2010 luxury trends

2010 Luxury Trend Report

2010 Luxury Trends

Indian Jones-‐inspired, five-‐figure vaca;ons, the Chinese economic boom, social network-‐themed mar;ni lounges, the perceived value of discounted pres;ge brands. The 2010 luxury market is all over the map aFer a year of budget-‐;ghtening and nervous nail-‐bi;ng amid the Great Recession. Purveyors of all things pres;ge are learning lessons and re-‐strategizing to emerge on-‐top.

To sort through and make sense of luxury's re-‐emergence in 2010, we iden;fied key trends to navigate not only today's market, but prepare for tomorrow:

The State of Luxury Today -‐-‐ In 2009, the Great Recession brought great panic to the luxury industry. Coach and Nordstroms bit the bullet and slashed product prices, and unlike what some experts predicted, the pres;ge brands have retained their luster and thrived. Other high-‐end brands are hedging losses in America and Europe by entering the booming Chinese market. Boomers are entering re;rement while Gen X isn't large enough to support their historical spending. From a global lens, the luxury market is experiencing tectonic shiFs that show extraordinary short-‐term gains, but are profits sustainable?

The Golden Wall of China -‐-‐ The Chinese market is trying to find its pres;gious iden;ty among established luxury brands in Europe and America. In fact, many affluent Chinese reject "Made in China" products in lieu of superior imported quality. "China is not an easy market. Chinese consumers are very demanding; they don't like 'made in China' products," said Florent Perrichon, CEO, Cerru;. Much like Amish youth trying

to find their iden;ty, Chinese too will undergo a cultural transforma;on whereby "Made in China" will be less synonymous with ;cky tacky and more with rich cultural heritage, entrepreneurial spirit and quality.

Luxury's Love Affair with High-‐Tech -‐-‐ Robot housemaids, electric cars, personal commuter airplanes and all the insanely impossible kitchen gadgetry imaginable. For nearly a century, the World's Fair has illustrated American's strong associa;on between luxury and technology. Tech enhances our ability to connect with the world and how the world connects with us. It maximizes our ;me and extends our pleasure. It helps us navigate a world flooded in informa;on while libera;ng us from its complexi;es.

The Luxury of Once-‐In-‐A-‐LifeBme Experiences -‐-‐ You are assigned a mission in which you will train with former M16 agents. Your journey will take you around the world where you must complete challenging tasks that require both brains and brawn. Do you wish to accept? Many high net worth individuals are asking, where do I sign up? The seven-‐figure Indiana-‐Jones-‐inspired vaca;on is one of many thrill-‐seeking experiences coordinated by the members-‐only luxury concierge service, Quintessen;ally. Quintessen;ally is leading a trend that curates not just extravagant vaca;ons, but extraordinary experiences that yield incredible stories.

Recession-‐Proof Luxury: Timelessness & Enduring Quality -‐-‐ If you had a choice between buying one uber trendy dress this season and another trendy dress next or buying a ;meless dress this season and a ;meless cardigan next, which would you choose? At year two, you could either have one dress or

2 2010 Luxury Trend Report

2010 Luxury Trends

one dress and one cardigan. Inves;ng in ;meless luxury items is a way to maximize spending dollars in recessionary ;mes while maintaining an affluent lifestyle. More and more, Gen X men and Gen Yers consider luxury an investment and some pres;ge brands, such as Hermes, are benefi;ng -‐-‐ even when ;mes are lean.

Luxury: For What It's Worth -‐-‐ What makes a pair of Jimmy Choo heel sandals worth $1,150? Or a $17,500 price tag for a night at the Dunton Hot Springs? In essence, what is luxury worth? Everyone perceives products and service value differently. You've likely been in Gucci or Hermes and said, really? A shoe-‐shaped Gucci key ring is $170. Really? For some, it's worth it. As everyone derives value differently, there are three main criteria that help us decide whether a luxury product or service is worth it.

Personal Renewal with Purpose -‐-‐ All luxury fulfills an emo;onal need. OFen ;mes, that need is social relevancy and status among peers. Think about what a Louis Vuiion bag says about a person: affluence and they should be recognized

for it. There is a rising trend in luxury that stretches beyond superficial, Louis Vuiion and D&G status symbols, and speaks to rejuvena;on, personal energy and sustainability. No, millionaires are not holding hands around a camp fire, singing Koombaya. This emerging class of high net worth individuals seek to preserve themselves and the world around them. Two similar, yet different, brands capturing this rising trend are Terrain and Lululemon Athle;ca.

