‘The hotel was nice but no pet-sitting service and rigid pillows? Disappointing!’. In a spectacularly candid yet mundane tone, ASmallWorld forum post decries an unforgiving lack of red-carpet treatment. It made me think that perhaps I was the wrong type to have been invited to join the invite-only social network. At first the invite had left my ego pampered; by the end, my perusing left me ashamed for not knowing the tog and thread count of my favourite pillow type.
Although such diatribes are at the extreme end for most of the growing base of 11million High-Net-Worth-Individuals in the world, it is indicative of how the expression and use of wealth has become more emotive – based on time, convenience and experience. It is no surprise that the luxury sector has weathered the dearth within the global economy.
The demand amongst such consumers has become not only for quality but for increasingly bespoke freedoms reserved for the few. It is a boon time for time-substitute services such as personal concierges. They have done well by acknowledging that HNWIs are globetrotting citizens of the world that expect special, tailored, targeted services and perks, such as cleaners, personal shoppers, travel search agencies and dog sitters. In case you wanted to more literarily live and breathe a brand, interior-designed hotels such as Givenchy Hotel & Spa, Hotel Missoni and Cavalli Club provide the lucky few with a quintessential lap of branded designer luxury.
The most positive news for luxury brands is that exclusive goods, services and experiences that are truly out of reach of many others will continue to demand a high price tag – about 30% of Americans, Europeans, and Japanese say they are most likely to pay full price for an item that is classic – and more than half of Chinese. While average Joe may spend half an hour comparing prices on twelve different websites, the wealthy are increasingly going in the other direction, seeing the kinds of things that can never be bought on discount as more valuable. Cultural differences magnify this further – in China, for example, more than half of luxury good buyers think that the more expensive the product, the better they consider its quality.
Seemingly, providing such products and services is becoming even more essentials in fast-developing countries where status-grabbing is an ingrained cultural and social etiquette. This is especially enlightening given that the 600 cities with the largest GDP will generate nearly 65% of world economic growth by 2025. Within this 600, 440 cities are in emerging economies (and these cities will account for close to half of the overall growth) and over 400 of the 600 are middleweight cities (with populations of between 150,000 and 10 million), including 236 in China. The spheres of consumer spending are turning on their axes.
It is not only the demand for luxury goods and services that will increase. The ways in which luxury brand operate in different markets will also change. For example, to ensure authenticity, a couple of years ago Hermes, alongside Chinese designer Jiang Qiong Er, launched Shang Xia is a mission to project a modern lifestyle founded on Chinese design traditions.
Visa-versa, Bosideng – a middle-of-the road Chinese brand with sales of more than £800m and more than 8,000 stores and as well known in China as Marks & Spencer is here, has set itself up as a luxury brand next to Bond Street Station. Developing-country brands are still craving the allurement of Western retail hotspots, using it as marketing back home.
But then the conundrum: with millions of millionaires out there and with many luxury products affordable for the masses, being a millionaire is just not that special anymore. Luckily, luxury brands are more than happy to grovel in a bid to solve this frustrating conundrum; more keen that ever to satisfy customers’ every whim and bend over backwards to serve. Take Exhibit A: Birkin bag, which takes five weeks to craft and prices start around $6,000, sometimes reaching into six figures (i.e., the latter being made with alligator skin and diamonds). But you are going to have to wait over two years so you better stave off the bragging for now.
However, the biggest changes are taking place online. While previously luxury houses were sceptical about launching transactional websites, now the great majority of luxury players have at least a limited online offer. In 2011, several latecomers to luxury e-commerce launched their e-stores, including Dolce & Gabbana, Balenciaga, and Ermenegildo Zegna.
The internet is still treated with caution by most prestige brands; they are constrained by expensive legacy investments, fear of online discounting, or simply the lack of control. However, analysis of social platforms such as Facebook has shown that engagement has more than trebled, with luxury fashion brands Burberry and Gucci leading the way.
But still, when spending the amount that you are, being able to speak to someone is just irreplaceable. According to the Luxury Institute’s Wealth Survey, 62% of consumers preferring to call direct for live customer assistance, if that assistance is not available when shopping online, the purchase will be abandoned.
The alternative for the brand is to join the mobile revolution through customised mobile apps for in-store staff announcing a customer’s arrival and providing personally designed offers or apps that help you make those gravely difficult decisions –Tiffany’s has handily recently launched a mobile app to help you find the perfect engagement ring; hopefully they’ve made the app invisible to prying eyes!