Luxury industry leaders gathered at the Ritz-Carlton, Naples, Florida for American Express Publishing’s 2014 Luxury Summit. A broad array of speakers, from the chief executives of Cartier North America and Marriott International to the chief marketing officer of Gucci, addressed such issues as time, philanthropy and the psychology of buying and spending. Participation in the Summit is by invitation-only.
Approximately 150 attendees traveled to the Summit from around the world representing such stalwart companies as American Express, Bergdorf Goodman, Hyatt Hotels & Resorts, Brooks Brothers Group, MGM Resorts International, Jackson Family Wines, Oetker Collection, Automobili Lamborghini America, and Time Inc., among many others.
The Summit, which was hosted by Richard David Story, Editor in Chief of Departures magazine and Eveyln Webster, Executive Vice President of Time Inc., addressed many key issues facing luxury industry participants as well as trends that are developing.
Highlights of what was discussed:
Heritage, Craftsmanship and Design is of Utmost Importance to Luxury Consumer
One theme that was discussed by several of the participants at the Summit was the importance of a company’s heritage to the consumer.
Emmanuel Perrin, President and Chief Executive of Cartier North America, talked about the Frenchness of Cartier, the importance of its strong heritage and how it stays relevant in the 21st century. “Our Frenchness is the source of what makes Cartier, from its craftsmanship, design and style to its creativity and artisanship,” he said.
“There is a huge opportunity for us to show our customers what we do—our craftsmanship, our detail and our passion and dedication to our product,” added Perrin.
“If you have a great product and you create desirability, then it becomes the right thing to have,” says Cartier’s Perrin. “You want Cartier because it has become a reference—as your bracelet, as your watch.”
According to Peter Noel Murray, Ph.D., a consumer psychology consultant, emotion is what we are all driven by and it is extremely important in marketing. “But there is a product bias in marketing, as it is from the marketers point-of-view,” says Murray. “They are not looking at it from the point-of-view of the consumer—only through the lens of the product.”
Mobile Phones are an Important Playing Field for Luxury Brands
The next frontier for Cartier is in mobile phones, which Perrin believes is the next playing field. “We want to be sure to be ready for an enhanced, and perfect customer experience on mobile phones,” said Cartier’s Perrin. “Seventy percent of all web searches were made on a tablet or mobile phone.”
According to YouGov’s and Time Inc.’s 9th annual “Survey of Affluence and Wealth”, the results of which were announced at the Luxury Summit, few affluent and wealthy consumers now rely solely on brand messaging to form their opinions about brands. According to the study, among affluent U.S. consumers – with similar findings in most countries surveyed – 72% say, online comments by users of the product or service are meaningful to them when making decisions on what to buy. The study also found that 64% of affluent consumers surveyed believe online comments by experts influence them when making decisions on what to buy.
Experiential Travel is the Future
What is happening in the luxury travel industry is that customers want to know where they are when they stay at one of his hotels, said Arne M. Sorenson, president and chief executive of Marriott International (see photo above). “They want to feel that place. Customers want to know they are in Puerto Rico or Half Moon Bay and want to see that place.”
“We promise and deliver to folks a clean, large room—a place where they won’t be disappointed,” he added. “But we want very much want to add to that an experiential overlay where folks say ‘I remember where I slept last night.”
Every one of Marriott International’s brands, from Ritz-Carlton to J.W. Marriott, is shifting from every property looking the same “to one in which each place looks very different and reflective of their environments,” said Sorenson.
The Younger Generations are Connected Global Citizens
“Gen Y and folks like them, including myself, are global citizens in many respects, who are deeply interested in collecting experiences,” said Marriott International’s Sorenson. “They are curious about things around them and connected all the time through technology. What is important to me is not the status of the travel, but it is the richness of the experience that I keep. That is what we think Gen Y is interested in. It’s not just about staying at a five star hotel, but it is also how do I get an experience that resonates so that I can share it with my friends through social media and talk about it.”
“The global luxury traveler is connected all the time through technology and they are deeply cynical,” added Sorenson. “So if they see us communicating with them in a way which is self-serving to us but is of no value to them, they are going to shut us out. But if there is something about the way we communicate with them that reflects empowering them, that we somehow care about what they are doing and interested in what they care to achieve, then I think there is a real opportunity for something that is deeper.”
Cartier’s Perrin discussed how the younger generation doesn’t want to hear what companies have to say. “They just want the experience and hear about it from people they trust,” he said.
Philanthropy is the New Black
“We have a strong belief in the importance of corporate responsibility as a pillar for the brand alongside the made in Italy and craftsmanship,” said Robert Triefus, chief marketing officer of Gucci. “Corporate responsibility and philanthropy are imbedded in our mission as a business.”