Passion Immersion Drives Niche Luxury -‐-‐ A recent study of luxury handbags, featured in Psychology Today, suggests once the price exceeds $300, the logo decreases in size. But why pay more for a brand without the recogni;on? Sterling Lanier, President of the market research consultancy Chaier, performed in-‐home case studies of affluent Gen Yers to provide insight. In one of Sterling’s audience tes;monials, a Gen Yer said he purchases shirts from a Sconsh designer with around three small stores in Europe. With only a small colored tag to iden;fy the designer, he gets gra;fica;on seeing others wear the Sconsh brand.


In 2009, the Great Recession brought great panic to the luxury industry. Lower-‐rung affluents ;ghtened their budgets, slowed luxury spending, causing many pres;ge brands to consider the sinful thought of: discoun;ng. Coach and Nordstroms bit the bullet and slashed product prices, and unlike what some experts predicted, the pres;ge brands have retained their luster and thrived. Other high-‐end brands are hedging losses in America and Europe by entering the booming Chinese market. Boomers are entering re;rement while Gen X isn't large enough to support their historical spending. From a global lens, the luxury market is experiencing tectonic shiFs that show extraordinary short-‐term gains, but are profits sustainable?

Nearly across the board, the luxury market has rebounded aFer a recessionary slump. Global luxury sales rose 15 percent in the first quarter of 2010, according to U.S. consultants Bain & Co. Nearly all categories are in the black. e-‐Commerce, luxury, jewelry and

restaurants saw May sales rise 13.7 percent, 9.7 percent, 6.4 percent and 2.8 percent, respec;vely, reports Reuters. Bricks and mortar retailers are also up. Saks countered last year's loss with record profits in the past quarter, with sales up 6.1 percent -‐-‐ and an astounding 395 percent stock increase. Nordstrom shares skyrocketed 246 percent over last year's boiom. Tiffany & Co's global strategy benefited them with interna;onal sales up 17 percent in the most recent quarter and profit up nearly fourfold. How have pres;ge brands made such a comeback?

If the recession provided any key lessons, it's the value of diversifica;on. Those pres;ge brands with all of their eggs in one, American basket, suffered when the market boiomed in 2009. Milton Pedraza, CEO of the Luxury Ins;tute, termed the strategy as a “self-‐imposed limita;on.” He added that "overseas markets like China could be key growth engines for luxury players and also sees Japan as a 'cash cow' for those brands who can

manage costs well." Indeed, Chinese consumers account for nearly 25 percent of global luxury sales, followed by Americans, Europeans and Japanese, each taking around 20 percent of pie. Many large-‐sized luxury brands see the wri;ng on the wall.

Taking Pedraza's advice, historical luxury brands, such as Hermes and LVMH, have bumped up profits by entering the Asia market, writes Rob Lever of AFP. "Shiseido, Japan's largest cosme;cs firm, expects sales of its high-‐end cosme;cs to grow up to 20 per cent a year in China over the near term, making it a key pillar of its global expansion plans," reports the Economic Times. For pres;ge brands, all signs are poin;ng to Asia right now, but what should we expect for the future?

Global luxury goods industry sales are expected to grow 4 percent in 2010 to $195 billion dollars aFer 8 percent decline in 2009, according to the consul;ng firm Bain & Company. Five to ten years out, Gen X will pick up the torch and lead

luxury spending. As Baby Boomers conserve spending in re;rement, Gen X will be the primary target for pres;ge brands. Some experts predict Gen X cannot support Baby Boomer's historical spending. Gen X is simply not a big enough group to pick up the slack, writes Rob Lever of AFP. Lever suggests Gen Y will fill-‐in the gaps leF by Gen X. "The luxury market is unlikely to regain its luster un;l around 2018 to 2020, when the Millennials born aFer 1997 start their spending sprees," he writes.

If this genera;onal shiF occurs as Lever predicts, the short-‐term profits in 2010 will serve as only a slight up;ck in struggling American market. Luxury brands will have to shiF focus slightly away from the American market over the next decade to sustain growth. The recession could have been a wake-‐up call for luxury brands focused en;rely on Western markets, and considering the imposing genera;onal shiF, they should look East for answers.

