Iconic brands retain advantage in luxury markets amid shifts in consumer sentiment
By DIAN VUJOVICH
SPECIAL TO THE DAILY NEWS
Depending which end of the luxury market your business serves, the U.S. economy has posed unique challenges for those offering their luxurious goods and services to the high-end consumer the past several years.
Whether you're selling designer shoes, bags or clothing; exotic cars; one-of-a-kind holiday vacations; high-end hotel rooms; or investments, getting clients to spend hasn't been easy.
That said, things seem to be changing as sales trend higher, according to the four panelists who spoke at the Luxury Marketing Council's recent "Shifting Consumer Sentiment" program at the Omphoy Beach Resort.
"Iconic brands do lead by example," said Chris Ramey, president of Affluent Insights and Luxury Marketing Council Florida chairman.
And if there's one thing Palm Beachers know, it's iconic brands.
Finding a consensus on the spending habits of today's wealthy can be as challenging as deciding how to handle a client's individual wants, tastes and needs.
On one hand, guilt about spending seems to have subsided this year. A recent Gallup poll found upper- income Americans spent about 16 percent more per day during the week ending June 20 this year than a year ago: $126 a day in 2010 vs. $109 a day in 2009.
In comparison, middle- and lower-income Americans didn't increase their spending, which averaged $59 a day.
On the other hand, high-end stores have cut inventory on some high-end and couture items, introduced more affordable merchandise and are opening trendy outlet stores.
On a third hand, because of the fragility of the stock market, the global economy and the possibility of a double-dip recession, some pros think one reason the recession continues to drag on is because the wealthy are still nervous about spending.
"One of the reasons that the recovery has lost momentum is that high-end consumers have become more jittery and more cautious," said Mark Zandi, chief economist for Moody's Analytics.
The Luxury Marketing Council panelists, however, had their own take on things. Representing four industries, each spoke about the challenges of doing business in the current market environment. On the panel were Laura L. Hanson, vice president for global wealth management at Merrill Lynch; Michele Jacobs, corporate director of marketing and operations at The Forbes Co.; Doug McLain, regional director of sales and marketing of Obadon Hotels; and Ashish Sanghrajka, president of Big Five Tours and Expeditions.
Iconic brands retain advantage in luxury markets amid shifts in consumer sentiment, representing The Forbes Co., owner of The Gardens mall, said, "We stayed true to our core values. We believe in delivering the promises to our customers and it's really paid off, although it's been painful."
Because The Forbes Co. is a family-owned business, she said, it was able to focus on its operating and marketing efforts even when there were mall vacancies. By the end of this year, however, The Gardens Mall is expected to be 99 percent leased.
"It's very exciting for us," Jacobs said. "Sid Forbes, our owner, is 74 and told us, 'Don't lose sight of the bigger pictures, this will pass and let's not forget who we are.' So he gave us the strength to look at the long term."
McLain, of Obadon Hotels, says hotel rooms are like perishable fruit. "The night the light doesn't go on in a room is like a piece of fruit that's dead the next day," he said. "It's [revenues] gone. So we have to deal with that."
McLain is sales and marketing manager of The Brazilian Court, Mayfair Hotel & Spa in Miami and Traymore Hotel in Miami Beach in addition to The Omphoy.
What Obadon has done in the wake of that challenge is add value through the uniqueness of its properties, understanding that its guests today are more savvy travelers than they were a few years ago -- and more price-conscious.
Well aware a downturn in luxury business travel was coming, Sanghrajka of Big Five Tours & Expeditions said the first thing he did was to "protect our brand."
Then he made it a point to recognize his company's strength, intellectual property; updated the company's services; and chose to not discount its pricing.
"It is a fact that we know what we do based on the feedback that we get from our guests," Sanghrajka said. "Intellectual property is worth something and we deal in ideas. And ideas are worth something. So you take your risks at the downturn and realize that you're not planning for now but for the future."
Hanson, of Merrill Lynch, has been in the securities business 27 years and remembers when it was "a lot more fun." She's seen markets rise and fall a number of times and knows when clients are worried.
Today she sees a lot of investors "frozen in uncertainty." To quell those concerns she spends time with clients, to create a sense of trust and stability as well as help them understand the markets.
Today's investment business "is not about transactions," Hanson said, "but total and comprehensive planning from college funding to estate planning. ...
"Bottom line," she said, "I think the markets are very volatile, they are going to stay volatile, so (personal) service matters."
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