Captivating Connections.

the demise of luxury.

According to Cindy Gallop, founder and CEO of IfWeRantheWorld, "the single worst thing that happened to luxury was its democratization.

'Who will want to have a luxury brand if everyone else can have it too?' She argues that luxury brands, if they are to succeed, must be willing to be elitist in nature. They can't dabble in the upper reaches of the mass market. 'I think 'new luxury' is a return to true luxury,' she said. 'It's luxury for the very, very few. It will be shamelessly elitist.'

Gallop argued that luxury must also learn to be empathetic to its affluent customers. 'Astonishingly, in luxury comes some of the worst customer experience in any sector, especially when you buy super high-worth items. Everything radiates 'look, don't touch',' she says. 'I'm astonished by the number of people who can afford to buy the store,' she says.

Gallop argues that this kind of supercilious exclusivity at retail will return to haunt those brands. The newly wealthy and self-made 'not to the manner born,' often from Asian countries, are 'enormously uncomfortable in situations where they are trying hard to hold onto the [working-class] values they have always had.'

'In Shanghai, a guy comes out of poverty, opens a belt factory and becomes wealthy. He doesn't take friends to the best place in town; he will likely take them to the Shanghai fish market. I don't see many brands offering [retail] experiences where they can walk in and have their values respected,' she said.

The single biggest defining aspect of luxury lifestyle, said Gallop, is 'being able to do what you want, how you want, when you want and not giving a damn what people think.' Unfortunately, she said, luxury brands don't get it -- and often make it hard for customers to do that. 'That's what e-commerce is about. Luxury brands are bad at that,' she said."

the migration of luxury to the east.

"Emerging Asia’s role in the market for super high-end luxury goods is mushrooming, reflecting a tectonic shift eastward in the global balance of spending power — a shift that has crept along for years but that got added oomph from the recent global economic crisis.

Christie’s and its rival Sotheby’s say that within the past few years, their hub in Asia, in the financial center of Hong Kong, has emerged as a top location for their sales of top-dollar jewelry, gems and fine wines. Asians have also become major buyers of ultraluxury goods at the auction houses’ sales in cities like London, New York and Geneva.

Rolls-Royce, which did not even have dealerships in Asia until 2003, immediately got 20 orders for its new $250,000 Ghost when it presented the car in Hong Kong last month, despite taxes that effectively double that price.

For Christie’s and the others, moving auctions and business to Asia is a calculated decision reflecting the shift in the consumer base."

are luxury brands doing ok?

Despite that earlier article about luxury in Japan, luxury brands may be doing ok in this current economic climate:

"The big branding story of the past year's recession has been the threat to the luxury category. Luxury, once thought recession-proof, seemed in danger this time around because of the broadening appeal of discount brands.

As Interbrand's Best Global Brands 2009 report, released today, observes:

In Western markets, the rise of the hi-lo consumers -- people who save on what is less relevant to them so they can indulge in what they find to be truly meaningful -- has made discount shopping not a sad compromise, but a joyful form of smart allocation.

Despite this pressure, the brand value of the luxury category in the Interbrand study actually grew in 2009. Individual brands were happy to stay flat in this environment, with Hermes up one percent, Gucci down one, and Prada and Louis Vuitton down two percent. (In the automotive sector, Ferrari was the only brand that didn't lose value.) Companies that had diluted their brand equity with moves toward the mainstream, like Armani and Tiffany, lost more ground.

According to Interbrand, luxury brands that target 'wealthy connoisseurs' are most likely to prosper. Successful luxury brands set themselves apart using 'authenticity, legacy, and excellence,' the study concludes. European luxury brands who fared best this year -- LV, Prada, Hermes -- maintained their focus on craftsmanship and exclusivity."

are the affluent back to, well, being (or at least acting) affluent?

"A year after the Lehman Bros. collapse sent financial markets and consumer spending reeling, conspicuous consumption isn't dead after all among the 23.9 million U.S. households with incomes of at least $100,000.

Of course, it's still hurting: The 2009 Ipsos Mendelsohn survey of the affluent, being released a year to the day of the Lehman collapse, finds consumers in that income bracket planning less overseas travel than in 2008 (down 10%); fewer are planning on buying new cars (down 18%); and are less inclined to invest in securities (down 5%).

But even so, they are planning on doing all those things. The survey projects that someone in 12.2 million of wealthy households will journey outside the U.S. this year; 6.3 million will buy or lease new cars, trucks or SUVs; and 13.9 million will invest in stocks or mutual funds."

even the rich are online.

According to ComScore, the wealthy can be found...online.

"Over 50 million unique affluent Internet users—those with annual household incomes of at least $100,000—visited Websites in March, making up over one-quarter of the entire Internet population for the month.

There were slightly more wealthy men (53% of affluent Web users) online than women (47%).

