LUXURY IN A RECOVERING© SOCIETY LONDON 03 The Panel Njide Ugboma Pippa Isbell Patrick Jephson Editor-in-Chief Worldwide Director of PR Writer, Broadcaster Let Them Eat Cake Magazine Orient-Express Fran Page Alan Treadgold Georgie Coleridge-Cole Head of Marketing Head of Retail Strategy Founder & Editor Liberty Leo Burnett Sheerluxe Liz Hambelton Fiona Sandserson Peter Howarth Contributing Beauty Editor Managing Director Managing Director Grazia The Luxury Channel Show Media Luxury Trend Report 2010 LONDON 04 SUMMARY OF MARKET TREND REPORT Part 1 What’s going on in the luxury market • Recession created resentment of wealth • Consumers are shying away from overt displays of status • There is willingness to spend on luxury if it is toned down and genuinely deserves its luxury status • Bling was already on its way out before the recession • The market crash accelerated the association of overt luxury with the fast-buck culture • People are making more discriminating luxury purchases and will often compensate by budgeting elsewhere • There is a new emphasis on the personal relevance of brands • Status is still important - but it is only to be recognised by those in the know • There is a new consumer mindset: more discriminatory, making integrity an important factor Luxury Trend Report 2010 LONDON 05 SUMMARY OF MARKET TREND REPORT Part 2 How to address the new trends • Brands must truly fulfil luxury criteria to justify purchase • A marketing ‘message’ is no longer enough; brands now require stories that imbue a purchase with greater meaning • Stories set a brand apart, but they need to resonate with values and experiences • It is no longer enough for a brand to tell one story which it projects to consumers • Brands need to involve consumers who relate on a more level playing field than ever before • Brands can use online as a tool, not a hindrance, to connect with their consumers • Luxury brands need to provide multiple stories for their consumers to blend and colour with their own Luxury Trend Report 2010 LONDON 06 SUMMARY OF MARKET TREND REPORT Part 3 What are the brand stories to tell? • The story of superior performance: substantiated by how and why it is the best, reassures the consumer • The story of sophistication: a subtle language that assures the consumer of a shared taste and aesthetic • The story of craftsmanship: upheld by expertise, time spent, tradition and beautiful design • The story of collaboration: gives a brand an exciting hybrid story, co-opting the creative partner’s brand attributes, for a collective experience • The story of exclusivity: imbuing an item with a sense of rarity and exception, which justifies the expense • The story of involvement: the rising demand for bespoke items builds the status and exclusivity of both brand and consumer • The story of innovation: keeps brands relevant, particularly those with a heritage story; and a really significant innovation can create a luxury brand • The story of heritage: not just a name and a date of inception; but a proper history, whether a story of longevity or a cultural immersion • The story of provenance: if a brand comes from a location famous for that product, that place’s story becomes its own • The story of ethics: a green or fair trade badge isn’t enough - there must also be an authentic, inspirational or heartwarming tale Luxury Trend Report 2010 LONDON 07 hat’s going on in the luxury market Luxury Trend Report 2010 LONDON 08 hether splashing out on bling with a bonus, or flaunting the fact you can buy the latest top-of- the-range in ‘What’s the difference between a banker and a pigeon? any consumer A pigeon can still leave a deposit on a new BMW.’ category, it’s no longer - Worldwide email joke in 2009 fashionable to be seen to ‘Barclays bankers £500,000 banquet. Fatcat bankers have a lot of disposable flew to Italy yesterday on an all-expenses-paid bash - income in these days as the rest of the country was left in financial meltdown.’ of recession… - The Sun ‘Top 10 worst WAG moments - footballers wives criticised for excessive spending on fashion, kitchens with six ovens, and £1 million weddings: - The Mirror Luxury Trend Report 2010 LONDON 09 s this bad news for luxury brands? ‘The new spend-averse consumer is now wanting much more reassurance on value’ - Alan Treadgold, Head of Retail Strategy, Leo Burnett ‘It is no longer acceptable to be obviously broadcasting status.’ - Patrick Jephson, Writer, Broadcaster ‘People don’t want to walk down the street wearing something that makes you look filthy rich’ - Peter Howarth, Managing Director, Show Media ‘The days of belt notching and showing wealth and status that way are well and truly fading, a trend that was only accelerated by the recession.’ - Pippa Isbell, Worldwide Director of PR, Orient Express Luxury Trend Report 2010 LONDON 10 ut it’s not the whole story… The market for luxury goods and services is not diminishing dramatically, so much as going undercover. In a recovery economy, people are looking to treat themselves - but they need stronger reasons than ever to buy. The flavour of the month just won’t do: they need to be sure that one or more qualities ‘People are willing to spend on luxury again; it’s just that the sense of shame attached to overt displays of wealth has stuck.’ will justify that - Pippa Isbell, Worldwide Director of PR, Orient Express purchase for some time to come. ‘Super-premium brands are somewhat more resilient than less expensive discretionary spend products as they’ll continue to be valued.’ - Alan Treadgold Head of Retail Strategy, Leo Burnett ‘It is how you don’t flaunt it that has become the new status symbol.’ - Patrick Jephson, Writer, Broadcaster Luxury Trend Report 2010 LONDON 11 new consumer mindset: the importance of integrity For consumers, the age of bling and other outward-directed symbols is over. Such overt displays of spending have become associated by many Britons, Western Europeans and metropolitan Americans as synonymous with less sophisticated people from nouveau riche ‘The luxury peacocks will keep away for a long time to /developing parts of the world. come thanks to consumer reticence when it comes to overtly showing what they can afford.’ - Alan Treadgold, Head of Retail Strategy, Leo Burnett The global financial crisis accelerated the latent public resentment of those regarded as only having eyes for the fast buck. Identifiably expensive clothing, cars and accessories marked people out, fairly or unfairly as ‘those responsible’ for the crisis. ‘There is definitely a sense of “luxury shame” now. But in many ways there is Big, bold logos turned into badges of shame. a relief attached to having to live in this And so there has been a genuine wish new balanced way - it was a pressure to disassociate from perceived financial to fit in and keep up with that level of consumption.’ - Pippa Isbell, Worldwide irresponsibility. Director of PR, Orient Express Luxury Trend Report 2010 LONDON 12 Note, however, that we are talking about attitudes, not ability to purchase. There is still disposable income and a taste for luxury. Now, the attitude is one of introspection and discretion - spending money not to show that you’ve spent it, but on goods and services that have a real meaning to the purchaser. This often means that it ‘There is a polarisation of spend as consumers happily spend at a premium but cross-subsidise in other parts of their spend. is one special purchase Clothing is a good example - mixing a Calvin Klein jacket, for mixed and matched example, with a pair of Top Shop jeans.’ - Alan Treadgold , with cheaper goods. Head of Retail Strategy, Leo Burnett ‘The importance of having a point of view, of mixing experiences for savvier combinations very much applies to travel. People will fly cheap on Ryanair and stay in a five-star hotel. The consumer feels good about making more mindful, balanced choices.’ - Pippa Isbell, Worldwide Director of PR, Orient Express Personal connections with a brand or an appreciation of its qualities not only create a deeper source of pleasure in the purchase than mere status symbols, but also serve to Now people are far more discerning and re-evaluating justify making a luxury purchase, what constitutes a luxury experience.’ - Peter Howarth, if there is any lingering spend-guilt. Managing Director, Show Media Luxury Trend Report 2010 LONDON 13 Status is still important. It’s just that the communication of that has changed. The idea is no longer to rub status in the faces of those without it, but to be noticed by those with the same superior tastes - a Berluti shoe or logoless Oliver Peoples sunglasses are recognisable to those in the know, but pass unnoticed by those out of the loop. Status has now become bound up with integrity. True luxury is not flashy fast-fashion or this month’s ‘Status now is about showing personality, knowledge, and investment - luxury purchases often represent investment rather than expenditure. hot bar/restaurant/holiday destination, There is a much greater desire to know the true value of what we’re but a brand that resounds with a story. buying - that rational underpinning will completely influence consumer behaviour.’ - Fiona Sanderson, Managing Director, The Luxury Channel ‘Sophisticated luxury users tend to direct their status messages at increasingly focussed groups of people; building small and intense knowledge groups.’ - Georgie Coleridge-Cole, Founder and Editor, Sheerluxe Luxury Trend Report 2010 LONDON 14 ow to address the new trends Luxury Trend Report 2010 LONDON 15 new way of communicating status: the strength of stories With the consumer of luxury goods requiring greater meaning and value from their purchases, as well as justification for making them, a marketing ‘Brands are having to learn how to talk to their consumers more than ever.