Indiana Jones-inspired, five-figure vacations, the Chinese economic boom, social network-themed martini lounges, the perceived value of discounted prestige brands. The 2010 luxury market is all over the map after a year of budget-tightening and nervous nail-biting amid the Great Recession. Purveyors of all things prestige are learning lessons and re-strategizing to emerge on-top.
To sort through and make sense of luxury’s re-emergence in 2010, we identified key trends to navigate not only today’s market, but prepare for tomorrow:
The State of Luxury Today — In 2009, the Great Recession brought great panic to the luxury industry. Coach and Nordstroms bit the bullet and slashed product prices, and unlike what some experts predicted, the prestige brands have retained their luster and thrived. Other high-end brands are hedging losses in America and Europe by entering the booming Chinese market. Boomers are entering retirement while Gen X isn’t large enough to support their historical spending. From a global lens, the luxury market is experiencing tectonic shifts that show extraordinary short-term gains, but are profits sustainable?
The Golden Wall of China — The Chinese market is trying to find its prestigious identity among established luxury brands in Europe and America. In fact, many affluent Chinese reject “Made in China” products in lieu of superior imported quality. “China is not an easy market. Chinese consumers are very demanding; they don’t like ‘made in China’ products,” said Florent Perrichon, CEO, Cerruti. Much like Amish youth trying to find their identity, Chinese too will undergo a cultural transformation whereby “Made in China” will be less synonymous with ticky tacky and more with rich cultural heritage, entrepreneurial spirit and quality.
Luxury’s Love Affair with High-Tech — Robot housemaids, electric cars, personal commuter airplanes and all the insanely impossible kitchen gadgetry imaginable. For nearly a century, the World’s Fair has illustrated American’s strong association between luxury and technology. Tech enhances our ability to connect with the world and how the world connects with us. It maximizes our time and extends our pleasure. It helps us navigate a world flooded in information while liberating us from its complexities.
The Luxury of Once-In-A-Lifetime Experiences — You are assigned a mission in which you will train with former M16 agents. Your journey will take you around the world where you must complete challenging tasks that require both brains and brawn. Do you wish to accept? Many high net worth individuals are asking, where do I sign up? The seven-figure Indiana-Jones-inspired vacation is one of many thrill-seeking experiences coordinated by the members-only luxury concierge service, Quintessentially. Quintessentially is leading a trend that curates not just extravagant vacations, but extraordinary experiences that yield incredible stories.
Recession-Proof Luxury: Timelessness & Enduring Quality — If you had a choice between buying one uber trendy dress this season and another trendy dress next or buying a timeless dress this season and a timeless cardigan next, which would you choose? At year two, you could either have one dress or one dress and one cardigan. Investing in timeless luxury items is a way to maximize spending dollars in recessionary times while maintaining an affluent lifestyle. More and more, Gen X men and Gen Yers consider luxury an investment and some prestige brands, such as Hermes, are benefiting — even when times are lean.
Luxury: For What It’s Worth — What makes a pair of Jimmy Choo heel sandals worth $1,150? Or a $17,500 price tag for a night at the Dunton Hot Springs? In essence, what is luxury worth? Everyone perceives products and service value differently. You’ve likely been in Gucci or Hermes and said, really? A shoe-shaped Gucci key ring is $170. Really? For some, it’s worth it. As everyone derives value differently, there are three main criteria that help us decide whether a luxury product or service is worth it:
Personal Renewal with Purpose — All luxury fulfills an emotional need. Often times, that need is social relevancy and status among peers. Think about what a Louis Vuitton bag says about a person: affluence and they should be recognized for it. There is a rising trend in luxury that stretches beyond superficial, Louis Vuitton and D&G status symbols, and speaks to rejuvenation, personal energy and sustainability. No, millionaires are not holding hands around a camp fire, singing Koombaya. This emerging class of high net worth individuals seek to preserve themselves and the world around them. Two similar, yet different, brands capturing this rising trend are Terrain and Lululemon Athletica.
Passion Immersion Drives Niche Luxury — A recent study of luxury handbags, featured in Psychology Today, suggests once the price exceeds $300, the logo decreases in size. But why pay more for a brand without the recognition? Sterling Lanier, President of the market research consultancy Chatter, performed in-home case studies of affluent Gen Yers to provide insight. In one of Sterling’s audience testimonials, a Gen Yer said he purchases shirts from a Scottish designer with around three small stores in Europe. With only a small colored tag to identify the designer, he gets gratification seeing others wear the Scottish brand.
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