New white paper on “The State of Luxury”

May 27, 2004 |

American Express released a white paper entitled "The State of Luxury," containing research and analysis on the $400 billion U.S. luxury market.

American Express Publishing Corporation released today a White Paper entitled “The State of Luxury,” containing research and analysis on the $400 billion U.S. luxury market.

The White Paper includes highlights from the recent American Express Publishing Luxury Summit, which brought together the world’s leading luxury producers, marketers and retailers to examine the new luxury market, and incorporates proprietary research from various sources, including American Express, The Boston Consulting Group and Four Seasons Hotels & Resorts.

According to the White Paper, luxury is no longer just for the rich. In fact, “New Luxury” encompasses the 47 million households with an average yearly income of $50,000 or more. That’s because companies are now making luxury more affordable and accessible than ever, which has resulted in a spending boom in the luxury sector and an optimistic future for premium products and services.

The White Paper indicates that “New Luxury” luxury is no longer considered any one thing, but is defined as an experience that appeals directly to the emotional needs of the consumer. The Boston Consulting Group identified four key emotional drivers for the “New Luxury” consumer:

- Connectiong: Making the most of personal relationships

- Questing: Seeking challenging new experiences

- “Taking care of me”: How the time-deprived restore and rejuvenate

- Individual style: Expressing personal taste

While the traditional luxury consumer still exists, the “New Luxury” consumer has more money than ever, does not live in a traditional household, is female and is spending more on personal consumption. “New Luxury” consumers are spending on items with an emotional impact in ways that increase personal satisfaction.

“Offerings of luxury cars have exploded and the volume of luxury goods overall—which typically expands twice as fast as the economy—is expected to increase 5 to 10 percent this year,” said Ed Kelly, the President and CEO of American Express Publishing.

According to the White Paper, there is one luxury that is most in demand—time. When asked if they could have more time or more money, affluent consumers worldwide were split. “Time is the single most precious resource that anybody has. It doesn’t matter what your income is, or where you live. No matter how much money you make, you can never make more time,” said Barbara Talbott of Four Seasons Hotels & Resorts.

Brent Handler, President of Exclusive Resorts, LLC., whose company sponsored the White Paper, believes that the travel and hospitality industry must develop new products and services that cater specifically to the “New Luxury” consumer. “Breakthrough luxury categories include the ‘practical luxury’ of fractional ownership, enabling more people to enjoy the experience of multiple vacation homes or private air travel,” said Mr. Handler.

“The State of Luxury” also delves into the importance of branding, “New Luxury” consumer purchasing behavior, how companies can capture the “New Luxury” consumer, as well as the future of luxury, the market for which is growing at a rapid rate of about 15 percent annually. The luxury market is expected to reach nearly $1 trillion by the end of this decade.