The State of Luxury Today


Devil's Playground is a documentary that captures the transforma;ve period in a young Amish person's life, when they must decide whether to stay among the Amish for the rest of their lives, or join the "English." This period is called Rumspringa -‐-‐ the Pennsylvania Dutch word for "running around." The film showcases several Amish young adults going through Rumspringa, who drink, smoke and even get hooked on meth because they think it's what the "English" do. Their "English" reference point is derived from stories and likely tall tales, therefore, some Amish destroy their lives to experience the exaggerated "English" perspec;ve.

China's nouveau riche are experiencing a Rumspringa of their own, but careful to not swing too far. The Chinese market is trying to find its pres;gious iden;ty among established luxury brands in Europe and America. In fact, many affluent Chinese reject "Made in China" products in lieu of superior imported quality. "China is not an easy market. Chinese consumers are very demanding; they don't like 'made in China' products," said Florent Perrichon, CEO, Cerru;. Much like Amish youth trying to find their iden;ty, Chinese too will undergo a cultural transforma;on whereby "Made in China" will be less synonymous with ;cky tacky and more with rich cultural heritage, entrepreneurial spirit and quality.

China's Affluence is a Brightspot for Global Luxury -‐-‐ Western pres;ge brands are not unhappy China is impor;ng luxury. Chinese consumers account for nearly 25 percent of global luxury sales, followed by Americans, Europeans and Japanese, each taking around 20 percent of pie. In fact, China has become the fulcrum of the global luxury industry. "The euro zone is a sizable market, but today the growth reserve is in the emerging countries, and par;cularly in China, whose demand is pulling the en;re sector," said Isabelle Ardon, head of Paris-‐based SG Ges;on's luxury fund. Even while the Euro market is suffering amid the current financial crisis, pres;ge brands are finding security in China's growing affluence.

Western PresBge Brands Flock to China -‐-‐ "For the Chinese consumer, luxury is synonymous with Western heritage. Today there are no big Chinese luxury brands, so there are no compe;tors," Ardon said. Western brands, Car;er, Louis Vuiion, Hermès, Tiffany & Co or Gucci, have established a foothold in China through years of brand building in the country, reports the Wall Street Journal. Indeed, Tiffany & Co reported that sales at its Asian stores opened last year (excluding those in Japan) had risen by 21 percent during last quarter, with 11 stores in China. Jaguar and Land Rover are opening a new plant in Nanchang, East China soon. "Next year, Land

Rover's sales volume in China will surpass Britain as the world's second," said Scoi Dicken, the general manager of Land Rover China.

There is SBll Room for "Made in China" Luxury -‐-‐ Alongside Jaguar, Land Rover and Car;er of Western pres;ge, there s;ll resides an opportunity for "Made in China" luxury. "China's high-‐end market is highly fragmented, with no single brand domina;ng individual product categories," writes the WSJ. "This is star;ng to change: In each luxury-‐goods category, five brands account for around 50% of the market, indica;ng early signs of concentra;on." Shanghai Tang is an authen;c emerging pres;ge fashion house that appeals to Chinese. The brand blends China's subtle, delicate cultural heritage with Western flare. In fact, Fast Company dubbed Shanghai Tang "China's first global, upscale brand."

As China's nouveau riche seile into their new status as purveyors of luxury, expect the Shanghai Tang's -‐-‐ a confluence of China's rich cultural heritage, entrepreneurial spirit and vision -‐-‐ to make in-‐roads into the country's blossoming luxury market. Authen;c Chinese heritage, as Tang illustrates, cannot be imported and presents and opportunity for "Made in China" luxury to flourish. AFer all, heritage is a cornerstone of luxury and China is rich with it.

The Golden Wall of China


Robot housemaids, electric cars, personal commuter airplanes and all the insanely impossible kitchen gadgetry imaginable. For nearly a century, the World's Fair has illustrated American's strong associa;on between luxury and technology. Tech enhances our ability to connect with the world and how the world connects with us. It maximizes our ;me and extends our pleasure. It helps us navigate a world flooded in informa;on while libera;ng us from its complexi;es.