Most affluent Internet users lived in the Pacific (West Coast), South Atlantic (the East Coast from Delaware to Florida), East North Central (the eastern Midwest) and mid-Atlantic (New York, Pennsylvania and New Jersey) regions.

Not surprisingly, 45-to-54-year-olds made up the largest group of affluent Internet users, in terms of age, with 10.8 million. Next-highest in number were 35-to-44-year-olds, followed by teens and older users."

it ain't easy (having) green.

Remember that song, 'Can't Buy Me Love'? Well, even luxury consumers are attempting to buy a whole lot less of the things they love...

"Pessimism has set in amongst 'luxury consumers,' based on the latest research from the American Affluence Research Center, which found that the wealthiest U.S. households have cut their spending plans, expectations for personal income and outlook for an improved economy.

In fact, the numbers are at their lowest point since the center began its twice-yearly surveys of wealthy consumers in 2002.

The latest survey found that the wealthy have also changed their primary financial objective -- from capital appreciation and growth to preservation of assets."

"Overall, the survey found that 81% of respondents have reduced or deferred expenditures over the past year, would make a conscious effort to do so over the next year, or had already done so and will continue to do so. This figure is up from 55% a year ago.

Multiple reasons, more than four on average, were given for cutting expenditures, with the top being 'uncertain when the economy will recover' (80%), followed closely by 'decline in the value of our investments/savings.' Both were mentioned twice as much as in 2008, when 'possibility of a recession' was cited by more than 50%.

This year, around 50% said they're cutting expenditures in order to 'spend less and save more.' Mentioned less frequently (by 30% to 45%) were increased taxes, uncertainty about job security and compensation, decline in the value of primary residence, and increased cost of everyday goods and services (which was mentioned by more than half of respondents last year, due to the high cost of gas and oil)."

everyone is trimming spending these days...

Even Mass Affluents are trimming back their spending these days:

"A Mintel study found that 55% of Mass Affluents have cut down or deferred overall spending due to the recession. Only 48% say they currently 'feel financially secure.' That figure is just 36% of Hispanic Mass Affluents. Mintel noted that the Mass Affluents rely on credit cards for more than half of all their purchases, and as might be expected, spend 'significantly more' than the average consumer.

More than three-quarters (78%) of U.S. households earning between $100,000 and $1 million -- dubbed the 'Mass Affluents' -- did not change their credit card payment behavior during the past 12 months, according to a new report from Mintel.

The remainder of the group was split evenly between those who formerly paid balances in full but now don't, and those who didn't formerly pay in full, but are now making even smaller monthly payments."

affluents hitting the drive-thru line.

Even Affluents are making changes in how they eat and act...

"Affluent consumers increased their visits to fast-food burger restaurants, but cut back on visits to the more upscale chains within the family restaurants category in the months following the economic 'meltdown' in early October.

Those are among the restaurant-related trends emerging from newly released Experian Simmons data from the latest three-month wave of the Simmons National Consumer Study (Fall 2008)."

Here's what's really interesting:

"Following the meltdown (pegged at Oct. 3), the data show a distinct uptick in reported recent (last 30 days) visits to fast-food burger chains among households with incomes of $75,000 and above.

Furthermore, the uptrend was more marked among the highest incomes levels. For example, the percentage of consumers with household incomes of $100,000+ having visited one (unnamed) burger chain jumped from 50.1% pre-meltdown to 57.3% post-meltdown, and the percentage reporting visiting a second unnamed burger chain rose from 25.7% to 31.3%."

secret shopping.

Well hereis an interesting trend going on among Affluents who still want to shop...

"'Shopping is almost embarrassing, and a little vulgar right now,' said Ms. Buckley, an editor at Allure magazine. Loath to be seen loading freezer-size parcels into the back of a waiting cab, she finds herself shopping at under-the-radar soirees in the homes of her friends.

Ms. Buckley is one in a coterie of shoppers turning their backs on conspicuous consumption but trawling for treasures nonetheless at invitation-only shopping events springing up in hotel suites, at private showrooms or in the well-appointed parlors of their peers. Feeling the pangs of conscience, they are shopping on the down-low, finding deals in places that are the retail equivalent of a safari on a private game reserve.

'People don’t want to be as public about shopping for luxury goods as they were in the past,' said Robert Burke, a luxury retail consultant in New York. 'It’s a feel-good way to buy, and this is a time for feel-good things.'"

This is an interesting take on consumption during the recession. When I was in Soho the other day, it was just as crowded as usual, but, if you walked into stores that are usually nightmares to shop in (H&M, etc.), it was almost strange how EMPTY they were. We all know this is going to be a holiday where spend is down, but could it be people are still 'secretly' spending in other socio-economic brackets, just in more 'private' places like online?