Ledbury Research, specialist luxury market research firm, examines key themes for the coming year that will have important implications for brands targeting the wealthy in 2011
CONSUMERS
10 Must Know Trends for Luxury in 2011
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Over the last decade, collaborations between luxury brands and contemporary artists have gone beyond mere artistic partnerships towards a new kind of luxury branding.
PARIS – Art and fashion have always developed side by side, for fashion, like art, often gives visual expression to the cultural zeitgeist. During the 1920s, Salvador Dalí created dresses for Coco Chanel and Elsa Schiapparelli. In the 1930s, Ferragamo’s shoes commissioned designs for advertisements from Futurist painter Lucio Venna, while Gianni Versace commissioned works from artists such as Alighiero Boetti and Roy Lichtenstein for the launch of his collections. Yves Saint Laurent’s vast art collection, recently auctioned at Christie’s in Paris, testified to his great love of art and revealed the influence of a variety of artists on his own designs.
In the 1980s, relationships between luxury brands and artists were advanced when Alain Dominique Perrin created the Fondation Cartier. In the Fondation Cartier pour l’Art Contemporain, a book marking the foundation’s 20th anniversary, Perrin says he makes “a connection between all the different sorts of arts, and luxury goods are a kind of art. Luxury goods are handicrafts of art, applied art.”
The Fondation Cartier pour l’Art Contemparain building in Paris
Ledbury Research, specialist luxury market research firm, examines key themes for the coming year that will have important implications for brands targeting the wealthy in 2011
Alternative Stores of Value
As the financial markets settle after the recent turmoil, wealthy individuals are increasingly questioning the ways in which their assets can be held. Property has always been one option, with international prime locations such as London and New York benefiting from emerging market wealth looking for security outside of their riskier domestic markets: South America is one such example. Outside property, investments of passion are attracting renewed interest, including art, wine and classic cars. Though these investments are prone to speculative bubbles, their tangible nature gives a level of security that financial instruments cannot.
Social Media Grows Up
The internet is still treated with caution by most prestige brands, perhaps due to ex-pensive legacy investments, seeing it as a discount channel, or simply the lack of control. However, analysis of social platforms such as Facebook has shown that engagement has more than trebled. Luxury fashion brands are leading the way here, including Burberry and Gucci. With over half of High Earners (incomes over $150,000 or equivalent) in US, UK and Japan using online recommendations and networking sites for financial information, brands outside the luxury fashion sector should be taking these platforms more seriously.
Asian Over-Reliance…
Much of the growth in luxury spend in 2010 was driven by Asia, excluding Japan; 2010 was also the year that Asia Pacific became home to the more centa-millionaires than any other region. Whilst the region will continue to grab headlines, there has been recent history of Asian wealth generation imploding. In 1996, at the height of the Asian Miracle, 34% of the wealthiest in the world were based in the region; within two years this proportion had halved and continued falling for another decade until it reached 3% in 2007. Such experience would suggest caution for those relying on the one region in 2011.
… and the South American Alternative
Using the above analysis, one key theme to emerge is the decline of the Western hegemony on wealth. In 2004, four in every five of the wealthiest 100 lived in either the US or Europe; this has been declining steadily to 58% this year. Other than Asia, one key region has been South America – a region set to grow in profile in 2011. Though Brazil’s luxury market is five times smaller than China’s, its growth is larger than other emerging markets and looks more sustainable.
Emerging Luxury
Prestige brands have frequently relied on historical roots and length of establishment as a core part of their messaging. Partly as a result, most of these brands have been based in Europe and, to a lesser degree, the United States. As the non-Western emerging markets grow in importance (see above), it is natural that 2011 will see more examples such as the launch of Shiang Xia, a newly created Chinese luxury brand by Hermes.
Wealth Mobility
As the demographics and structure of wealth generation is changing, wealth is set to become more mobile in 2011. This will include emerging market wealth looking to diversify, such as Chinese investors looking to emigrate, as well as restrictive regulation forcing established European wealth to move East.
The Discernment Journey
A further boost to new luxury brands being developed outside the US and Europe is the increasing discernment of luxury consumers. This will include Western luxury consumers looking to buy niche brands and Asian consumers becoming comfortable buying local prestige brands.
Luxury Confidence
2010 saw the second, and larger, year of Fashion’s Night Out. Measuring this event in terms of sales generated is difficult, but it did help show that ‘luxury shame’ – the social embarrassment of luxury consumption – will become less of an issue in 2011, though this confidence will not return to the ostentation of 2007-8.
Lessons outside Luxury
Successful brands will continue to look outside their industries for best practices and innovations, even from sectors not known for challenger brands, such as retail financial services, where MetroBank are remunerating staff on the basis of mystery shopping experience rather than sales.
Philanthropic Resilience
Charitable giving has been closely correlated with the economic cycle. However, we may have reached a tipping point in terms of the wealthy’s philanthropic attitudes, as well as their expectations. As a result, measuring philanthropy by looking at money donated to charity may be misleading: there is increasing evidence that the wealthy are looking for other channels to engage these needs.
The above is an opinions article taken from Ledbury Research’s flagship publication High Net Worth. For more information please visit this link.
