte, 2017). This drop in demand has strong implications as Chinese consumers account to 31 percent of global luxury sales (D’Arpizio et al., 2015). Despite the market fluctuations, the luxury goods sector is resilient and consumers are still consuming luxury brands (Barnier et al., 2012). Particularly, consumers in emerging markets such as China, Russia, and the United Arab Emirates continue to drive the industry’s growth (Deloitte, 2017). Among the luxury goods, bags and accessories are the fastest growth categories with sales growth of 13.4 percent in 2015. The sales growth of apparel/footwear and jewelry/watches were recorded at 4.4 and 2 percent, respectively (Deloitte, 2017). These developments in the luxury industry clearly indicated the challenges of the market’s volatility, which has attracted much interest of economists, scholars, and marketers alike to understand the luxury business landscape.
Conspicuous consumption has long been the center of academic interest in luxury research since Veblen’s (1899) theory of the leisure class. Luxury fashion designers such as Gianni Versace, Giorgio Armani, and John Galliano are engraving their legacy into product designs by making their names or logos more prominent. However, recent news headlines such as “Inconspicuous consumption will motivate consumers in next decade” and “Inconspicuous branded consumption is the new business buzzword in retail” that appeared in Advertising Age and The Huffington Post, respectively (Crain, 2010; Wilson, 2014) reveal a changing consumer mindset that moves toward inconspicuousness. Inconspicuous consumption is defined as the use of subtle signals that are unidentifiable by the mainstream but instantly observable to those with the needed connoisseurship to decode their meanings (Eckhardt et al., 2015). Inconspicuous consumers are those who prefer unique, sophisticated, and subtle luxury brands whom Berger and Ward (2010) called “insiders” with hard-to-imitate tastes and preferences, distinguishing them from...