Following the launch of our Truth about Affluence in the fall of 2013, and with more than a couple of us at Truth Central enamored with the world of luxury, we were thrilled to attend the second annual Luxury Daily FirstLook: Strategy 2014 conference at the Time & Life Building in New York City. The luxury stage was set immediately upon entering: attendees were generously greeted with sets of glossy magazines and a skin caviar sample from La Prairie. The conference line-up was extensive, consisting of leadership representing Peninsula Hotels, La Prairie, Saks Fifth Avenue, LVMH, and Pratesi – among others. We certainly left the event more enlightened, educated and impressed.
Equipped with insights from our Affluence study, we were fascinated to see how brands connect with affluent consumers. The thematic foundation of many presentations was built upon the global economic shake-up experienced in 2008, which had profound implications on luxury brands and businesses. As Renaud Dutriel – ex-chairman of LVMH U.S. – said, “We were confronted with people asking ‘Why do we need luxury’?”. A fair question given hard times, but as Sharon Osen – SVP of global marketing and brand strategy at La Prairie – eloquently stated, “Luxury is important because it reminds us to strive for perfection. Luxury is the pinnacle of ‘getting it right’.”
We learned that, because of the recent economic turmoil, attitudes and behaviors of wealthy consumers towards luxury have changed for the long term. For instance, Cara David of American Express Publishing spoke of Affluents’ “depth of memory”: despite current times of relative economic prosperity, extravagance of times past has led to fear, which has led to anxiety. The wealthy remain cautious. However, they still yearn for the sublime, and we learned, above all, that today’s luxury customer is an empowered, independent and international one.
Empowered: The Internet has provided more than greater access to better, faster shopping. It’s granted a new set of tools to the affluent population. Cara David’s American Express Publishing study finds a significantly heightened sense of resourcefulness and saving among the wealthy, along with new core values of control and planning. Consumers feel an increased sense of self-reliance in making sound decisions, with implications on the way in which a range of industries should tailor communications with the audience.
Independent: “I am who I am, where I am, when I am”. This phrase, spoken by L’Oreal Luxe VP of digital strategy, Rachael Johnson, succinctly captures the attitude of today’s luxury consumer. Always connected and very discerning, consumers don’t want to feel “sold to” 365 days a year. They expect a higher standard of content and relationship-building, says Matthew Woolsey – SVP of Digital at Barney’s New York. “Storytelling is the word on everyone’s mouth, but we choose not to create ‘empty calories’ of content.” Instead, their strategy is to delight and surprise their consumer every day, even if it means no direct link to a sale. Consumers want to make their own decisions when it comes to which brands they allow into their lives.
International: The rise of the Asian market, coupled with allure of global travel, represents a strong shift towards an international mindset among the luxury customer. Renaud Dutreil, formerly of LVMH, predicts that luxury goods closer to the body, like apparel and jewelry, will be more important in communicating status than items apart from the body, like cars and homes. He attributes this, in part, to the desire among the wealthy to be seen as “billionaire nomads”. This aspirational persona of the globe-trotting sophisticate, who hops from city to city equipped with just the priceless essentials, means assets like cars are not as needed. In addition, goods that are ingested by the body, like food, wine and even culture, will become increasingly important as signifiers of affluence. But lest we doubt the significance of hard assets, Dutreil assures that the wealthy are still renting Jaguars and taking up expensive lodging on the short-term.
It seems the world of brands is increasingly in flux, and even the most traditional categories, like luxury, are no exception. The more we learn about this multi-faceted and demanding consumer, the more the luxury category can better provide for and delight them in years to come.