Luxury is the new standard
As a society we have become so addicted to luxury that it is the new normal, says Bill Jamieson, with the amount we spend on top brands and money-can-buy experiences climbing inexorably no matter how dire the economic conditions
W en the Editor of Scottish Field kindly invited me to write a column for this luxury edition, I immediately felt that first hand research was surely needed. Today, what’s on-trend is not so much rich stuff – the yachts, the Maseratis, the Francis Bacon originals – instead, it’s all about the experience. Exotic out-of-the-box holidays; diving with sharks; five-star luxury hotel stays; liveried staff who can be summoned with the gentlest tug on a velvet rope to bring Champagne (or a cheese toastie if that’s what you require) on a silver salver.
What could I not experience on the editor’s generous expenses? I decided to start near home, with the top-class Gleneagles Hotel – surely there must be plenty of rooms available in this era of deep economic uncertainty and grim austerity? But imagine my consternation on finding that Gleneagles was fully booked in the first week of August. I had to settle for a five-night stay at the end of the month – a room for two costing a snip at £1,850 for five nights, although in fairness that does include breakfast. And the TripAdvisor reviews were a rave.
Then there was the unmissable opportunity for grouse shooting with a few pals. Here I have to admit that the cost was a trifle hair-raising – for a party of six over three or four days the bill can range up to £35,000. I didn’t dare ask whether the wi-fi is free.
I could, of course, go for a top-of-the-class 257ft luxury yacht to cruise the Scottish coast and beyond. Costs can range up to £630,000 a week to hire.
After this, it was back to Edinburgh to file my article. And from where better to file on luxury experience than the magnificent Waldorf Astoria, where I could experience the top delights of the Festival, chauffeur-driven visits to Muirfield and dinner at the Witchery, although I’d really have to check in for a few days. The tariff for seven nights is £3,808, or £544 a day: although I presume that would include a complimentary copy of Scottish Field in the bedroom?
As I sat in a luxury spa having my nails buffed to the soothing notes of Mozart played by a harpist flown in from the Vienna Philharmonic, I idly totted up my expenses. A wispy apprehension drifted overhead, a tiny smidgeon of doubt: would Scottish Field pay up?
But then two features stood out amid the massive accumulation of facts and figures gleaned by my dedicated team of researchers hired from the top consultancy companies.
Both cheered and surprised in equal measure. The first was that, despite our barely palpitating economy, the gurning and moaning about cutbacks and austerity, the impenetrable clouds of apprehension over Brexit and fearful warnings of another credit crash, spending on luxury goods and services continues to rise, here in the UK and world-wide. Downturns, panics and recessions come and go. But our hunger for the ineffable thrill of pleasures beyond everyday reach is insatiable.
And the second was the striking shift in luxury spending towards experiences as well as goods and services: that luxury is not merely owning an Abramovich yacht, a ten-bedroom house in Belgravia or a private jet. It is existential: its Silver service The death of deference and deification of aspiration means we all believe we deserve life’s luxuries.
highest apogee is a state of luxury being. ‘Luxury,' says Boston Consulting Group senior partner Antonella Mei-Pochtler, ‘is shifting rapidly from “having” to “being” – that is, consumers are moving from owning a luxury product to experiencing a luxury. They already have the luxury toys; the cars and the jewellery.'
I know the feeling. And as I ponder the dizzying heights of my expense claim, I feel that I am finally there, at the very pinnacle.
Estimates of luxury spending vary widely – as does the definition of ‘luxury'. It can include everything beyond what we need to survive and reach a basic level of comfort. Anything on top could be defined as ‘luxury' – and most of us on that definition could be said to have spent something.
We can be stretched to afford a host of luxury goods, and the fastest growing category for the world's top producers are accessories – handbags, key ring holders, phone and tablet covers, and sunglasses. The market for these is forecast to reach £66.3 billion in 2019.
According to market data specialists Euromonitor, the growth of the global luxury market has been astonishing, and continues to be so. It forecasts spending on luxury goods to hit $463 billion (£355 billion) by 2019, an increase of 88 per cent in 10 years. The UK market for luxury goods is forecast to be worth up to £54 billion according to Frontier Economics, up from £32 billion in four years. It puts a much higher value on Britain's luxury industry than previous estimates, which valued it at around £8 billion.
Around 78 per cent of luxury products coming out of the UK – defined by Walpole as including designer clothes, shoes and high-end cars – are destined for overseas markets. Recent year-on-year growth has been running at just over 12 per cent, due largely to a strong performance in the luxury car sector by Rolls Royce and Jaguar Land Rover.
How have we come to view a handbag as an item signalling prestige, wealth and luxury? Big desirable names can cost thousands of pounds. Much of this is the result of skilful marketing and pricing, with price points tempting the less affluent to part with money that they can't afford, or worse still, don't have. But this can have the opposite effect and hit the brand mystique if carried too far and risks diminishing the brand, as Burberry found when its distinctive check began to be sported by football supporters. Burberry had become a victim of its own success. The company changed direction and is now in the top 10 of the world's luxury brands – according to Interbrand it is now worth £4.3 billion. Louis Vuitton tops the global list with sales of £17.3 billion, followed by Gucci at £7.9 billion and Hermes at £6.8 billion.
But more than ever, it's luxury experiences that have become in vogue. Some £350 billion is reckoned to be spent on one-of-a-kind travel adventures such as expeditions to the Antarctic or bespoke safaris. Other growth areas include fine art and wine, often now seen by collectors as attractive alternative investments to investing in the stock market.
Of the $1.4 trillion spent world-wide on luxuries in 2013, Boston Consulting calculates an estimated £768 billion went on services – from private airline flights to luxury slimming clinics, or a fivestar hospital stay with en-suite facilities including a marble bath. This staggering figure is slightly more than the wealth controlled by the poorest half of the world's population, some 3.5 billion people.
A key feature of the luxury experience is allure – creating a pampered and exclusive atmosphere. It's not enough for buyers of a top price Armani item or piece of Tiffany jewellery simply to acquire the product. The very action of purchase has in itself to be a luxury experience, with personalised service. Luxury, in the words of Jean Bienayme of upmarket jeweller Van Cleef and Arpels, ‘is an experience we offer to our clients, immersing them in a magic and enchanting universe'.
For Scotland, currently enjoying a buoyant tourism and visitor season due to the fall in the pound, there is a silver lining to this golden cloud. Management consultancy firm Bain & Company recently calculated that more than half of luxury goods sales in the UK are driven by tourism. The biggest spenders today are typically Asian, particularly Chinese, and Russian.
Luxury, it seems, is a necessity for a full life. And now, I must go, for the Lamborghini is purring outside and Forbes the chauffeur is tooting on the horn (must remember to add him to expenses).
‘Luxury is shifting rapidly from ‘having’ to ‘being’ – consumers are moving from owning a luxury product to experiencing a luxury’