“We believe that corporate social responsibility is fundamental,” said Triefus. “For our employees, doing a job in which you feel you are also doing the right thing is incredibly empowering.” Likewise, consumers today want philanthropy to be a part of a company’s ongoing commitment, he added. Gucci’s “Chime For Change” has funded 310 projects in areas of education, health and justice for girls and women in 82 countries. Additionally, Gucci has raised more than $20 million for Unicef.
Marriott International has also imbedded philanthropy into its operations. “Investment in the community is something Marriott has been involved with in a long time,” said Marriott’s Sorenson. “Today, we encourage our employees to get involved with the community. We have a global volunteer day every year. One of the things that I find most exciting about this business, when you talk about places like Dubai or India, when we open hotels in these markets, it absolutely transforms hundreds of thousands of lives.”
Marriott International’s Sorenson believes philanthropy needs to be imbedded in a company’s culture. “Customers will feel proud to stay at a JW or a Ritz-Carlton because they know we are focused on making the world a better place,” he said. “We all need to recognize that not only is it about the authenticity of experience and the collectability of the experiences, but also it is about the way business is done.”
Customer Service is Still Key
Cartier’s Perrin discussed how as a retailer, his company is providing a service and takes care of what its clients want. “You can’t go wrong improving customer service,” he said.
Arne Sorenson, chief executive of Marriott International (parent company of Ritz-Carlton), however, believes his associates come first and the customer comes second. “Typically, in a consumer-facing world, most companies would say their customer is their imperative and is always first and do everything they can to make them happy,” he said. “But we know that to get to our customer we can only do that through our people.”
“Our investment has to be in our people,” added Sorenson. “We are empowering them to do the kinds of things that we want them to do for our customers. That piece has created a different relationship over the decades between Marriott as an employer and the 300,000-plus people who wear our name badge. They say they are connected with something that they feel cares for them and they take pride in their work.”
Luxury Retail is Moving Out of the Malls and to the Streets
“There is a shift in how the luxury consumer wants to shop and is shopping,” said Hanna R. Struever, founder of Retail Portfolio Solutions. “People are craving experiences and a real sense of a specific place—not just a place. They want a sense of discovery and a sense of surprise, not the predictable and they want something with a point of view and perhaps a bit daring.”
“The bottom line is, they are looking for is the unexpected, not just the less expected,” added the luxury real estate consultant. “There is a monumental shift away from the mall and on to the street. People want to be outside. These changes are happening all over, from global markets like London and Paris to Hong Kong and New York and in regional markets like Dallas, Atlanta and Houston.”
“Luxury brands are choosing to go to the streets,” she added. “The destinations that we are creating need to have the best in class of local and regional offerings of shopping and dining. The experience needs to be dynamic, energetic, ever-evolving and authentic, and not programmed in an artificial way.”
The Luxury Buyer Will Spend More in 2014
According to Dr. Jim Taylor, chairman of leading market research firm, YouGov, the average family is consuming, on a dollar basis, about 15% less than they did before the recession. YouGov’s and Time Inc.’s 9th annual “Survey of Affluence and Wealth” found that 20% percent of Americans are looking forward to buying luxury goods and services more now than they did a year ago.
The YouGov and Time Inc. study found that on a cash basis, the total saving account balances in the U.S. (as of the last quarter) totaled $8.5 trillion, up 60% from 2007. As approximately $908 billion is currently deposited in checking accounts in the U.S, the total amount of cash on hand is nearly $10 trillion. “We are in the middle of the greatest asset boom in the history of man,” said Taylor. “Personal assets in 2013 totaled $241 trillion, up 4.9% from 2012. There has never been anything like this before—so the money to consume is available.”
Additionally, YouGov is forecasting substantial growth in the luxury sector and increased spending by the top 10% of the population who control 85% of the wealth. According to Dr. Jim Taylor, the global affluent class is uniform and homogeneous. “Globalization puts them together,” he said. “The affluent class is a global homogeneous phenom who know one another, get paid the same and are accumulating assets the same way.”
Photos by Carrie Coolidge
Carrie Coolidge is a Pursuitist contributor based in Manhattan. From 2009 to 2011, Carrie served as Co-Editor of Luxist, the luxury lifestyle website at AOL where she ran the Luxist Awards, a program that honored the very best in fine living. From 1996 to 2009, Carrie was a Staff Writer at Forbes magazine, where she covered real estate, personal finance and the insurance industry, among other areas. Carrie is also the author of six books, including "The Business of America is Business". Follow her on Twitter: @carriecoolidge