Luxury goods are status symbols, we buy them because we crave status because deep down we crave recognition from others in society. So I wonder if urbanization/the trend towards more loneliness is the problem. If you have a tightly-knit community, you'd have people who appreciate you because of your character, sense of humor or good company; not because you drive a fancy car. And nowadays we don't really have real communities anymore, just polarization through the Internet, where people try to feel better about themselves by putting down others.
Status can't be all of luxury goods - although it may be for say fashion. Material comforts and perception of superiority are reasons - those who have a community and any disposible income have their own market "profiles" based on familarity. Even if it is just say preferred sorts of Whiskey by mennonites.
In a capitalist society status is defined entirely by ownership of capital, and low status is defined by very limited capital.
So of course luxury goods are defined primarily by their capital cost, supported by subsidiary markers like cultural capital and social proof. Actual utility (and quality) come second.
Competitive status display is entirely about the careful curation of success tokens - clothes (+ accessories), car, house, sexual and breeding partner(s), and the amount of autonomy, agency, and political and cultural capital at work.
Ads exist to promote competitive status display through curated consumption of success tokens.
It's a sport no one can ever win, but for some people it's enough to be on the leaderboard for a while.
This (2+ hours) documentary about status is quite eye opening: https://www.youtube.com/watch?v=t1MqJPHxy6g