Luxury Spenders Not Into Bling
By Tom Ryan
According to a survey from The Conference Board, the vast majority of luxury consumers worldwide say they reject conspicuous consumption or buying to impress. Rather, they believe luxury is more about the “experience.”
The report – sponsored by Conde Nast, Gucci, Gibson USA, The Ritz Carlton and Tru Vue – was based on an online survey of 1,800 affluent consumers (top 25 percent income brackets) in the U.S., China, France, Germany, Italy, Japan, and the UK.
According to the survey, time is the most highly valued luxury (named by 35 percent of respondents as best matching their personal definition of luxury), followed by life experiences (25 percent) and having comfort, beauty and quality (18 percent).
About one-fourth of respondents strongly agreed:
- Luxury is less about the material things one has or one owns and more about
how one experiences life, a sense of happiness and satisfaction (26 percent
strongly agree); - Luxury is being comfortably well off and not having to worry about tomorrow
(25 percent strongly agree); - Luxury is the finer things in life that surround you with extreme comfort,
beauty, and quality (25 percent strongly agree).
“For the largest share of luxury consumers, luxury is not specifically related to how much something costs or what brand it might be,” said Pamela Danziger, the author of the survey. “Luxury is highly personal and something the individual interprets and judges for him or herself. But while luxury is highly personal and separated from price and brand, luxury is expected to be something with a quality that sets it far above the ordinary product.”
The survey comes as luxury sales have been booming over the past six years and splurging by the wealthy appears to be reaching new heights. A few years ago, according to an Associate Press article, a must-have handbag sold for $500 but today it sells for well over $1,000. Coach has a $10,000 crocodile handbag and Louis Vuitton has a $50,000 one. A shoe by designer du jour Christian Louboutin tops $1,000. Montblanc recent sold a $700,000 pen in days in its Manhattan store. At Cartier, $1 million to $2 million sales checks – rare a few years ago – are common.
“There’s this insatiable appetite for the most luxurious,” said Faith Hope Consolo, a real estate broker who has opened posh stores in the U.S. for European designers such as Versace and Valentino over the past two decades.
The only one interviewed by the Associated Press who seemed to agree with the Conference Board’s view was Carol Brodie, chief luxury officer of the Robb Report. She said the superrich don’t want just the expensive; they are looking for the rarest item, something custom-made and the best quality. Unlike the 1980s and 1990s, “it’s not about the logos. It shouts quietly.”
Discussion Questions: Do you think the Conference Board’s survey illustrates that what luxury spenders ‘say’ and ‘do” are completely different things? Or do you see a new luxury consumer who puts greater value on experiences, comfort and beauty over conspicuous consumption?
This is a gray area when it comes to customer behavior. Most of these luxury items are still status symbols. And while the luxury experience is still probably worth something in the eyes of the consumer, there are products out there that deliver the same (if not better) quality at a fraction of the price. I think the term ‘bling’ quantifies the ‘luxury experience’ as getting high quality while also conveying status.
Based on my observations, I beg to differ with the statement “Luxury Consumers Around The World Are Very Similar.”
Luxury consumers are very different based on geography and culture. I have observed while traveling around, particularly in Asia, that so called “new rich” are at the “showing off” stage in their life. They are not there yet as far as appreciating “luxury experiences,” which, I am sure, they will reach eventually. In my opinion, to those with so called “old money” luxury experiences are more important because they have gotten used to having “luxury items/products” around them and have reached the next level.
There are luxury spenders and there are aspirational spenders. The richest people in the world don’t stay at Trump properties. The aspirational spenders do. The richest folks in the world can buy their jewels at Sotheby’s auctions. The aspirational folks go to Tiffany’s. The truly wealthy buy couture dresses for $45,000. The aspirationals buy the ready-mades for $5,000.
Why do consumers purchase pricey luxury items? Completely depends on the category and the item. Luxury beds are purchased for the experience but Coach Purses are more likely purchased to impress. Would anyone purchase a Bentley if no one else would ever see them drive it? Why do designers put their insignias on shirts? The reason is that wearing the insignia to impress is part of the experience.
No brand is the new brand among luxury consumers. I think it has to do with readily available knock-offs. 10 years ago, it was a kick to buy an imitation Coach bag or Rolex watch in front of Bloomingdale’s from a shady guy with a folding table piled with goods. Now, everyone has knock-offs. Couple that with the fact that the newly super-rich express ambivalence about their money, and what you get is “under cover luxury.” Only people truly in the know can even distinguish a $100,000 watch from a $2,000 one. It seems that luxury consumers have completed the circle–from plain shirts, to alligators, to polo players, and back to plain again.
How come I wasn’t contacted online for this survey? After all, I’ve recently moved up from Oscar Mayer bologna to the custom-sliced German variety in the deli case. They should have noticed.
Was anything clear from this survey, or was I the only el confuso? Apparently “one-fourth of respondents strongly agreed” to some vague philosophies and “only one” person interviewed by the Associated Press “seemed to agree.” Definitive, right?
We don’t know about affluent people who choose low profiles because they have, well, low profiles. They probably don’t even respond to online surveys. Too busy cruising the Greek islands.
I’m with Mr Mehta on this. It depends on whether you’re talking about people with new money or people who are used to having money. From what I’ve seen, the former go for bling which is not necessarily what I would term luxurious. They are much more conscious of conspicuously consuming. The latter (and that takes in most of the British aristocracy regardless of whether or not they still have money which many of them don’t) take luxury for granted and expect it whenever and wherever. They do not have to be seen driving a new Bentley; an old one will do just as well (if not better).
It’s far too easy to make generalizations about this consumer group–it is much too diverse. You need to examine not only the product or service in question, but the geographic location of the consumer, the age bracket they’re in, and also the economy of the country they live in. The aspirational purchases of the young Asian, particularly Chinese, consumer is rampant and doesn’t seem to be slowing. The US baby boomer looks instead, in addition to the status of the product, for the experience they’re getting. These varying consumer behaviors relate to the value put on time, status of the item, how much of a routine purchase is being made, etc. There will always be the designer handbag collector, no matter what the price or how many knockoffs are out there. There will also, always be the aspirational customer who is “wowed” by the new offerings available.