Know Thyself

“Though the luxury sector is expected to put in another strong performance this season, the lower end of that market -- selling so-called affordable luxury to aspirational buyers -- is starting to feel the pinch of the weak economy... Only the most elite brands and the retailers catering to the richest customers are likely to escape unscathed…

“The outlook is very different from the past several years, when sales of all sorts of luxury goods exploded, boosted by a rising stock market and strong fashion trends that spurred purchases. The boom led marketers to broaden their target audience from the super-wealthy to include the growing ranks of upper-middle-class consumers…

“For some brands, the strategy involved going slightly more down-market, tempting mid-income consumers with relatively affordable entry-level luxury products like Chanel sunglasses, Coach wrist purses or silver jewelry at Tiffany & Co. -- while still selling ‘extreme’ luxury products such as designer watches and handbags costing thousands of dollars. The new less-affluent customers are now proving vulnerable to a variety of economic factors that don't appear to faze the very rich.

“As a result, some brands may soon retreat from the affordable-luxury strategy and begin emphasizing their more elite or customized products as a way to reach the wealthier consumers…

“Some top-tier brands already appear to be trying harder than usual to distance themselves from the masses. Robb Report, a magazine for the super rich, is joining with Rolls-Royce, Audemars Piguet, Louis XIII de Remy Martin and Wynn Las Vegas, among others, to market a series of ultra-custom products and experiences -- among them, a $1.5 million Wynn Las Vegas vacation package that includes a round of golf with course designer Tom Fazio, $150,000 in jewelry and a Ferrari 599 GTB Fiorano.

“‘The top end of the market has a ton of vitality,’ says Frann Vettor-Gray, senior vice president, multimedia at Robb Report…

“Bain & Company divides the global luxury market into three layers, each with its own dynamics. At the top tier, brands such as Hermes, Loro Piana, Van Cleef & Arpels and Harry Winston, targeted to the super-wealthy, account for nearly a quarter of luxury spending. The next tier, representing 36% of spending, is the aspirational market, which blossomed during the late '80s and early '90s as brands like Gucci and Louis Vuitton expanded around the globe and introduced smaller, more affordable leather goods that became status symbols. Bain defines the remaining 40% as ‘accessible’ luxury -- brands such as Coach, Burberry, Hugo Boss and Tiffany, which specialize in luxury accessories for the affluent middle-class.”

(“'Affordable Luxury' Stores Feel Economy's Pinch.” Vanessa O'Connell. Wall Street Journal: November 9, 2007. pg. B.1)

AREN'T DEFINITIONS SLIPPERY and elusive creatures? Beware of how you define yourself. Beware of trying to be "all" things to "all" people. Focus.