New Times for Luxury

By Erinn Morgan
Photography by Peter Baker

An inside look into what your customers really want in their high-end products—and the retail experience—today

While the market for luxury goods and services took a significant hit during the recent recession, experts agree that this segment is bouncing back in a new and meaningful way.

Prada style VPR55 by Luxottica (top) and GUESS by Marciano from Viva International Group style GM 199

“The market is extraordinary again,” says Andrew Sacks, president of the Affluence Collaborative, a New York City-based market research consultancy. “This is coming from the period of 2008 to 2009 when people were swearing off luxury to now, where we have it back in full swing with record earnings.”

In fact, the global luxury goods market grew by 15.9 percent in 2012. And, while China is a growing force in the luxury market (the country is expected to ring in 50 percent of all luxury sales by 2025), Sacks says the U.S. is still the world’s leading luxury market, according to a recent Boston Consulting Group study. This fact, coupled with recent sales growth, is leading to a robust luxury market stateside.

“Spending by those consumers with investible assets of $1 million is much more robust, and the luxury brands that target this market are feeling like they’re back in 2007 before things went downhill,” says Gregory J. Furman, founder and chairman of the Luxury Marketing Council. “Those brands are doing very well.”

WHERE IS EYEWEAR?

Considered a key luxury category, high-end eyewear is also showing encouraging results on the recovery front.

The market for luxury frames (frame only) in the U.S. priced at $300 or more has grown by a full 10.2 percent in units sold from the year ending March 2009 (1.98 million pair sold) to the year ending March 2013 (2.18 million pair sold), according to The Vision Council. In addition, dollar volume sold also spiked by 6.7 percent during the same time period, from $708.9 million sold during the year ending March 2009 to 756.7 million sold in the year ending March 2013.

At the two-store, high-end Gogosha Optique based in Los Angeles, a high volume of extra-pair sales indicates a strong market for luxury. “About 50 percent of our customers walk out the door with multiple pairs,” says owner Julia Gogosha. “Even if they buy just one pair at the time, many come back later to purchase a second pair.”

Still, luxury consumers’ tussle with the economy has changed their buying habits. “Customers today might buy one or two pair of glasses rather than three or four pairs or they might simply change their lenses,” says Zach Winitz, owner of the two-store, high-end Glasses, Ltd., in Chicago. “They are just a little bit more frugal with everything.”

Luxury market experts espouse good news for high-end eyewear, as it is a perfect entry-level luxury item for consumers. “Luxury sunglasses [and eyeglasses] allow an opening pricepoint that most anyone can afford,” says Chris Ramey, founder and CEO of Affluent Insights and The Luxury Marketing Council Florida. “The aspirational customers can’t afford everything; but they can likely afford eyewear. Perhaps it’s safe to suggest that branding a luxury product on your face is the ultimate conspicuous consumption.”

WATCH AND SEE

Luxury watch aficionados have become tremendous enthusiasts, often collecting several high-end watches each year to add to their cache. In fact, global consumer interest for luxury watches grew 3.3 percent in 2013, according to the World Watch Report from Digital Luxury Group.

Can retailers of luxury eyewear also fan the flame of enthusiasm for their category? And, can eyecare professionals fuel consumers’ passion for collecting unique and coveted eyewear?

“I don’t think eyewear has reached the place as a category that has the panache,” says Andrew Sacks, president of the Affluence Collaborative, a New York Citybased market research consultancy. “It’s still a little more utilitarian.”

Still, Sacks sees a parallel in the opportunity to create the behavior in men, especially, that this is something in which someone should have a wardrobe.

At the Luxury Marketing Council, president and founder Greg Furman agrees. “The watch has become more of a fashion accessory and eyewear is now in the watch category,” he notes. “Eyewear is a fashion statement and now it’s on everybody’s radar because celebrities are wearing it and the media is putting a focus on it. It’s a wonderful luxury accessory, and all this bodes well for retailers at the high end.”

Eyecare professionals can look to the latest trends in the luxury watch market to get an assist in their own merchandising and marketing efforts.

According to the World Watch Report 2013, watch forums are the most engaging platform among collectors and aficionados. Top forums include the Chinese platform iWatch365 (49 percent of post views), TimeZone (45 percent), and PuristSPro (six percent).

In addition, luxury watch brands garnered nearly 50 million fans on Facebook, exhibiting growth of 135 percent over the previous year, according to the World Watch Report 2013.

The luxury watch categories with the biggest growth include the elite level, Haute Horlogerie (up 10.15 percent with brands such as Patek Philippe, Vacheron Constantin, and Breguet), and the high-end Watch and Jewelry (up 7.70 percent with brands such as Cartier and Piaget).

SUN ELITE Leisure society style 44038 (top) and Lindberg style No. 023

LUXURY’S TWO CONSUMERS

So, who is today’s luxury consumer? Though Sacks notes that affluent consumers are typically “educated, informed, and skeptical,” they are also divided into two distinct segments.

