Work in Progress: Luxury

A JWT TRENDLETTER May 2006

What was once the preserve of the Montecristo-smoking, Cristal-drinking, Chanel-wearing, Bentley-driving
upper strata of society has been catapulted into the mainstream—at times, kicking and screaming, and at
times, in a willing, capitalistic way. Rising wealth in the Western world, combined with brands trending down-
market and the growth of masstige, fakes, and knock-offs has contributed to what has become known as the
democratization of luxury.
These days, one is just as likely to spy a middle-class woman walking out of a Costco discount club store with
a newly purchased Fendi handbag—albeit last season’s remnant—as they are a lady-who-lunches strolling
out of the Daslu luxury department store with a $2,000-something Fendi B Bag.
 Work in Progress: Luxury
A JWT TRENDLETTER May 2006
Still, the luxury goods market has not been deterred. Mintel
estimates that the luxury market grew more than 16 percent in
current prices between 2000 and 2005, to $380 billion from
$327 billion.
After all, Costco is not Daslu and the truth remains that many
high-end buyers still crave the experience, personalization,
authenticity, service, and exclusivity that comes with
The Democratization of Luxury
As the Western world grows wealthier, more people become
more apt and able to splurge on that must-have item. Couple
that with the masstige craze that has designers like Stella
McCartney and Cynthia Rowley offering exclusive lines at
H&M and Target, respectively—and the mass is reveling in
what they construe as class.
The democratization of luxury has penetrated almost every
category imaginable, from food and beverage to beauty and
fashion to automotive and home. Nowadays, top-grade food
sits alongside hot dogs, Cracker Jacks, and cheap beer at the
concession stands of sporting events and concerts. And
celebrity chefs like Wolfgang Puck and Emeril Lagasse sell
product lines in grocery stores, so that consumers can
“experience” their famous cuisine at home for a fraction of
what it would cost to dine in one of their restaurants.
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purchasing big-ticket items, whether it is in retailing, dining,
driving, traveling, or living. Lending to the upward trajectory is
the influx of new money and the inclination to spend on
indulgences in emerging markets. And while the world’s focus
is increasingly on humanitarian efforts, the philanthropists are
championing their causes clothed in the finest threads and
flying around in private jets.
Even the idea of the starving college student is fast
becoming passé in university towns around England, as
luxurious, yet affordable housing accommodations spring up
in Bradford, Huddersfield, Nottingham, Leicester, Liverpool,
Wolverhampton, and Leeds. Wilmslow Park in Manchester,
for instance, boasts suites for individuals, as well as three-,
four- or five-bedroom apartments, deluxe double rooms with
double beds, a communal 16-meter swimming pool, gym,
Internet café, and security. “My friends and I catch up in the
sauna and Jacuzzi,” 21-year-old theology student Nicola
Archard, who pays a weekly rent of £89, told BBC News.
Reaching what many feel are ridiculous proportions—e.g.,
Starbucks coffee, designer toilet brushes, Theo Fennell’s silver
sleeves for tomato ketchup bottles and sterling silver
marmite lids, etc.—the class-to-the-mass phenomenon has
 Work in Progress: Luxury
A JWT TRENDLETTER May 2006
come to both the delight and detriment of
high-end brands.
On the one hand, these brands are
being introduced to a broader
segment, priming people who would
normally buy mass to trade up. On
the other hand, it has caused many
consumers to expect more for
less and question why they
should pay a premium when they
can get “close enough” to prestige with
masstige. Today, “affordable” and “accessible” are just as
likely to be associated with luxury as are “expensive,” “refined,”
and “indulgent.”
The Internet has given new meaning to the word accessibility,
as companies such as Bag Borrow or Steal
(www.bagborrowsteal.com) and From Bags to Riches
(www.frombagstoriches.com) offer inexpensive handbag
rentals, the latter proclaiming that “Luxe Life Knows No
Boundary.” Think of these services as Netflix for bags. And then
there’s eBay, which brings second-hand luxury to Netizens.
Luxury’s exclusive nature has gone the way of the Prada
trainer, which is currently rivaling the Burberry plaid for the
signature style of chavs, a working-class British subgroup
described by American Vogue as “binge-drinking, bling-loving,
boob-displaying.”
Exacerbating the problem is the rise in fakes and knock-offs,
with merchants in Manhattan’s Chinatown, Beijing’s Silk
Street Market, and elsewhere selling Chanel, Gucci, and Louis
Vuitton in their back rooms, and retailers such as Zara
churning out their own spin on runway looks in record time.