The intersec;on of technology and luxury is more apparent and pervasive in the luxury market today than ever before. From social networking restaurants, to vehicle office management soFware, to accessorizing luxury products, technology is the height of luxury. Today's tech speaks to several pillars of luxury: exclusivity, badge of importance and an immersive experience.

In-‐the-‐Know Luxury Tech -‐-‐ MiWorld leverages a main tenant of luxury: exclusivity. The tech-‐savvy Jahannesburg restaurant taps into affluent Gen Yers and Gen Xers lust for exclusivity and techno-‐gadgetry. To par;cipate in MiWorld, patrons must receive an invita;on and secret code to register online. The in-‐the-‐know customers can visit MiWorld's modern cocktail bar, MiBar Mar;ni or

the sophis;cated cocktail, champagne and wine bar, MiLounge Mar;ni.

When patrons enter the door, they must log in -‐-‐ much like Facebook or FourSquare. Once inside, users can play with interac;ve, touchscreen MiTables, where they can chat with other tables, sign into Facebook, view the menu and access exclusive content and offers.

Complete Tech Immersion -‐-‐ Car phones were the height of luxury at the dawn of the mobile phone era. High-‐power CEO's tooling around in company limos epitomized luxury nearly a two decades ago. Hartman's System-‐On-‐a-‐Chip (SOC) is ushering auto tech into a new age of connec;vity. Hartman is developing a premium automo;ve infotainment system for entry-‐level luxury vehicles.

SOC enables customers to integrate smartphone devices (iPhone, Blackberry, Android) to deliver mobile office features within their vehicle. That means e-‐mail, SMS, tex;ng and calendar func;ons all within arms reach. That's just the beginning... SOC delivers 3-‐D route graphics, real-‐;me traffic updates, latest map info, construc;on zone no;fica;ons, speed limits, etc. Though there are arguably many hazards with such a system, SOC epitomizes auto luxury.

Tech Badge of Luxury -‐-‐ “Although Apple did not set out to be a luxury brand, it exhibits most of the quali;es that luxury brands should strive for in the 21st century,” says Milton Pedraza, Luxury Ins;tute CEO. In its quest for the most beau;ful, awe-‐inspiring, user-‐friendly device, Apple created a leading luxury device. The tech company “delivers fabulous product design, unbeatable func;onality, and a powerful in-‐store experience to consumers of all ages that many luxury brands lack."

As with many pres;ge brands, accessories makes the product pop and serves as a badge of your personality. iSobre knows this more than anyone. iSobre's offers an iPad made of 100 per cent leather, with double s;tching all around with a turned-‐edge finish and two blue leather central buions. The iSobre's Bumble Bee iPad case tells the world not only do you love sexy tech, but you know how to dress it up.

American's associa;on between all things tech and luxury has accelerated at an astonishing rate since the 1950s World's Fair. In fact, even many non-‐affluent individuals splurge on a $300 smartphone with a $100 monthly plan. A smartphone, tablet, high-‐tech soFware system for your car or an invite into a members-‐only cocktail lounge are ways individuals -‐-‐ non-‐affluent and high net worth individuals alike -‐-‐ display status. Much like a robot housemaid in the 1950s World's Fair.

Luxury's Love Affair with High-‐Tech


You are assigned a mission in which you will train with former M16 agents. Your journey will take you around the world where you must complete challenging tasks that require both brains and brawn. Do you wish to accept? Many high net worth individuals are asking, where do I sign up? The seven-‐figure Indiana-‐Jones-‐inspired vaca;on is one of many thrill-‐seeking experiences coordinated by the members-‐only luxury concierge service, Quintessen;ally. Quintessen;ally is leading a trend that curates not just extravagant vaca;ons, but extraordinary experiences that yield incredible stories.

"These days people are looking for those once-‐in-‐a-‐life;me moments," says Quintessen;ally's founder, Aaron Simpson to the WSJ. "Genng a peek into a closed-‐off sector of the pyramids or cruising through Europe in a Bentley can be a very different experience than your average vaca;on." Indeed, extreme luxurious vaca;ons are less about pampering and island getaways and more about access to exclusive experiences.

“Our luxury travelers are fascinated by the history in Israel and nearby Turkey and really want to have in-‐depth cultural experiences,” says Ashley Isaacs Ganz, founder of Ar;sans of Leisure Travel to the Luxury Ins;tute. Ganz explains, his high net-‐worth clients seek thrilling, unexploited experiences, such as ren;ng a rehabbed ghost

town in the Colorado wilderness or pay $17,500 a night for the Dunton Hot Springs.

