It’s clear that there’s a mood of economic uncertainly afoot. But while a recession appears to be casting a shadow across some sectors, the top end of the consumer market seems to be in rude good health. Marks & Spencer chief executive Sir Stuart Rose said last month that ‘the West End can’t get enough diamonds’. The Champagne region is enlarging to meet demand. Luxury goods and services are continuing to boom, outrunning the economic slowdown.
A British Retail Consortium report published in January found that, while December was slow for retailers generally, designer fashion, designer accessories and premium beauty products outperformed the market.
Verdict Research points to premium clothing as the big retail winner on British high streets in 2007. Retailers at the top end of the market – from premium high street brands like Reiss to luxury brands such as Burberry – grew nearly four times faster than the overall clothing market. Maureen Hinton, lead analyst at Verdict, expects this trend to continue despite a downturn in the economy in 2008. ‘When consumers have less to spend they are more selective in what they buy,’ she says. ‘Relying on them to become solely price-driven is too simplistic a response.’ In fact, Verdict predicts that global expenditure on luxury products will more than double over the next five years to create a market worth £225bn.
And this is a trend that goes beyond retailing. Trend forecasting website Trendwatching.com believes 2008 is the year of ‘premiumisation’. It points to Renova Black, a Portuguese toilet paper billed as the first fashionable toilet paper and priced at more than €2 (£1.50) per roll, and Bling H2O, a bottled water in limited edition bottles embellished with Swarovski crystals. Aiming to be the Cristal Champagne of bottled water, it can cost up to $500 (£250) a bottle, lending credence to Trendwatching’s prediction that ‘no industry, no sector, no product will escape a premium version in the next 12 months’.
It’s a theme echoed by Caulder Moore creative director Ian Caulder. His consultancy has worked with premium clients including Aquascutum and Coutts, and Caulder believes the term ‘luxury’ has become overused. ‘There are so many different levels of luxury in the market that it’s beginning to feel highly diluted,’ he says. In response, the definition of true luxury is changing. Forget conspicuous bling – think customisation and exclusivity instead.
Hinton calls it ‘the changing mood of shoppers’. ‘Consumers are looking for exclusivity and brands with a strong identity that set them apart from competitors,’ she says. Caulder agrees, adding that top-end brands need to focus on delivering an elite and unique experience. ‘True luxury means offering something very rare,’ he says. ‘Hand-crafting is increasingly important, as is the idea that you can make something that is completely individual.’ He points to the consultancy’s work with beauty brand Aveda as a case in point. It was asked to create a limited edition Christmas range for the brand and chose to employ artisans and designers to hand-make both the packaging and products. He believes the rarity of the pieces and the fact that each product was unique appealed to the luxury market.
Retail environments are also vital to the perception of luxury. ‘Personalisation of the experience and service is becoming important, as is the idea of being in the know,’says Caulder. ‘Temporary stores and those that position themselves almost as galleries and feature one-off pieces are becoming more common.’
It’s a theme with which Coley Porter Bell creative director Stephen Bell agrees. The group commissioned consumer research into the luxury sector last year and found that consumers rated experience as the key definer of luxury. ‘Luxury brands aren’t just creating tangible products,’ says Bell. ‘The experience around them is equally important.’ But as more and more consumers are able to access luxury brands – consider the ubiquity of Louis Vuitton handbags and Burberry tartan – Bell believes brands need to extend beyond the retail environment, a space that is becoming more and more accessible and can actually serve to dilute exclusivity.
CPB is working with a premium drinks company that is considering creating clubs and bars, rather than retail, as a way of appealing to top-end consumers. ‘Brands are doing things outside their immediate product area and benefiting by association,’ says Bell. He points to Chanel, which has opened a restaurant in Tokyo called Beige Alain Ducasse Tokyo, and Louis Vuitton, which has a club called Celux above its Tokyo store. ‘The Chanel restaurant is very exclusive – less mainstream than its retail outlets and the design oozes Chanel,’ says Bell. ‘It has the classic Chanel colour scheme but only very subtle branding. At the Louis Vuitton club you have to be invited to join. And in both cases you have to be in the know, which adds to the exclusivity. They are targeting the über-lux.’
The luxury sector is clearly forging ahead. And as more of us choose to access premium brands, the challenge for designers lies in maintaining exclusivity in the face of growing demand.