Luxury = New Definition?

 That luxury goods are enjoying a buoyant market is a given. What's harder to define is why consumers at so many different income levels are in hot pursuit of relatively expensive things they don't really need.

Luxury is being defined in new ways and that definition evolves constantly with ever-shifting demographics, socioeconomics and the geopolitical climate, luxury observers note. Furthermore, the definition of luxury is not only objective, but also subjective depending on the buyers' personal circumstances.

The cliché used to be that fragrances were the point of entry into a traditional luxury label's domain. Over the past decade or so, designer eyewear has become a luxury category with relatively easy entry prices. More recently, watches, often further up the price scale, have also gained importance as a symbol of luxury, notably in the United States, compared to Europe where watches have been a traditional form of luxury, notes Ravi Dhar.

"You can't drive your Porsche into the boardroom, but you can distinguish yourself with a watch," says Dhar. Here, there is a mix of conspicuous consumption and the feel-good factor of wearing a great watch.

One way the notion of luxury has entered people's vocabulary is via the media. The increased availability of celebrity magazines or celebrity television programming, in addition to coverage in more traditional consumer glossy publications, means that more people know what's available.

"Eighty percent of Japanese women own or have bought a Vuitton bag," says Pierre Chandon. "This is not to distinguish themselves from the rest, but to show that they are part of the group."

"The real paradigm shift occurring in the luxury market that signifies new luxury is the consumer-centric way people are defining luxury as an experience or feeling," writes Pamela Danziger.

The only way for luxury brands to survive when the very definition of luxury is constantly shifting is to be consistently innovating, observers note. This is particularly important when courting the super rich. "The super rich have always stood out from everyone else, but the distance has shrunk," notes Myers. "They want to continue to distance themselves."

Recession = Less Luxury?

Recession! What recession? This is the kind of response you might get from South Africa’s BEE individuals (Black Economic Empowerment). They are the newly found rich segment in South Africa. They are the ones who found the golden pot at the end of the rainbow after 1994 once the democratic government came into power. They are South Africa’s “black diamonds”.

And they are spending. The latest findings of the UCT Unilever Report shows that, despite the recession, this markets’ spending power has grown by 39%, from R150 billion in 2007, to R250 billion to date.

Solly is just such a guy. He is rich. He is sleek. He’s an eternal optimist. And he knows what it means to fight for what you want. So what we might call a recession, he calls a “social struggle”. An opportunity to roll with the punches and come out stronger as a result. “I grew up in the struggle, I laugh in the face of what you call a crisis”

We met him at the Radisson restaurant situated in one of South Africa’s most prestigious hotels in Sandton City. He arrived, dressed in a black shirt and sleek designer black jacket, jeans and very shiny shoes. Waving keys to a  R2,4 million Bentley, he quickly tells us that this is his new investment.  He is thinking of buying this “baby” to add on to his other high profile portfolio of cars parked in his garage. 

“I am an optimist,” he tells us “I believe that the recession is a state of mind” he says with a look of determination on his face.

The truth is that these BEE are still living quite comfortably and spending quite freely. Perhaps they feel they deserve it. Perhaps they made smart decisions. Perhaps the recession really is small when compared to a life filled with struggle.

One thing is for sure, they are tenacious and one can only be humbled by such resilience.

Opportunity: Recognize Them For Their Tenacious Spirit. 

Rich yet counting dollars

 

Palos Verdes, California. Population: Approx. 42,000. Median household income: $95,000. It's zip code, 90274, was US' 47th most expensive zip code in 2007 according to Forbes.com. To Lesley Tanchum, this was the perfect place to set up her art gallery/shop that sold/consulted/framed art affluent consumers that appreciated the value of art.

Much to her surprise, it was everything but. "The mindset of these people was far from what I expected." She described the residents of Palos Verdes to be 'avid negotiatiors' and 'conservative' with their spending, always looking for a bargain. Customers that come into her store wanting a piece of art to be framed often try and haggle the price down to a number that they can find at a mass market shop, saying things like, "wow, $100 to frame this? I was looking online and saw that you could frame this for $20 less than this amount." The irony is astonishing to her, as she quoted that it was "funny seeing how people would drive up to the store in their Ferrari's yet come in and ask to pay the lowest price for a frame."

And if anything, the recession has only made this worse. Lesley's sales are down nearly 50-80%. Residents of PV are spending less money on art. And if they are, they come to the store saying, "my husband will kill me if I spend this money..." or something of the like. 

 

By Anna L