Ar;sans of Leisure Travel and Quintessen;ally understand the power of once-‐in-‐a-‐life;me experiences and re-‐experiencing them through stories. More unique stories you have, the more interes;ng you become. For instance, who would have beier life-‐stories: dare-‐devil billionaire Richard Branson or tech tycoon Bill Gates? Sure, Gates could wax poe;c about soFware systems, but Branson could regale you with stories of hot air balloon races and sky diving.

More affluent individuals are searching for Branson-‐esque adventure that pair risk (exo;c cultural explora;ons) with reward (fascina;ng stories) to yield incredible experiences. It's about finding your passion -‐-‐ whether it's an Indiana Jones adventure or archeologist -‐-‐ and realizing the life you could have had through exclusive experiences. It's not enough to put your mind on auto pilot, if you dreamed of flying in an F-‐47, you are the pilot. And concierge services, such as Quintessen;ally and Leisure Travel, are making that possible.

The Luxury of Once-‐In-‐A-‐Life;me Experiences

Image by Rob Owen-Wahl from Stock.Xchng 7 2010 Luxury Trend Report

If you had a choice between buying one uber trendy dress this season and another trendy dress next or buying a ;meless dress this season and a ;meless cardigan next, which would you choose? At year two, you could either have one dress or one dress and one cardigan. Inves;ng in ;meless luxury items is a way to maximize spending dollars in recessionary ;mes while maintaining an affluent lifestyle. More and more, Gen X men and Gen Yers consider luxury an investment and some pres;ge brands, such as Hermes, are benefi;ng -‐-‐ even when ;mes are lean.

The overall luxury market fell during this recessionary dip. It dropped 10 percent in the U.S. and 8 percent worldwide in 2009. Trendy fashion houses such as Chris;an Lacroix went belly-‐up, meanwhile Hermès managed to increase sales by 8.5 percent, including an 11 percent bump in the final quarter and an astonishing 20 percent gain in the Americas. “Hermès isn’t about trendy,” said Bob Chavez, the CEO of Hermès’s American opera;on to the Luxury Ins;tute. “It isn’t even a fashion house. We are a house of craFsmanship. We are commiied to making products that have an enduring quality and are very versa;le.”

Heritage, classics and enduring quality, as found in Hermes and Louis Vuiion products, are powerful selling points to during recessionary slumps -‐-‐ par;cularly to Gen X men and Gen Yers.

"I believe the American male is largely uneducable. We need to focus on the segment of males that have real discerning taste, but I can also say that even the undiscerning American male is a smart consumer. That person is looking for a product that is durable, that is classic, that can stand the test of ;me," says Lew Frankfort, Chairman and CEO of Coach. In general, classic and ;meless value makes sense when considering men's fashion versus women's fashion.

Women's fashion dras;cally ebbs and flows with the seasons whereas men's fashion receives subtle adjustments on exis;ng designs. For instance, slightly v-‐necked shirts or a small whale paiern or a royal blue instead of a faded blue or a European cut versus relaxed might be en vogue for several seasons. For the most part, men's fashion remains constant and therefore inves;ng in one product could last many more seasons than women's uber-‐trendy drop-‐crotch trousers -‐-‐ reminiscent of Hammer-‐;me.

Gucci drop-‐trousers might pique the interests of some young fashionistas, but for the most part, Gen Yers view luxury as an investment -‐-‐ and as such, have a discerning eye for the quality. Unlike its genera;onal counterparts, Gen Y is less concerned with heritage than excep;onal quality. Heritage brands might find it difficult to market its spot in history to turn on Gen Y. Instead, luxury

brands need to dial-‐up the longevity, both in quality and style, of its products to make their brand a long-‐term investment.

Many high net worth individuals are savvy shoppers that buy less on impulse and think about purchases in a calculated, well-‐thought-‐out manner. As we've seen in 2009, trendy fashion houses are the first out the door due to their ephemeral designs while enduring quality pres;ge brands, such as Hermes and Louis Vuiion, thrive. Although the recovery is in the purview, high net worth individuals are s;ll wary of spending superfluously but interested in inves;ng in luxury.