The first is the affluent segment, which was the first to come back post recession, says Sacks. The second is the aspirational segment, which drove a lot of luxury business in the earlier part of this century. “And now they ’re back,” he says. “The middle class of the country is disappearing, so if you’re not defining business strategies to target the top 10 or 20 percent of the market, or focusing on a real discount, value message, that’s not good.”

Though the affluent consumer is still a buying powerhouse, their needs are different today and they are aging—a fact that is opening the door in the luxury market for the Aspirational consumer.

“The mind of affluent consumers has been recalibrated today and, second, they are older,” notes Ramey. “Five years ago we used to say that 60 was the new 45. Today, that 60-year-old is 65 and acting their age. Consumption no longer drives happiness.”

In addition, Ramey notes that today’s affluent consumer generally doesn’t want you to know they’re affluent. “Consequently, the luxury business is driven more than ever before by the aspirational consumer,” he says.

In fact, demographic analysis in Mintel’s recently released Luxury Goods Retailing International report found that there is a great deal of luxury purchasing being done by less affluent groups, and that enthusiasm for luxury is high among younger shoppers.

SERIOUS SPARKLE Brendel style 903027 by Tura (top) and Marchon’s Valentino style V680SR

FUTURE PREDICTIONS

Where will the overall luxury market go in 2014 and beyond? Market experts seem to agree that the category will continue to see positive momentum. “I think it’s going to stay strong,” says Sacks. “The challenge for retailers and the big luxury brands will be to keep things fresh and exciting. Luxury has become much more mass over the past 20 years-not everyone had a piece of Louis Vuitton 20 years ago.”

This market will also focus on global customers he continues, “Companies in the luxury segment will continue to focus on China. This is a long-term strategy.” EB

WHAT LUXURY CONSUMERS WANT

What is the new luxury consumer looking for in their products and shopping experiences today? Here, we look at how luxury market experts and successful eyewear retailers suggest reaching–and appealing to–this highly loyal customer.

■ STOCK UNIQUE BRANDS. According to Chris Ramey, founder and CEO of Affluent Insights and The Luxury Marketing Council Florida, the opportunity exists for retailers to segment their market by stocking unique brands. “Affluent consumers will likely define ‘their luxury’ as brands that others don’t know,” he notes. “It will be about wearing an unmarked brand others don’t recognize.”

As such, he suggests retailers reach out to secure distribution with smaller, higher/highest quality and less well-known brands to serve their affluent clients.

Such is the merchandising mix at Gogosha Optique in Los Angeles, where the focus is on highly unique brands that appeal to the new luxury consumer’s sensibilities. “A lot of people think we only offer progressive looks, but we do also bring in American classic styles so our luxury client has a lot from which to choose,” says owner Julia Gogosha.

GOLDEN SHIMMER Marcolin Mont Blanc style MB 454s (top) and L’Amy’s Bally style BY2004A

■ APPEAL TO BOTH LUXURY CONSUMERS. According to Ramey, it’s important to separate luxury consumers from affluent consumers. Who is the luxury customer at your business?

“Luxury consumers often want the brand emblazoned across their face. But, the affluent consumer is less likely to desire or need brands to define them,” he says. “It’s much more important to them that they’re discreet.”

At the Oak Street store of Chicagobased Glasses, Ltd., luxury customers are looking for exclusive, high-quality frames. But, at the eyewear retailer’s North Michigan Street store, there is a need for a lower-priced luxury line to appeal to a more aspirational customer. “We’re looking for a unique, high-quality line for around $100 to $150 per frame that will appeal to the tourists and the employees working in the mall in which we’re located,” says owner Zach Winitz.

Echoes Gogosha, “Luxury can be found in lots of different pricepoints.”

■ ASK QUESTIONS. Who is your luxury customer? Affluent Insights recently conducted a segmentation study that helped define the many faces of the luxury consumer. “We found that 30 percent are true luxury consumers and 70 percent are people who buy luxury goods but also use brands like Holiday Inn,” says Andrew Sacks of the Affluence Collaborative in New York City. “From a retail perspective, you can really understand who your own customer is by asking them questions about who they are and what they like. If you simply bring them a tray of Cartier frames to try on, there could be a complete disconnect.”

■ SELL THE DNA. According to Gogosha, selling luxury eyewear today is not just about having the right product. “It’s about understanding the story and relaying that to the client-and providing impeccable service,” she says. “The market is about the rise of the specialists [who can sell their store’s and product’s DNA], so when people part with their money, they understand why.” White glove service is the icing on the cake of the luxury eyewear sale. “Everyone’s included in that equation, not just VIP kind of people or celebrities,” says Gogosha. “I think that’s how everyone should be treated whether they’re spending $200 or $2,000 or $20,000.”

■ GO BESPOKE. In the era when the concept of a sale is a little outdated, luxury retailers are looking to more intimate, bespoke events to appeal to their high-end customers. “Invite best customers and ask them to invite their friends,” says Greg Furman of the Luxury Marketing Council. “You can educate those customers through sophisticated events, social media, style trend-focused emails, and inventive telemarketing. Today, senior management is picking up the phone, making the telemarketing calls, saying, ‘We’re having a trunk show for fall and we’d love to see you there.’ That makes a huge impact.”