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While there’s some shame attached to pawning off a fake as
real, there isn’t any ignominy to someone from the upper
crust pairing high and low fashion. Increasingly, people are
crossing over, a la Sharon Stone who walked the red carpet at
the ’96 Oscars in a Gap t-shirt, Valentino skirt, and Armani
dress worn as a coat.
So, what’s a luxury brand to do to keep the cachet? Reach
higher. Though Burberry’s Rosemary Bravo is confident the
chavs have moved on to other labels, the company de-
emphasized the red, white, black, and carmel check in fashion
shows this spring and is looking to further capitalize on the
cachet of its Prorsum niche business. “We’ve had an amazing
response to Prorsum, and you don’t see it. But if we’re
building this line without people even having a real exposure
to it, then it could become something bigger,” Christopher
Bailey, who is in charge of Burberry’s product line, told Men’s
Fashion Magazine earlier this year.
Interestingly, the rise in masstige has created a backlash of
sorts, led by discerning customers demanding authenticity,
personalization, and originality. “The consumer is already
looking for authenticity—they want unique, one-of-a-kind
products,” says Seirian Hanner, Senior Market Analyst at
Market Dynamics.
It’s no wonder then that sales of Van Cleef & Arpels’ made-to-
order watches have been on the uptick in the past year, and
Selve, a customized, handmade shoe service, exceeded its
first-year sales target by 60 percent, according to Retail
Jeweller. Serotta Bikes has hung its business model on
customization, tailoring bicycles according to the psychology,
physiology, and biography of the rider. And bespoke suits,
Prescriptives lipstick, and Smythson stationery also deliver
against personal requirements.
 Work in Progress: Luxury
A JWT TRENDLETTER May 2006
Experiential Luxury
As luxury becomes more
accessible and affordable
to acquire, true high-end
buyers derive their greatest
satisfaction from experiences.
Luxury is being redefined as
experiences that deepen
one’s understanding and
appreciation of life—unlocking the cultural, architectural,
natural, and traditional richness of the world.
Hermès, Louis Vuitton, and Chanel boutiques have turned
into major attractions in the key capitals of the world, as well
as luxury districts such as Bond Street in London and
Omotesando in Tokyo. Retail architecture has become one of
the most powerful forms of brand communication, as stores
have evolved into showrooms for
everything the brand stands for. Just look
at the Rem Koolhaas-designed, $40
million-plus Prada epicenter in New
York’s Soho, which features an oversized,
round elevator, bleacher-like stairs, and
glass-enclosed dressing rooms that turn
translucent at the touch of a button. Or
its Herzog and de Meuron-designed,
$80 million sibling in Omotesando, described by architectural
Web site Galinsky as “a strikingly unconventional six-story
glass crystal that is soft despite its sharp angles.”
São Paulo has perhaps the world’s most opulent palace of
consumerism, the Daslu luxury department store, home to
such brands as Chloe, Fendi, Manolo Blahnik, Valentino, and
Dolce & Gabbana. It’s so elite that you can’t walk into the
store from the street; you have to arrive by car or helicopter.
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Luxury retailing helps extend the whole brand story—the
atmosphere, the service, the packaging. In fact, the latter is an
incredibly important part of the equation, with consumers
taking pride in perfect packaging. As Mark, a 36-year-old from
London, explains: “I buy a cake from Yauatcha to take home
and eat just so it will be wrapped in their divine box with the
pink and yellow ribbons. I
just love waiting and
watching them tie the
bows.” For the younger
demographics who have
saved up for their top-shelf
purchase, shopping will take
place as early in the day as
possible, so that the store
bag will be seen swinging from their arms for the maximum
amount of time and by the maximum number
of people.
Though it may be more important to have the
goods than the good service for younger people,
the majority of luxury buyers still crave the red-
carpet treatment that their big-ticket purchases
demand. Luxury service is all about being taken
seriously, being understood, and being treated as
an individual. Here, God is in the details. Recognition is
significant, with prized clients of luxury goods companies
being invited to purchase collections at the start of season. It’s
about not having to wait in line: you get what you want, when
you want it.
Beyond the retailing experience, people look for luxury in
other experiences, be it in dining, driving, vacationing,
traveling, or living. Increasingly, luxury is indulgent food and
 Work in Progress: Luxury
A JWT TRENDLETTER May 2006
wine. Or walking in Peru or taking a safari in Africa, which
according to a report from Dresdner Kleinwort Wasserstein,
makes one happier than a Ferrari or a Rolex watch.