Recession-‐Proof Luxury: Timelessness & Enduring Quality

Image by homero chapa from Stock.Xchng


What makes a pair of Jimmy Choo heel sandals worth $1,150? Or a $17,500 price tag for a night at the Dunton Hot Springs? In essence, what is luxury worth? Everyone perceives products and service value differently. You've likely been in Gucci or Hermes and said, really? A shoe-‐shaped Gucci key ring is $170. Really? For some, it's worth it. "We see consumers as the ul;mate experts on brand pres;ge and this year they are vo;ng on the en;re perceived price/value equa;on of the brand as well as pres;ge,” said Milton Pedraza, CEO of the Luxury Ins;tute. Brand, quality, rarity all play a role in how we valuate pres;ge products and experiences. As everyone derives value differently, there are three main criteria that help us decide whether a luxury product or service is worth it:

Exclusive Value -‐ Uniqueness

By economic standards, value is derived from supply, demand and barrier to entry. Short supply, high demand and high barrier to entry drives the luxury market. Accordingly, only a select few high net worth individuals can afford to buy a $1.42 million Lamborghini Reventon or even a $170 Gucci key ring. In fact, only 20 individuals own the Reventon, as they are so rare. Uniqueness not only applies to products, but experiences as well. Quintessen;ally and Ar;sans of Leisure Travel design custom vaca;on packages ranging from

Indiana Jones-‐inspired adventure or an immersion in Turkey and Israeli cultures. For those high net worth individuals seeking exclusive value, very short supply weighs heavier than quality.

Enduring Value -‐ ArBsan CraVsmanship

The economic recession has the luxury industry returning to its core: enduring quality [LINK TO TIMELESSNESS POST]. Hermes and Louis Vuiion have flourished amid harsh economic storms, while other, trendier fashion houses such as Chris;an Lacroix have gone belly-‐up. Hermès managed to increase sales by 8.5 percent, including an 11 percent bump in the final quarter and an astonishing 20 percent gain in the Americas. In fact, Louis Vuiion held an event called “The Art of CraFsmanship,” to educate young designers on the importance of old-‐fashioned values such as ar;sanship and the mastery of tradi;onal skills at New York City's Fashion Week.

Price Value -‐ Deal-‐seekers

There is always a risk to integrity whenever a pres;ge brand discounts, says Milton Pedraza, CEO of the Luxury Ins;tute. A discount suggests the original perceived value was too high and essen;ally, you were genng ripped off. Despite Pedraza's foreboding, Guilt Groupe has grown by

leaps and bounds by offering daily flash sales to its "exclusive" 2 million invite-‐only members. Gilt expects to pull in $500 million in revenue in 2010 and in 2009, just two years aFer its launch, it posted revenues of $170 million. To counter Pedraza's point, even a 10 percent discount on $1,150 Jimmy Choo shoes ($1,035) is s;ll not accessible for most.

To make your luxury product or service valuable, you must first start with those consumers passionate about your category. For instance, targe;ng the famous, stylis;cally challenged Warren Buffet to don a new Gucci suit is worthless, as Buffet finds liile value in fashion. But marke;ng an Indiana Jones-‐inspired vaca;on to thrill-‐seeking high net worth individuals like Richard Branson is smart. To obtain a high perceived value in your customers eye, it's about finding the right customers and accentua;ng your products to appeal to their passion points.

Luxury: For What It's Worth

Image by Svilen Milev from Stock.Xchng


All luxury fulfills an emo;onal need. OFen ;mes, that need is social relevancy and status among peers. Think about what a Louis Vuiion bag says about a person: affluence and they should be recognized for it. There is a rising trend in luxury that stretches beyond superficial, Louis Vuiion and D&G status symbols, and speaks to rejuvena;on, personal energy and sustainability.

No, millionaires are not holding hands around a camp fire, singing Koombaya. This emerging class of high net worth individuals seek to preserve themselves and the world around them. Two similar, yet different, brands capturing this rising trend are Terrain and Lululemon Athle;ca.

Terrain, an outdoor home and garden store owned by Urban Ou|iiers, is a calming retreat into nature. Chairs, tables, and pots look as if it grew naturally in the store. Every piece of furniture seems ar|ully hand-‐selected from yard sales and foreign ruins. That's not to say you feel like you're in a junk yard.

