This current period of global economic crisis has caused the luxury industry big turmoil. Simply shifting focus from classic markets to new, emerging markets is not enough to make up the consumer-spending shortfall. I have spent the past few months meeting and speaking with executives from the top luxury houses, and one theme seems to rein consistent across the board. The period of rapid geographic expansion (with a name brand luxury boutique in each mall across America) and a product range that relies largely on entry point aspirational products - cannot continue.

During a recent Posh Planet Interview with Guy Leymarie, the CEO of De Beers Diamond Jewellers, he spoke about his views on the evolution of consumers’ definition of luxury. Guy Leymarie explained: “Luxury is not linked to a period, and we can observe different interpretations of the idea in the history of civilizations. In all civilizations though, luxury, and the ultimate expression of luxury, diamonds are present and take a role in Society. Privilege of Royals and symbol of power, grandeur and magnificence at the beginning, luxury became, with the development of the liberalism in the late 19th century, a more sophisticated consumption as beautifully described in the French literature (”Au Bonheur des Dames”). Luxury goods became a status symbol and a must-have. In the past 20 years, the reference to brands as symbols of aspirational lifestyle and specific values, with which we want to be associated, became more substantial than the product itself or the function. The multiplication of brands as expressions of lifestyles with more and more sophisticated codes made luxury consumption a worldwide phenomenon for an enlarged number of privileged individuals. Luxury codes were more a sign of belonging to a privilege or identified lifestyle group than the expression of individual identity. The notion of luxury was extended to different functions such as fashion, gastronomy, cars, etc. Nowadays, a Gucci mobile phone is certainly the ultimate expression of what luxury became: a social phenomenon.”(A private interview with the CEO of De Beers, www.theposhreport.com)

Follow up:

Luxury Becomes Unique

The theme of the mass commercialization of luxury that perpetuated the last 15 years may need to step back and reevaluate strategy. The original characteristics and brand attributes that created the following of well-heeled luxury consumers were based on individuality, quality and craftsmanship, and service.

As aspirational consumers are challenged with less disposable income, they will expect more value for their investment. The wealthy consumer will also demand value, but they will become more concerned with aspects of bespoke design, quality materials, and new, higher levels of service. Many of the chief executives of the top luxury houses are now shifting attention (and production) to smaller quantities of unique exceptional products with limited distribution and availability. One of the main challenges will be improving the service aspect of these businesses.

Luxury era of “you”

Great service is difficult to teach, and is often crafted over the life of a career. The great Italian fashion houses, the tailors of Saville Row, the jewelers of Paris, and the world’s most renowned hotels, were (and in many cases still are) masters of long-term relationships. The mass merchandising of luxury has brought expansion and growth, and unfortunately decreased the relationship and individuality aspects of luxury purchases. We predict that 2009 will herald a shift in the luxury business, back to the basics of service excellence as a competitive differentiator. Marketing and advertising dollars are currently being shifted away from advertising in favor of top-tier customer intimacy events and programs. We are entering the luxury era of “you”.

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Nathalie Delrue-McGuire is the Founder and CEO of Posh Planet. Nathalie combines her international experience in luxury goods with a strong foundation of technology sales and marketing, as well as writing and publishing. Prior to moving to the US in 2005, she worked in London, Paris and Vienna in senior sales, marketing and strategic alliance positions for software companies and marketing globalization consultancies. She was educated in export and international business administration at the University of Economics in Vienna (Austria), in English and Germanic Philology at the University of Brussels (Belgium), in European and international public law at the Ruhr University (Germany), in global strategy at Harvard Business School in Boston. Fluent in five languages and comfortable conducting business around the world, she responsible for Posh Planet’s business operations, strategy, business development and editorial direction.

www.poshplanet.com is a new media technology and publishing community serving the discerning needs of the global luxury consumer. Posh Planet is revolutionizing the way consumers and brands interact, by building long-lasting, profitable partnerships through the exchange of relevant content and value-add offers