On March 13, American consumer confidence saw the largest single-day drop in more than two years, continuing a downward trend that began earlier this month, as measured in a daily survey by Morning Consult.

Under normal circumstances, the company releases its Index of Consumer Sentiment (ICS) weekly, but because of the national emergency caused by the coronavirus outbreak, it will begin reporting its ICS daily.

According to the latest report, Americans are no longer seeing coronavirus as an existential threat to the national economy, but one that has become personal.

“The coronavirus pandemic has begun to affect consumers’ views of their own financial situation and confidence in spending, a key difference from recent periods of depressed consumer confidence,” Morning Consult’s economic intelligence unit said in a release.

Particularly troubling is that consumers at all income levels are feeling less confident, which could impact all consumer-facing businesses in the coming months.

And even more troubling for business segments that are discretionary in nature, with the luxury market being the most discretionary of all, the confidence of high-income Americans fell first and declined fastest compared with the middle-income or low-income cohorts in the survey.

The ICS and other consumer confidence indices are at their core a quantitative way to measure the totally qualitative underlying consumer psychology in the country. That high-income consumers are feeling growing uncertainty doesn’t bode well for the luxury sector, which depends upon their outsized spending.

Luxury in the crosshairs

Since the recent experience in China, where the coronavirus first appeared, gives us a window into what’s going to happen here, we can also expect the luxury market to be among the hardest-hit sectors in the U.S., the world’s largest luxury market (more than twice the size of China).

Already luxury industry executives predict the coronavirus could wipe out between €30 billion to €40 billion in sales, dragging the industry down to levels not seen since 2015, according to an ad-hoc survey conducted in February by Italian luxury brand consortium Altagamma, in association with Boston Consulting Group and investment firm Bernstein.

But that survey of luxury executives doesn’t take into account luxury consumer psychology. “Shopping behavior is always a means to an emotional end,” explains Chris Gray, Psy.D., founder of consumer psychology consultancy Buycology and an early pioneer in the shopper psychology field with advertising agency Saatchi & Saatchi.

“Behaviors happen for a reason, always,” he continues. “If you can get to the bottom of why – the reason it is happening – you can start to understand consumer behavior.”

Since emotions are at the core of luxury consumer spending, the luxury industry is totally dependent upon their customers’ feelings for sales. Rational decision-making takes a back seat in the world of luxury.

Given Gray’s focus on the consumers’ underlying psychology, or why people buy, to understand their shopping behavior, I asked him to use those insights to predict luxury consumers’ future shopping behavior.

Deep-seated anxiety is catching

Today luxury consumers are experiencing anxiety and a sense of insecurity far greater than experienced in the Great Recession of 2008-2009. While the affluent shoppers took a hit to their financial security at the time, most of them also had the financial wherewithal to ride out that storm.

However, this crisis is different. The threat to their physical wellbeing is unprecedented. We’d have to look back to World War II or, to a lesser extent, 9/11 to find parallels. “We are feeling a sense of insecurity at a very basic level. The intensity of that anxiety is new to most of us,” Gray says.

Once the immediate threat lifts, he expects luxury consumers to come back stronger in a backlash against all the worry and anxiety they came through. It happened after World War II, 9/11, and the most recent Great Recession.

“People get worn out. They react with a desire to buy things that show the world that they are here and safe. After a period of emotional crisis, the rebound spending is about identity building and showing the world that you are in a good place,” he explains.

This will lead to more identity-building and identity-reinforcing purchases, of which luxury brands are the pinnacle.

“Showing your identity is a very important emotional aspiration that plays into shopping behavior. Luxury says to the world that I’m doing well and that I can afford this. From that comes a greater sense of comfort and security,” he believes, and continues, “The spending that comes after hard times is more about identity and security.”

Gray also foresees luxury brands could get a boost after this crisis because following the short-term hardships, affluent consumers will be ready to open up emotionally to new long-term possibilities.

“Luxury items provide a sense of possibility and freedom to dream. When you are in the middle of a crisis, it is hard to dream,” he says. “People are focused on the day-to-day versus being able to think about how life may be better in the future. This opens another opportunity for luxury brands to be able to provide people with that sense of aspiration and possibility.”

New possibilities for luxury brands

Turning to what this anticipated shift in consumer psychology will mean to luxury brands, I spoke with Dr. Martina Olbertova, founder of Meaning.Global and one of the world’s leading authorities on meaning. As the author of a study, “The Luxury Report: Redefining the Future Meaning of Luxury,” she has a unique perspective on how luxury brands can lean into the changes that are forming now.

Olbertova warns that unless luxury brands take a longer-term view, their brands could face a crisis of meaning after the coronavirus lifts.

“We have to take a holistic perspective. This health crisis and the way we are reacting to it is a symptom of underlying weaknesses,” she says. “It is a wake-up call to brands. It can serve as a great catalyst for brands to transition to the new luxury paradigm faster than they probably would under normal circumstances.”

On the horizon, she sees the luxury consumers tilting toward more experiential luxury and away from the materialistic expression of it. Olbertova sees the need for brands to put more meaningful values into their offerings that branch out into services and experiences and away from luxury as ostentatious symbols of wealth and power.

“As far as bags and shoes go, maybe this is to remind us that we live in a society that worships meaningless things instead of embracing and fully activating things that really matter,” Olbertova continues.

With this crisis in health, which does not discriminate based upon one’s income or wealth, she foresees a shift in the luxury market toward wellness and wellbeing. That means luxury that is good for the individual, good for the planet, good for society.

“It may open up a whole new conversation about luxury that will be more experiential, authentic and provide healing,” Olbertova believes.

Bringing new meaning to luxury

Olbertova agrees with Gray that initially luxury consumers will demonstrate rewards-based behavior, or indulge in luxury purchases to make themselves feel better. This has also been called revenge or retaliatory spending.

“It can be therapeutic to spend on yourself after you’ve come through a period of suffering,” she says, but adds, “that is not a sustainable long-term strategy.”

Olbertova warns luxury brands not to expect a return to “business as usual” after the crisis abates. That would just be adding more fuel to a fire that could ignite again when another black swan event occurs, which is bound to happen sooner rather than later. “The world is too volatile today. We are all interconnected,” she says.

“Luxury brands need to be thinking about future-proofing their businesses in ways that go beyond simply expanding into different countries and cultures,” she shares, stressing that the cultural diversification strategy needs to cater beyond selling the same-old, high-priced stuff in China, Russia, India, and the Middle East.

“Rather, they should fundamentally rethink the values that luxury brands promote across their services and experiences. They need to think about serving people’s essential needs that revolve around what is scarce and luxurious,” Olbertova says.

She cautions that by simply diversifying into new world markets, many luxury brands have actually devalued their value and meaning. The future-proofing opportunity lies in diversifying and elevating brands in terms of the products and services offered based on values shared and promoted and that people can identify with.

“Ultimately the symbolic value of luxury isn’t going to change,” she says. “These luxury brands have been around for hundreds of years. There is always going to be demand for something that is handcrafted, premium quality, and of lasting value.”

In an unexpected way, this may cause luxury brands to return to their roots and the true legacy value of the brands. The meaning of luxury brands has to go deeper than prominent logos.

Olbertova believes this crisis, which is slowing the whole world down, will give luxury brands a chance to pause so that they can look inward to probe more deeply into what their brands mean now and can mean in the future.

“This is a time to create and strengthen brand perceptions, which ultimately create value. And that’s all anchored in meaning,” Olbertova says.