Two items in the news this past week reveal once again how the consumption and connoisseurship of luxury goods is becoming increasingly mainstreamed.
The first was the launch of a new luxury ‘channel’ on CNNMoney.com. CNNMoney.com is the collective online location for several Time Inc. properties, including Fortune, Money, and Business 2.0 magazines. CNNMoney.com has covered luxury items before—stories on the $8 million Maybach Exelero and the private lives of millionaires have yielded video streams in the tens of thousands (according to a spokesperson)—but now the site is putting such stories in their own section. I found the initial content quite interesting, especially the photo gallery of what a $1.5 makeover can do to an Airbus A380. Clearly Time Inc. has identified luxury as a category that its readers (and advertisers) are interested in.
The second was a commentary item from the RightSide Advisors entitled ‘Democratizing Luxury.’ They note how several years ago Michael Silverstein, a consultant with the Boston Consulting Group, identified a new group of luxury consumers. They are middle-market consumers who selectively trade up to higher levels of quality, taste and aspiration, but at the same time are forced to trade down in their housing and other staples in order to afford it.
From the article:
These new customers luxury-rich but asset-poor are more demanding, more selective, and show less brand loyalty than high net worth individuals, the archetypal consumers of the old luxury. They are willing to pay high prices, but they expect commensurate quality; old luxury was never so fussed. And they want the hottest, trendiest designs, which increasingly have to be marketed in creative ways including product placements on TV sitcoms.
The article goes on to mention American shoe retailer DSW as an example of a company catering to these consumers of new luxury. DSW is able to sell famous brand shoes at 20-50% less than department stores, and its stock has been performing very well of late.
As more people see luxury on CNNMoney.com and other web sites, they’ll have greater aspirations and desires, and the market for stores like DSW that cater to these aspirations and desires will continue to grow. For this reason it’s a great time to be a luxury brand or retailer.
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