The high-end hospitality industry understands this all too
well, and is constantly innovating and upgrading to lure the
most discriminating consumers. At luxury hotels across the
world, guests are checking into designer suites, such as the
Vera Wang Suite at the Halekulani Hotel, which is billed as
the “new standard for sensual elegance,” and as of this fall,
they will be lining up to stay at the Bottega Veneta Suite at
the St. Regis Hotel in New York. Turning it up a notch,
designer brands are also opening their own hotels, e.g.,
Milan’s Bulgari Hotel, and the Versace Palazzo and Armani
hotels due to be opened in 2008 in Dubai.
As described in the Los Angeles Times: “Armani’s hotel…
will feature subtle hues and a rigorous, sophisticated
environment. In addition to offering who-knew-you-needed-it
features such as temperature-controlled sand on the beach,
Versace’s Dubai outpost will be as Baroque as the late Gianni
Versace’s private residences.”
More and more luxury brands are placing themselves in the
ultimate “try before you buy” environment, with hotels acting
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as one of the best experiential advertising channels. Fairmont
Hotels has a partnership with Porsche through which guests
can choose the Boxster or Cayenne to explore San Francisco
in style. And Peninsula Hotels prides itself on providing a
unique luxury guest experience by blending the best of its
offerings with local culture; for example, after a one-hour trip
to China’s Great Wall in a chauffeured Mercedes-Benz, guests
can take a guided tour, followed by a private lunch on a
secluded part of the wall.
Increasingly, higher-income travelers are looking for more
exotic getaways as more people of every economic level
venture abroad, thanks to the decreasing rates of long-haul
carriers. Gallivanting around to Spain, France, or Italy has
been replaced with trips to Iceland, Nepal, or Dubai. The more
exotic, the more remote, the more exclusive, the better. It ups
one’s conversational currency.
What more could one ask for in a destination? Privacy. Rather
than hanging out in the Hamptons, which are clogged with
traffic, write Marian Salzman and Ira Matathia in their
upcoming book Next Now, many of the ultra wealthy are
buying their own islands, among them Mel Gibson, Nicholas
Cage, and Johnny Depp, who recently splashed out on his own
hideaway in the Bahamas to avoid prying fans and paparazzi.
 Work in Progress: Luxury
A JWT TRENDLETTER May 2006

The Pope Wears Prada?

Luxury brands, which have always benefited from the halo
effect celebrities and public figures bring by donning their
haute couture, driving their cars, or drinking their beverages,
recently found an unlikely ally. Since his election last year,
Pope Benedict XVI has been “spotted wearing Serengeti-
branded sunglasses and brown walking shoes donated by
Geox,” according to an April story in The Wall Street Journal,
adding that “He owns a specially engraved white Apple iPod,
and he recently stirred much publicity with a pair of stylish
red loafers that may or may not be Prada.”
The unwitting, unpaid Pontifical product placements were
greeted by marketers with much delight, for the pope has a
following of more than one billion Catholics. Now
Volkswagen AG and BMW AG are both vying to replace
DaimlerChrysler’s Mercedes as the next maker of the
popemobile, WSJ reports.
Still, for Pope Benedict XVI and increasingly for others, luxury
is less about the tangible—Prada shoes and Serengeti
sunglasses—and more about the intangible—like a better
world in which to raise children. Unwilling to relinquish all of
their indulgences both big and small, however, these people
straddle the line between materialism and altruism.
Angelina Jolie walks the red carpet in Versace one night, and
flies off to Sri Lanka or Kosovo on a refugee aid mission the
next. The actress has probably done more for
humanitarianism than she has for any
brand, though her latest ad campaign
for St. John tries to do both. Not
only is she is the face of the luxury
apparel label, she is also the voice
behind its newly formed charity
created in support of children’s
issues and causes. Amazon rainforest to save it from loggers, and Paul van
Vlissingen, the 65–year-old owner of Calor Gas who is worth
For the wealthy, luxury is in having £1.1 billion and has spent £15 million buying up or leasing
enough money and time to dedicate land in African countries to create wildlife parks.
to causes. The Economist describes it as
“conspicuous non-consumption.” “It is showing that you have No matter what the cause, it’s clear that,
more money than you know how to spend. So, for example, in the words of social activist and U2
philanthropy is increasingly fashionable, and multi-billion- frontman Bono, “It’s sexy to want to
dollar endowments such as the Bill and Melinda Gates change the world.” In that respect,
Foundation are certainly conspicuous,” the magazine reports. the Pope is just as sexy as
Angelina and they are showing
There’s the UK-based multi-millionaire businessman John it’s OK to change the world
Eliasch, for instance, who has bought 400,000 acres in the in style.

