New Rules of Luxury Living 2016 White Paper
EACH YEAR LUXURY PORTFOLIO INTERNATIONAL® sponsors a large syndicated research project called The Survey of Affluence and Wealth, produced by Time Inc. and YouGov. This decade-long study of afluent people looks to uncover the truth about how they live, work and play in and around the world of luxury. The research includes more than 6,000 interviews carried out online, plus in-person focus groups that provided direct consumer feedback.
TODAY’S AFFLUENCE IS MOSTLY SELF-MADE. The leader-class of the past would describe luxury as a birthright, the possession of which was proof of their rank. Today, luxury consumers describe their access to luxury in a very different way. In fact, luxury today is most commonly a result of a lifetime of work, strong desire and no longer something that simply divides, but rather is a signal to one’s self that they are victorious over the challenges of life.
A renaissance of what luxury means has emerged, and there are five primary trends that make up the foundation of luxury living.
TREND 1: THE DESIRE TO BE VICTORIOUS. Throughout history, luxury has been reserved for the social, political and economic elite. As affluence becomes increasingly available to regular people, so too does the pursuit of luxury living. Luxury purchases represent, among other things, the owner’s victory over the challenges they have overcome. The increasingly victorious luxury real estate consumer is one who can afford to focus on the answer to the question “what makes my home happy?” For most, the primary residence serves many purposes: it is a comfortable refuge from the day, a place to entertain guests, a place to raise successful children, and, ideally, an investment that pays off in the long run.
TREND 2: THE ABILITY TO DISCERN. Luxury is a part of a lifelong journey, and as successful people often do, they learn from their experiences. As luxury participation increases, so too does the ability to tell the difference between very good and excellent. Details begin to stand out as hallmarks of artistic metric and high quality materials. For example, the one percenters can innately recognize the above and beyond, personalized service that only a true 5-star hotel delivers and “feel” the difference between that and the spectacular service of a great 4-star property. In real estate, many buyers know about current trends and easy-to-research details; however they rely on agents of worth to communicate special attributes about a property, neighborhood or area.
TREND 3: LUXURY IS INCREASINGLY INDEPENDENT. More and more, high-net-worth people prefer brands that work independently from the mainstream. The trend is popular because of a commonly held belief that independent companies rely on their ability to provide better service, better training for staff and deeper local connections that big-market, big-brand companies don’t always provide. Affluent consumers are also embracing their independence through the so-called “shared economy” by participating with brands like Airbnb or VRBO for vacation accommodations (22%), Uber or Lyft for on-demand transportation (12%) and newcomers like Turo.com which allows them to rent a luxury vehicle for less than the standard models found at airport car rentals around the country. The fact is today’s affluent are mindful of the way in which they spend their hard-earned money and want to participate in luxury, while also avoiding waste.
TREND 4: THE DESIRE TO COLLECT IS PASSION-BASED. Collections are the expression of a passion and a desire to possess the best a category has to offer. The goal is not to collect a lot of things, but rather, to collect the best of things. So, even among the most luxury-oriented people, their focus is acute, and their selection is intentional. This is true for watches as much as it is true for real estate where the average top “one percenter” family own four homes for personal use, often in multiple states and even multiple countries.
TREND 5: THE DECLINE IN BRAND POWER. Brands are losing their power to influence purchases on name alone. Affluent buyers are increasingly comfortable participating in non-traditional markets. For example, 62% like to stay at new or independent hotels; 52% participate in auctions for art, antiques or other goods; and 31% like to shop at consignment stores.
FINAL THOUGHTS. Successful people start out a lot like everyone else. For the vast majority their affluence came as the result of education, hard work, seizing opportunity and pursuing passions first and financial gain second. Affluent consumers are increasingly sophisticated in their ability to discern luxury from imitation, and they focus on details that signal the difference.
Email TinaCiaccio@michaelsaunders.com to receive the full copy of the 2016 Luxury Portfolio International White Paper.
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