Luxury From the Heart
Monday, 26 April 2010 - Las Vegas, USA
In this presentation to the American Express Publishing Luxury Summit, Cynthia McFarlane, President Saatchi & Saatchi Latin America, presents some emerging revelations about high net worth consumers in today’s new economic reality, sharing the learnings from a recent Luxury Xploring project.
It’s been a roller coaster of a decade for the luxury business in this new century. Luxury providers have been roiled by cheap chic, robbed by copycats, showered by rubles, shocked by digital, slapped by sustainability, crunched by credit, and thumped by a new frugality.
What a ride!! And so here we are. We’re in Vegas, the sun is up and luxury is in conference. A big thanks to Amex Publishing for inviting me today!!
One certain thing is that the view on the Riviera is changing. It is a new time and a new moment – and the right moment to reflect, re-imagine and reinvent.
So where are we? Bob McDonald, CEO of Procter & Gamble – calls today a VUCA world. Volatile. Uncertain. Complex. Ambiguous.
It’s a post-recession blend of pessimism and optimism. Globally we can expect more financial shocks, debt crises and social attrition as the lingering effects of the economic turmoil roll through. Equally, expect the unreasonable power of creativity to lift the world on a scale, and at a speed, never before seen. Necessity is the mother of invention, there is simply no limit to the power of ideas.
The luxury industry, as they say, has issues. Despite the fountain of youth appearing in luxury advertising, the core consumer base is aging and feels stressed. Billionaires may be on the rise, but the world’s 8.6 million high net worth individuals – with investable assets greater than $1 million – lost 20% of their combined wealth.
Luxury still remains a $227 billion dollar business, so breathe out. We know that consumers have reframed the equation – less spending beyond their means; no more buying stuff they don’t need; shopping on autopilot is out, even as spend returns. People have reframed indulgent treats as a necessary respite.
We know that people want “priceless value” not price-focused value. This is where our expedition begins.
It’s not about putting the customer at the heart of everything you do.
It’s about putting yourself at the heart of everything the customer does.
This is a vital step-change in attitude. This is beyond price, beyond range, beyond business as usual. It is a truth that creates Loyalty Beyond Reason, that creates Lovemarks.
Saatchi & Saatchi has luxury clients: Lexus, Ritz Carlton and Flexjet. We also have clients who are masstige: Olay is an amazing leader in everything it does. It’s our job to know the inner secrets of luxury reframing. And we take this very seriously.
This past September, 30 of our people went out Xploring the world of high net worth and luxury in over 20 cities around the globe. From New York to Los Angeles, Sydney to Buenos Aires, Paris, London, Mumbai to Moscow, and points in between, we met tenacious entrepreneurs, weary investors, optimistic business owners, scarred property investors, heirs to old fortunes, designers and stylists to the rich-and-famous, personal assistants and party planners.
We wanted to harvest insights, language, and core creative directions across design and advertising, photography and fashion, packaging and in-store.
It was a quest for truth.
Let’s pull up the 10 luxury learnings – with key takeouts.
THE 1ST LEARNING IS:
Embrace the Challenge
In all corners we met people with tenacity and an ‘against all odds’ attitude that has fueled their success, and will see them through tough times. In a language sense, they talk challenge not crisis, excitement not fear, tenacity not tragedy.
Many wealthy people have grown up in struggle so this crisis is just another challenge to be met. They ask: “how can I make this a good recession, how can I use it productively for myself, my family, my company?”
Some have thrived in the crisis. We met an owner of four Montessori schools, Moms are going back to work so enrolments are up 30%.
And for some, it’s all relative. Mr. A, a Russian tycoon from Moscow, told us: “Figuratively speaking we have moved from four layer toilet paper, back down to two layers, but we are still a long way from going back to recycled newspaper.”
The Takeout is:
Take your enterprise forward with determination, confidence, optimism and strength – and give your customers an opportunity to win.
THE 2ND LEARNING IS:
Hold Luxury to True Values
This decade – 2010-2020 is going to be a more hardworking and meaningful one. Wanton excess and inflated price tags are out.
Luxury is reborn rooted in the basic human values – family, community, wellbeing, generosity. There is a return to craftsmanship, quality, heritage and originality that play against a fast changing tech-loving throwaway culture. People want things that have a past and a future, with the quality to endure.