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 Work in Progress: Luxury
A JWT TRENDLETTER May 2006
Old Money versus New Money
Increasingly, old money is moving away from blatant, “Look,
I’m rich” labels and ostentatious displays of wealth to discreet,
subtle branding identifiable only by those in the know.
The very wealthy want to be discreet and invisible. They desire
private and exclusive spaces where they can escape the masses
and create their own world. For example, Nahm Restaurant at
the Halkin Hotel has a private dining room (with its own
private entrance), and the Four Seasons does check-in behind
closed doors. Private members-only clubs act as cocoons to
protect the wealthy and to shut out the rest of the world.
New money, on the other hand, finds no shame in flaunting
wealth. In other words, don’t expect a bling backlash anytime
soon, if ever. At a JWT influencer dinner earlier this year, hip-
hop experts agreed that the word on bling is that it has always
been a part of urban culture and it always will be, in some
form or fashion. It represents the tangible, obvious, in-your-
face success of those who make it.
That holds true for the emerging markets of Russia, China, India,
and the Middle East, too, which, after years of hardship are keen
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to indulge in luxury. Here, luxury purchases indicate wealth and
social status, and opulence and decadence are the rule of the day.
To see this in action, look no further than Dubai, a country
that the June issue of Vanity Fair proclaims is expanding
faster, taller, and bigger than any other country on the planet,
spawning schemes of impossible luxury. One such scheme is
Falconcity of Wonders, what has been described as “one of the
most awe-inspiring developments the region has ever seen.”
The tourist-and-recreational city will feature a one-million-
square-foot re-creation of New York City’s Central Park, as well
as structures modeled after the Eiffel Tower, the Pyramids of
Giza, the leaning tower of Pisa, the Taj Mahal, the Lighthouse
of Alexandria, and the Hanging Gardens of Babylon—only
bigger, according to the prospectus, Falconcity: Beyond History.
In China, the consumption of luxury goods is still very item-
driven. “Europeans like to spend money on travel, on the
enjoyment of life,” Shanghai-based Yvonne Han told the BBC
last fall. “In China, people like to show off with material
things, like my friend, he bought a Porsche 911.”
 Work in Progress: Luxury
A JWT TRENDLETTER May 2006
This trend has helped to make China the third-largest
consumer of high-end fashion, accessories, and other luxury
goods, accounting for 12 percent of global sales, after 41
percent in Japan and 17 percent in the United States,
according to a report from Ernst & Young. By 2015, Chinese
consumers could account for 29 percent of all global luxury
goods purchases, E&Y reports.
The numbers are also rising in India. According to The India
Luxury Trends Report released earlier this year by The
It’s All Relative
These days, luxury is self-defined, not
mass-prescribed: It is anything and
everything that you may truly desire. It
is about what you value and what you
find luxurious. It could be good health,
a good night’s sleep, a good massage,
or all of the above.
People’s idea of luxury varies greatly.
In the U.S., for instance, the focus
of conspicuous consumption is
increasingly on getting your children
into the best schools and universities, as
Marian Salzman told The Economist last
December. Harvard may be today’s ultimate luxury good. Getting
into the right clubs is as important a social statement as ever.
In this fast-paced, always-on, go-go-go world, time is also a
major luxury. It seems that most people can never get enough
of it, with many fantasizing about what they would do if they
had just a few more hours in a day. “If I had more time,” says
Priscilla, a 25-year-old from
São Paulo, “I would like to
spend it with the people
that I care about and who
I see really less than I
would like to, like my
friends, and I would spend
more time leading a
healthy life. When I say
healthy life, I mean
mentally, too, like reading more and going to movies more,
doing outside activities, taking in culture.”
