In these days of economic uncertainty, it’s safe to say that even the basics can be considered a “luxury” – nevermind what the traditional interpretation of that word might be. But judging by the sales of superyachts – builder Edmiston & Co has 30 under construction and is still receiving new comissions – not everyone is ditching the luxe lifestyle. While others around the planet are saving their pennies, this new class of ultra rich consumers, also called the “super affluent”, is not afraid to spend 10,000 times the average person’s annual income on just one more private jet, yacht, or mansion, and has even been heard dismissing the credit crunch as “some new breakfast cereal.” Of course, this makes the luxury brands very happy.

It’s logical; the more millionaires and billionaires there are, the better off the luxury industry is. But how will this newfound wealth and affluence change the industry? It won’t: the new up-and-coming millionaires are just the same as anyone whose bank account isn’t as well endowed as theirs; it’s just that when you have more money, you don’t buy more cars and handbags, just better cars and handbags. You don’t go more often on holiday, just when you do, you go to places that suit your tastes exactly.

A new set of rules
What might change within the luxury industry is that those customers from the general public whom luxury brands had converted in the past will not be able to afford to keep up. These consumers were buying outside of the norm, although according to the Risc Institute, more than one European out of two bought a luxury brand in the last twelve months, creating a shift in the typical luxury consumer.

Before, luxury thrived on the ordinary purchases of extraordinary people, but most recently it found its numbers in the extraordinary purchases of ordinary people. But with the financial crisis very present in everyone’s mind, luxury brands will lose some of the customers who would “treat” themselves occasionally, and rediscover their original customers, for whom luxury items are just an everyday commodity.

Of course, though, where there is an evolution in the mind of consumers – as there certainly will have been in those customers who have been loyal to the brand just as those who are new to it – there will have been an evolution in the way they consume. From their flagship stores to the internet, luxury brands will need to find the new playgrounds of their customers.

But not only will the customers of luxury brands change; the founding faces behind the luxury brands that we know today are slowly retiring and passing on their batons to a new generation. Brands will no doubt change as a result, in particular to battle with new challenges within the market. For example, the older generation of a brand such as Louis Vuitton never had to face the challenge of the internet, but today it is an ever present part of society, and the new generation must use these new ways to communicate with their customers.

No more bling bling
The most prominent trend in the luxury market, though, will be to find ways to stand out from the rest. But although brand recognition is increasingly important because of the intense number of messages consumers receive each day, being bigger, louder, and shinier might not be the way forward for luxury brands. People like Patrick Thomas, general manager of the Hermes group, seem to think that discretion will win the day in the end. With globalisation came mass marketing, and a certain dissolution of brands in order to be recognised and loved by all. Which meant being louder and generating more “bling” to create appeal for those wanting to demonstrate to others that they could afford a luxury item.

But in a recent interview for French newspaper Les Echos, Thomas explained that, “there will be a segmentation in brands: those that choose luxury on today’s terms, and those that remain loyal to their craft and quality. The first will go towards mass production, but I personally believe more in value strategies rather than volume strategies. The more desirable you become, the bigger you get; the bigger you get, the less desirable you become.”

But whether a Chanel bag has its “C’s” emblazoned across the outside or whether the nametag can only be seen on the inside, the current economic climate doesn’t mean that luxury will see a decrease in sales. On the contrary, luxury’s future is bright, diamond bright. In fact, Bernard Arnault, CEO of the Moët Hennessy - Louis Vuitton group, predicts that the luxury sector will have doubled by 2012, reaching €300 billion in profit terms. Theoretically, that means that people will be buying double the luxury products than they are today. While some worry about the credit crunch, Arnault feels confident about the future. Of luxury at least.

Perhaps it’s because 15 years ago, a luxury product was just that: a piece of very expensive clothing or jewellery from a high-end brand. But today, luxury encompasses almost everything, from mobile phones to the service industry, and instead of a product, it has become a different type of commodity: it’s time, it’s family, friends, culture, and the environment. It’s a way of life; one that’s hard to give up.

The new luxury
Luxury is not just about “having” anymore. In fact, the word “elegance” has its roots in the latin word eligere, which means to choose, and that’s what money can buy nowadays – the ability to choose anything, to choose better than others, and to choose things that others don’t, and can’t, have.

For example, thanks to the new super-affluent, art has now become a super luxury. According to UK art insurer Hiscox, the price of contemporary art has risen 55% in the past year alone. The best example of this new luxury? Damien Hirst, who recently made £50 million for his piece For the Love of God, a diamond-encrusted skull. Robert Frank, author of Richistan, explains this new development by the rise in Chinese and Russian buyers: “The challenge for today’s rich is to set themselves apart from the merely affluent. They want things nobody else can afford, experience, or, preferably, even imagine.”

This desire to have something exclusive, right now, has also spawned the creation of numerous “concierge” services. Membership is extremely hard to obtain, services have no bounds, and this is one luxury that offers, well, absolutely everything. Far from just a private car or a nice piece of jewellery, these services can provide pre-nups, impossible to get concert tickets, nutritional advice, a private jet designer... You name it, they’ll find the best in the business.

Luxury is no longer about having. It’s about being and choosing how to be the best. Luxury doesn’t have a price. Or rather, price isn’t necessarily its most defining characteristic. Each object is now full of meaning, of dreams.

In a nutshell, luxury has become the art of living.


Luxury in China
As China reaps the benefits of its booming economy, it has given birth to a small but growing group of people who are enjoying the finer things in life. But in a country founded on the principle of economic equality, their consumption habits are growing in a way that is very different from that of their counterparts in other regions of the world.

One way to look at the Chinese luxury market is to imagine a entire society that is grouped together inside a rubber band. Everyone is inside the elastic band, huddled together – to go outside it would make one an outcast. But even though everyone is happy to stand together, some individuals wish to claim their own personality and become more than just another face in the crowd.

And so they begin to push and extend the borders of the rubber band, to test how far they can stretch it before it pops back and forces them back into the centre, or leaves them outside the rubber band. The further you can push the rubber band, the more important you are.

In China, there is an elite class of consumers who want to “show off”, but the question for them is how to “show” their wealth without putting other people “off”. The answer is that they must turn to well-known brands that enjoy wide popularity (even if they aren’t easily accessible for the average consumer). Louis Vuitton, Gucci, Chanel – these are the brands that China’s luxury consumers turn to in order to demonstrate their wealth.

By the same token, little-known, niche brands mean nothing in China – arrive at a party with the latest handbag from a new, elite boutique in Paris and you are seen as either stupid (why buy an expensive handbag from an unknown label?), or pretentious (why are you placing yourself as an outsider?), but arrive in a new Audi, which are favoured by government officials, and people look up to you.

The definition of what is inside and outside this rubber band is fluid. It changes as tastes and cultural ideas evolve, with the primary drivers behind future trends in the Chinese luxury market being the country’s opinion leaders. People like government leaders and the country’s wealthiest individuals set the boundaries for what is acceptable for businessmen and executives in China. Younger consumers look to the stars of music, film, and sports for their cues on the limits to conspicuous consumption. A successful luxury brand in China will leverage these opinion leaders to establish themselves as a socially acceptable yet elite brand.