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"Ten years ago you would have auctioned handbags."
Ben Elliot, the boss of Quintessentially Group, a
concierge service that helps the rich organise their
lives, is explaining a shift in the way that money is
raised for charity. These days a kickabout with David
Beckham, or perhaps a cycling trip from Venice to
Rome, would be more effective: "It s about the brag-
ging rights of doing something others can t do," he
If sophisticated consumers are shifting their pref-
erences from handbags to handlebars, makers of
luxury goods need to pay attention. The rich set
trends, and their notions of luxury trickle down.
European consumers now "put more value on inward
things", Elliot thinks.
Revenues of upmarket hotels this year are expected
to grow by 9.0 per cent, four times the rate of lux-
ury-goods sales. Even the Chinese are tilting a bit
from having to being: during this year s Golden Week,
an autumn season of concentrated consumer frenzy,
the number of transactions in shops was 30 per cent
up on last year but that in restaurants and hotels
rose by 52 per cent, according to UnionPay, a pay-
What qualifies as an experience people are prepared
to pay for is also changing, to something more elab-
orate, more private and sometimes even stripped
almost bare of conventional comforts. David Leppan,
a South African-born millionaire, is not much inter-
ested in conventional luxury, but reckoned that a
recital by Plácido Domingo at Seville s Alcázar palace,
arranged by NetJets, a firm that hires out private
planes, was "pretty much priceless."
Elliot s colleagues at Quintessentially cite the Antarc-
tic Ice Marathon as the sort of activity its clients
appreciate. Swish hotels nudge guests away from the
familiar to the authentic.
"Luxury can be the absence of strawberries in win-
tertime," says Frank Marrenbach, who runs the Oetker
Group s chain of hotels. His chefs prefer to offer sea-
In a YouTube video for Johnnie Walker Blue, a
top-of-the-range whisky, two friends (played by Jude
Law and Giancarlo Giannini) swap ownership of a
beautiful old sailing boat on the basis of unlikely
wagers. If ownership does become separate from
enjoyment, makers of luxury goods will have some-
thing to worry about. That moment may not have
arrived yet, but as consumers become more skeptical,
more discriminating and more interested in experi-
ences, it is coming closer.
It is not as though the rich have stopped buying
stuff. The average billionaire owns US$6 million
worth of luxury goods, not to mention yachts worth
US$22 million, according to Wealth-X, a research
firm founded (and later sold) by Leppan. But increas-
ingly such purchases form part of an experience.
In the video Law needs a new made-to-measure
suit for the dance that will win him the bet on the
boat. Savoir Beds, a British firm, is making a rotating
bed for the new owner of a French château so that
he can enjoy the view both of the surrounding coun-
tryside and of the fireplace on the opposite wall.
Sellers of less bulky luxuries who make bespoke prod-
ucts for their best clients often add events to their
offering. Ferragamo, the Italian shoemaker, treated
its favourite Chinese customers to a trip to its work-
shop in Florence.
Make it special
Most consumers are not in that league. More than
a third of luxury handbags sell for less than 500
euros. The ranks of people who covet such goods are
destined to grow; once hooked, they will trade up.
Globally, McKinsey expects the number of big-city
households in emerging markets with incomes of
more than US$70,000 a year to treble by 2025.
Makers of luxury have come to realise that the
paradox of industrial craftsmanship can be pushed
only so far.
To captivate new clients and keep the
older ones on board, brands will have to
invest shopping with a sense of occasion
and give ordinary customers some of the
individual attention they have lavished on
their biggest-spending ones. Increasingly,
that is what they are doing.
When Burberry launched a perfume in
September, it gave customers a chance to
inscribe bottles with their own initials, both
in shops and online.
Consumers still want to hear the story
that luxury tells, perhaps more than ever as
the world comes to seem more rootless and
mass-produced. In London s Savile Row a
small crowd of men and women, nattily
clad in mid-20th-century garb, recently
staged a demonstration against two shops
selling clothes by Abercrombie & Fitch, an
American fashion chain.
"Give Three-Piece a Chance," demanded
their placards. To the demonstrators, the
intruder was the antithesis of Savile Row s
made-to-measure tailoring. "We re not
proper Savile Row-type people," said the
protest s organiser, Gustav Temple, who
edits an obstreperously nostalgic magazine
called The Chap. "But we hope to be one
@2014 The Economist Newspaper Ltd.
Distributed by the New York Times Syn-
Providers of luxury need to offer more
to take advantage of a growing market
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