The Chairman of Mauboussin told us: “We need a return to reason, decency, discretion, beauty and creativity – in other words, to true values.”
Rather than being defined by owning a lot of expensive things, luxury is evolved to be about personal importance, ways to express oneself as an original, creative, complex, and unique human being.
The Takeout is:
Create experiences that deliver enduring priceless value. It’s about surprising with the obvious. Hermés and Coach are launching stores for men. Who would have thought?
THE 3RD LEARNING IS:
Rediscover the Beauty of Feeling Human
Luxury is evolving from pampering to personal importance, toward intense feelings that take our breath away. It’s about moments of joy, laughter, romance, surprise – intense personal thrills that we can hang on to forever.
These are naive, innocent, pure, basic thrills – experiences that recall memories of genuine romance, family moments, or even revealing childhood moments – that have little to do with money.
Luxury is now about people looking for ways to define themselves more than it is about exclusivity, it’s about discovering ourselves, self-fulfillment, and learning.
A Turkish businessman told us a story of going angling with a local fisherman in Bali. So intense was the simple joy and happiness exuding from the local fisherman when he caught a fish that the businessman felt a welling of envy and admiration. Something so simple…The next day the Turk challenged his brother to their favorite childhood game: who can stay under water for longer…
This is close-in, intimate; it’s about the soul and not about testosterone.
The Takeout is:
Think how your services, products, packaging, marketing, everything can touch people in essential ways. Use Mystery, Sensuality and Intimacy – the three essential ingredients of Lovemarks – to enthrall people.
THE 4TH LEARNING IS:
Romance the First Time
We found in our study that people absolutely treasured their “first time”. Whether it was shoes or champagne, people held tightly onto the memories of the first taste, the first touch, the first scent.
The first time is always unbeatable. It’s the power of mystery. It is pure and fresh and exciting. We anticipate, remember and treasure our firsts.
Mr. S. from Hong Kong, the CFO of a Global Lingerie Brand, told us that he had 10 pairs of Brogue shoes – including the first pair he bought when he started working 23 years ago.
The Takeout is:
Frame the emotion of “the first time” in your offerings, advertising and taglines. Calibrate past, present and future for each of your brands to unlock favorable emotional states.
THE 5TH LEARNING IS:
Step into a Better Future
A lot of re-evaluating has taken place. Many people are changing for good what they did beforehand. It’s not “business as usual”.
People are thinking more about the important things in life: family, health, harmony, sustainability, longevity, legacy, contribution. More centered, less manic.
Some of our Xploring interviewees have been tempted to walk away, step out of the race, give up a zero rather than trying to add one – or at least take a break to live in the moment. A bank owner told us. “Luxury means caring what the day is like.”
Many are determined to “make the world a better place” – social entrepreneurship, career reinvention, giving and sharing, becoming creative.
The shift in luxury towards technology and function is not about doing less emotion. It’s about flowing with and embracing new kinds of emotion.
The Takeout is:
Think about how you can lead people out of themselves, and into an extraordinary moment – it could be in-store as, say, a sanctuary, it could be online as a bespoke order; but create the experience opportunity.
THE 6TH LEARNING IS:
Find Luxury in the Real Thing
We’ve come to think of luxury as something that must be created, produced, packaged and transacted. But luxury exists in the essence of life, and is therefore available to everyone.
People value a moment of peace amidst the chaos, a new friendship formed, a glimpse into a child’s imagination. Some luxuries don’t come wrapped in tissue paper. They’re simple, essential and sometimes elusive, yet just as valuable.
As an Indian Prince from Mumbai told us, “Luxury is about enjoying the essence of life, the freedom, and the space. It shouldn’t be forced; it exists in the real thing.”
And a London magazine editor told us that her grandmother’s jewels were more important to wear than anything new or contemporary.
The Takeout is:
Create a world that is authentic and genuine, the real world we live in, not just a fantasy world.
THE 7TH LEARNING IS:
Make an Understatement
Right now, ostentation is out of place. People still want to express their individuality and celebrate their achievements, but in more subtle and genuine ways.