Terrain taps into a central element of luxury: rarity. The outdoor home and garden store is about 30 percent re-‐used products, but the company carefully selects objects that embody sophis;cated, organic style. Each object feels natural, sustainable and hand-‐selected just for your home.

Lululemon Athle;ca takes a different approach to revitalizing personal energy. Where Terrain seeks to rejuvenate through a natural environment, Lululemon takes a more ac;ve approach.

The luxury healthy living retail site promotes physical renewal through yoga, Pilates and other forms of exercise. Its exclusive community is populated by former Olympians and athletes that inspire others to live strong. These brand ambassadors promote their unique healthy lifestyle through images, free demonstra;ons and each month members are given a challenge.

Terrain and Lululemon represent an emerging segment in the luxury category. Renewing personal energy through premium products, such as a palace door ruin from Terrain or high-‐end exercise gear at Lululemon, is only half the picture.

Both emerging luxury brands offer an holis;c branded experience either through a relaxing in-‐store environment or empowered online community. Terrain and Lululemon are making luxury less superficial and more sustainable to both the environment (recycled products at Terrain) and individual energy (yoga and pilates at Lululemon).

Personal Renewal with Purpose

10 2010 Luxury Trend Report Image vide Terrain

Image vide Terrain

A recent study of luxury handbags, featured in Psychology Today, suggests once the price exceeds $300, the logo decreases in size. But why pay more for a brand without the recogni;on? Sterling Lanier, President of the market research consultancy Chaier, performed in-‐home case studies of affluent Gen Yers to provide insight. In one of Sterling’s audience tes;monials, a Gen Yer said he purchases shirts from a Sconsh designer with around three small stores in Europe. With only a small colored tag to iden;fy the designer, he gets gra;fica;on seeing others wear the Sconsh brand. As consumers, we iden;fy personali;es by the brands and products we purchase. And as Sterling's tes;monial illustrates, we strive to emerge ourselves in brands that help build our iden;;es.

Passion Immersion in Products

For many high net worth individuals, luxury is about finding your passion, immersing yourself in its niche culture and being in-‐the-‐know. Brands are picking up on this trend, says said Luxury Ins;tute Chief Execu;ve Milton Pedraza: "Brands that are seen as experts in a few categories tend to manage those por|olios very well. Sort of punng one egg in a basket and then taking good care of it." Indeed, Sterling's research suggests two pleasure points with niche brands. Using Sterling's example, the affluent Gen Yers is: 1)

passionate about Sconsh fashion and 2) he no;ced people like him, that were in-‐the-‐know, wearing the same designer.

Passion Immersion in Services

Luxury concierge services also help high net worth individuals. Instead of providing rare fashions, they cater quite the opposite service by offering personalized, once-‐in-‐a-‐life;me experiences. These experiences are typically derived from individual passion points, such as quest for adventure, or "if I wasn't a ____ I would have been a ______." For instance, if you wanted to be an archaeologist, Ar;sans of Leisure Travel offers a Turkey and Israel cultural vaca;on. Or, if you would have been a dare-‐devil, Quintessen;ally offers an Indiana-‐Jone-‐inspired adventure.

Passion Immersion in CommuniBes

Passionate niche communi;es rally around purchasing decisions, as in Sterling's illustra;ve example, but also connect like-‐minded individuals in a meaningful way. Lululemon Athle;ca excels at the laier. Lululemon is a high-‐end athle;c apparel company that empowers its community to interact and engage with others -‐-‐ using the brand as a conduit. The athle;c apparel company enlists elite ambassadors -‐-‐ comprised of award-‐winning athletes, such as Olympians -‐-‐ who wear the

brand. The second ;er of the community is made up of Lululemon-‐veied athletes that embody the brand's healthful living philosophy.

When we look at where people allow themselves to splurge, it's in a space high net worth individuals are passionate about. Whether they are passionate about niche designer brands or once-‐in-‐a-‐life;me adventures or being a part of an exclusive athle;c club, they spend money with the heart. Products and services help consumers feel comfort in actualizing their dreams of being in-‐the-‐know, exploring the world and being the best of the best. Niche luxury offers a chance for high net worth individuals to be themselves, in the most fantas;c way.

Passion Immersion Drives Niche Luxury


Image via Lululemon.com

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