The new luxury

the new luxury October 2013 Regina M. Connell

Executive summary • Luxury is evolving: • The taste of the traditional luxury buyer is changing • Mass luxury has lost its power • An independent luxury segment, characterized by a particularly hard-toreach demographic, is growing in influence and number • This impacts companies’ brands, and all aspects of the customer relationship: product, communication, and sales

Executive summary • What is the nature of your risk? What is your opportunity?

• Is this a fad or a longer-term trend?

• What is your response to the evolution in tastes and market segments?

• Build?

• Buy? • Partner?

luxury

The evolution of luxury

meaning 1400s 1600s

su su mp rro tuo un us so din m co e gs mf thin ort g ab en ne le b joya ce ey ble gre ss on itie d or a t life s no c o ’s n-e m f ss ort e ; se ntia des lf-i l; p ira nd b ulg leasu le b en ra ut ble t

1300s

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Luxury through the ages luxury (n.)

Origins: Latin luxus: dislocated. Also luxuria: excess, extravagance, magnificence. Old French luxurie: debauchery, dissoluteness, lust.

1700s 1800s 1916 Today

The New Luxury

20th century luxury

The new luxury

The new luxury consumer

The old (20th C) luxury consumer • Passionate about quality • Concerned with uniqueness • Clearly recognizable as a luxury consumer • Label-focused • Fashion-focused • Acquisition-focused • Gathers information from traditional media, influenced by celebrity

The mass luxury consumer • Concerned with trends • Label and fashion focused • Driven by “tribal” affiliations • Gathers information from social and traditional media • Highly influenced by social mores (social shopping) • Highly influential among peers

The indie luxury consumer • More likely to express “stealth”, unbranded luxury • Driven by self-expression, creativity and independence • Focused on experience, process and story • Gathers information from nontraditional and oft-changing sources • Influences and inspires new wealth sectors (e.g. tech, creative economy participants)

Who are they?

• Creatives: media, architecture and design, advertising, PR, real estate, entertainment • Entrepreneurs • Financial Services • Technology • ...and all those who aspire to be them

The roots of change

A long-term trend, not a fad • Driven by long-term shifts in economy and new types of wealth • Shaped by cultural changes • Accelerated by technology and globalization • Rooted in psychological needs

Why the change?

Economy

2008 and its aftermath

Social Mores

Income inequality and the 1% problem The rise of conscious consumption

Brands

Macro

Massification of luxury and the death of exclusivity

Technology

Micro

Digital and social media

The human mind

Broader understanding of the “hedonic treadmill�

The human factor: the search for happiness • The acquisitive “hit” on which shopping, but luxury shopping in particular depends, dissipates over time: people are left wanting something else • It’s that something else that the new luxury seeks to satisfy through a more holistic experience that endures

the new luxury = the quest for (a new kind of) happiness

A more complete happiness Self actualization, achieving individual potential

“Old” Luxury

“New” Luxury

Self-esteem, confidence, achievement, respect Social needs: sense of affiliation, acceptance, affection

Safety: physical and psychological safety

Physiological needs: food, water, warmth, rest

Improving on Maslow Self actualization, achieving individual potential

Creating deeper happiness

Self-esteem, confidence, achievement, respect

The foundation: Maslow’s Hierarchy of Needs

Awareness Memory Linkage

Social needs: sense of affiliation, acceptance, affection

Safety: physical and psychological safety

Physiological needs: food, water, warmth, rest

What is the new luxury?

The new luxury construct

the enduring standard

the new standard

refinement rareness aesthetics quality

value

meaning story values

connection

The new luxury is still luxury

Rare Refined Quality

It has to give pleasure: but pleasure that’s sensual & intellectual & emotional

The new luxury: imperfect perfection

The new luxury: imperfect perfection

The new luxury: individual vs. exclusive

The new luxury: awareness of connectedness less massmanufacture

less waste less (no) harm

The new luxury: a new sense of value experience vs. products time meaning happiness

The new luxury: meaning & the new social values

The new luxury: meaning and story

The new luxury: meaning and story

The new luxury: meaning and connection

The new luxury: experience Experiences linger longer than the pleasure of acquisition Experience is connection to others, or to a higher, truer self

Improving on Maslow Exclusivity Story Experience Values

Self actualization, achieving individual potential

Creating deeper happiness

Self-esteem, confidence, achievement, respect

Awareness Memory Linkage

Social needs: sense of affiliation, acceptance, affection

Safety: physical and psychological safety

Physiological needs: food, water, warmth, rest

What this means

Where does this leave brands?

Brand matters more Branding matters less

How does the New Luxury affect you?

Tastes are already changing: how will they continue to evolve?

Core luxury

Will the mass luxury market still exist?

What will their tastes be?

What happens if those they emulate change their tastes and habits?

Indie Luxury

How do you reach people who pride themselves on not following the herd?

How influential will these people be?

I make products. They want experiences. What do I do?

Mass Luxury

Is this an opportunity for core luxury brands?

Is this an opportunity for mass luxury brands and companies?

What are your options

build Partner

Product Extensions

Reframe your brand Storytelling Experience Service Events

buy Create your own brand

Integrate

Collaborate

Leave Independent

To take advantage of the New Luxury: think different(ly) • Rethink production • Understand your story • Under the radar promotion • Authenticity and transparency

THANK YOU Regina M. Connell 415.322.9462 reginaconnell@mac.com