A Moscow heiress, Olga, shared this viewpoint, saying: “It’s improper to wear too many diamonds. It’s more important to look fresh and groomed. The real It Girl unlike others can combine a Chanel handbag with Converse sneakers, and wears a simple white t-shirt as if it were haute couture.”
Remember that people who shop at luxury stores also shop at Target, JCPenney and Barnes & Noble.
British newspaper The Telegraph recently described a New Zealand luxury tourism service as: “The kind of luxury that makes you grin from ear to ear because it’s so simple, so refreshingly unpretentious.”
The Takeout is:
Under promise. Over deliver.
Here’s something down to earth
THE 8TH LEARNING IS:
Support Investing as the New Spending
Ultra affluent consumers are still spending, but expectations have changed. They want to purchase beyond ‘this season’, and sustain what matters.
This is about transforming expensive purchases into treasured items.
Beneath the drive for wealth and success lies a very human need for meaning and purpose. “Causism” is the new consumerism – “personal giving” remained high for the affluent last year – and being involved with a cause can be a status symbol, the ultimate conversation starter.
Philosopher Daniel Dennett has a good line on it: “the secret of happiness is to find something bigger than yourself, and then dedicate your life to it.”
The Executive Director of De Beers told us that “we’re seeing a move away from immediate gratification. In tough times luxury consumers return to investment pieces that deliver on a promise to last.”
The Takeout is:
Being “Purpose inspired, benefit driven” is a relevant and potent concept. Help your customers find new ways to create a better future for their children and grandchildren. Start with what Saatchi & Saatch calls “DOT”, do one thing. And then “DAT”, do another thing.
THE 9TH LEARNING IS:
Embrace the Story on the Inside
It is easy to be captivated by the ‘outside’ of a luxury purchase. We all love the beautiful bottle, or the shiny new paint, or the thick grosgrain ribbon… but by itself, the outside is just a shell.
People are starting to peel back the layers and look deeper, because the inside is where the stories and the secrets lie. This is the golden age of storytellers and editors – tastemeisters, recommenders, influencers who will give you the inside story.
In Lovemarks, secret ingredients are one element of Mystery.
Monocle Publisher, Pamela, in London said: “The biggest problem with luxury brand advertising is ‘mannequin whitewash’ – after a few pages it’s hard to determine one uber expensive brand from the next. That’s why we help brands tell a more interesting story.”
A Jewelry Designer, Vincent, in Paris said: “My grandmother’s collection of jewels was beautiful; I would play and pretend to be a pirate as she taught me about the stones. Now I’m crazy for old diamonds with fewer cuts. Luxury should not be loud. It’s on the inside, not the outside.”
The Takeout is:
Embrace stories that build layers of luxury and mystery. Focus on hidden gems. The secret pockets, the invisible ingredients, the store within a store, the personalized message. Build positive, mutually beneficial relationships with influencers and storytellers.
THE 10TH LEARNING IS:
Generate a High Return on Time
Time is of course the ultimate luxury. Luxury is measured by products and experiences that enable us to get more out of time. Super affluent consumers want to get more out of every moment.
A bank owner from Los Angeles, Frank said. “At this stage in my life, what I want most is time. Time with my grandchildren. Time in my rose garden.”
Li, Hangzhou (China), an Entrepreneur said: “I’m so busy with work, there’s little time for myself, let alone time for bull****. Opportunities don’t wait. My time is the most precious thing I have.”
The Takeout is:
Time is the value equation of luxury – so build awareness of time into the product, service and experience.
Thirty explorers, 20 cities and 10 take outs. I hope there were one or two things for you in this summary. In addition to and even outside of what we learned from our exploring, here are three things we suggest you do tomorrow;
First, put your products, service, website, signage, business cards… every touch point to a simple test. Stand in your customers’ shoes and answer one question: what are three things that compel you to say, “I love this?”
Second, whatever you’re investing in digital, double it. In 2010, we are all “screenagers”, everyone is connected and fun is serious business. The average age of a heavy videogame player in the U.S. is now 39.
Third and last, switch stealth wealth to true wealth. Inspire everyone in your enterprise to take sustainability seriously – and remember to DOT (do one thing) daily. When millions or even billions do one thing, there’s luxury for all.