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8.12.2010 "New world" challenges luxury brands

The "new world of luxury" is posing substantial challenges to companies in the premium goods sector, the Boston Consulting Group has argued. "True luxury means different things to different people, but for most consumers the term connotes rarity, quality and refinement," it said in a report.Such a definition applies to "traditional" high-end segments like watches and apparel.

However, an Ipsos survey of 7,496 adults in seven developed countries, coupled with BCG analysis, revealed "experiences" must be incorporated. "In the eyes of most consumers, luxury also extends to alcohol and food, as well as to travel, hotels, spas, technology (for example, smartphones), and cars," BCG said.

This model values the luxury industry at €1tr, with premium automotive brands contributing €250bn, travel and hotels yielding €270bn, and watches and jewellery on €100bn, the same as technology. Fashion and clothing, leather goods, and alcohol and food are all worth €50bn, cosmetics and fragrances generate €30bn and furniture delivers €40bn.
"Luxury consumers … are moving to a more introverted kind of consumption that involves family, friends and living well. In the new world of luxury, consumers are looking more to 'be' than to 'have,'" BCG said. Further shifts include the surge of new media, premium manufacturers rolling out entry-level items and efforts by mass-market firms to "blur the lines between luxury and ordinary."

B.L. 8.12.2010