For some, luxury is seeing something you like in a magazine
and having the ability to buy it. It also means not worrying
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Knowledge Company, there are more than one million
consumers in the luxury segment in India, and that figure is
expected to triple by 2010. The report indicates that the
appetite for luxury goods, including clothing, jewelry,
handbags, watches, gourmet food, and wine is growing
rapidly. The only thing reining in their spending is a lack of
luxury retailers across Indian cities, and that is quickly
changing as companies such as LVMH and Chanel expand
their presence there.
about money. “Luxury is getting in a cab
and not worrying about the cost,” says
Luella, a 26-year-old Londoner.
For others, luxury can be even simpler:
a piece of Godiva chocolate, Kiehl’s lip
gloss, Starbucks coffee, etc. “Spooning
the froth and chocolate off my first
cappuccino of the morning is heaven
for me,” reports Jen, a 22-year-old from
Melbourne. As for Josey, a 28-year-old
from New York, her definition of luxury
has nothing to do with material things.
“Frankly, on my budget, buying
anything expensive makes me feel guilty, not indulged,” she
says. “That’s why a luxurious night in my book involves three
things: Hot bath. Glass of wine. Glossy magazine. Pure bliss!”
Still others see luxury as eliminating the superfluous—the
“more is less, less is more” philosophy. This type of lifestyle
replaces extravagance with essentialism, and champions a
world with fewer things and more ideas.
Having the strength of personal convictions is also construed as
a luxury. It is being free of judgment. It’s not caring about what
others think, moving away from fads, and not feeling pressure
to conform. It is living
in the now, with clarity
of purpose.
And then, there is the
luxury of love, as Tom,
a 36-year-old Londoner,
explains: “Having an
abundance of love in my
life is a real luxury.”
 Work in Progress: Luxury
A JWT TRENDLETTER May 2006

What it Means
As the definition of luxury evolves on a macro and a micro level, so too will the way luxury brands present themselves. Since
luxury is no longer reserved for the upper strata of society, brands will continue to struggle with how to handle the class-to-the-
mass phenomenon. Do they try to broaden their target to grab a hold of masstige consumers who are getting accustomed to
paying a little more for the attributes associated with prestige? Or do they stick to the super-high-end to retain their appeal
with a very niche but also very lucrative consumer base? It will be a tough balancing act for the brands that try to have it both
ways: speaking to a broader demo without alienating the hard-core loyalists who are willing to pay for exclusivity—for the
peace of mind that comes with knowing one’s intern won’t be carrying the same Louis Vuitton tote (real or fake).
As the luxury label becomes all-inclusive, the high end will go higher and the low end of luxury will go low enough to where it
is just a cup of coffee, albeit an expensive one (think Starbucks). Luxury will begin to mean anything that’s “special”—
something that is more than fine leather, more than a fine wine, more than a fine automobile. What that more is will be up to
the individual.
One thing’s for sure: The democratization of luxury is not letting up anytime soon, though the rumblings of a backlash
are getting louder. Marketers can take advantage of the counter trend by offering the personalization, customization,
craftsmanship, and service that many customers crave. The Internet, along with the Silk Streets and the Zaras of the world,
can’t provide the one-on-one, red-carpet treatment that the most discriminating shoppers feel they deserve.
As emerging markets such as India, China, Russia, and the Middle East continue to rise, luxury marketers will have to cater to
new money’s lust for opulence and decadence while respecting old money’s desire for discretion and subtlety. Look for brands
to speak to these markets in different ways, possibly playing up different types of products or services.
Increasingly, though, luxury is becoming less about the material things and more about experiences and intangibles. In a world
where more and more people can get their hands on the “It” item of the moment, the value of where you went on your last
vacation, where you dined out last week, where you bought your summer home increases tenfold. Today, it’s much easier to
snatch up the Fendi B Bag than it is to get your child into one of New York City’s top schools.
Probably the most notable symbol of wealth, and one of the biggest luxuries these days, is having enough time and money to
donate to social, political, and environmental causes. And while not everyone can plough millions into an effort or spend many
days and weeks on it, people still want to rally behind something they believe in. Expect more luxury marketers to make this
easier for consumers by aligning themselves with a cause and allotting a portion of sales to it, enabling shoppers to indulge
both in the luxury of a purchase and in the luxury of doing a good deed. After all, altruism doesn’t mean one has to abandon
the finer things in life.

ABOUT JWT: JWT is one of the oldest and most prestigious advertising agency brands in the world, and was the first to be associated with anthropology and
the study of consumer behavior. It’s also the first ad agency to recognize and embrace the new reality that, with time at a premium, advertising needs to
focus not on catching people’s attention, but on buying their time.