The rich world has come down with luxury fever and it has even more money to burn. How will the increased consumption of top-of-the-line goods and services shape the global luxury industry of tomorrow?



Fashion boutiques with VIP rooms; African safaris with air-conditioned tents and Dom Perignon; first-class only commercial airlines; $10,000 dollar leather belts; $23,000 gym memberships, $39,000 platinum cell phones...

Welcome to the new gilded age. Conspicuous consumption is back in style and spending on luxury goods and services is higher than ever before. Top-of-the line brands compete to offer the most outrageously exclusive and bespoke goods and services and the media are battling each other to tell the world about it, with publications such as Newsweek, The Economist and the Financial Times, for example, running special reports on the industry. This year alone, three luxury lifestyle magazines were also launched in Washington D.C., the capital of a country gripped by luxury fever and with money to burn. And it's not just happening in America.

Luxury has become a global phenomenon, a religion that has gripped countries from Brazil to India to Russia to China. This unprecedented global pursuit of luxury has now led to the creation of the world's first and only World Luxury Congress. The three-day conference, to be held in Paris this October, will bring together industry leaders from multiple sectors and markets to provide insight and innovative solutions to the expanding global luxury industry.

"The luxury goods industry is growing and changing very fast and it is hugely important for luxury goods companies to stay alert and on top of the game," said Helen Burden, marketing manager of Terrapinn Limited, a UK-based business media company that is organizing the World Luxury Congress. "They have to develop and maintain a brand story that connects with their customer. Innovation, both in product and in strategy is also crucial to stay on top."

The World Luxury Congress will feature high-profile keynote speakers such as Patrizio di Marco, president and CEO of Bottega Veneta, Patrick-Bousquet Chavanne, group president of Estée Lauder and Markus Langes-Swarovski, executive director of branding and communication for Swarovski.

Attendees at the event will include senior executives from a range of industries including fashion, jewelry, entertainment, food and wine, private aviation and yachts, travel, property and art, among others – in short, all those industries that together have transformed the very notion of luxury into the social and economic force that it is today.

"Luxury products and services outperform standard products in sales revenue and also in dividends," said Burden. "Key luxury brands have reported on average 10-15% annual growth in the past 2 years, and some fashion retailers reported sales revenue increase of up to 40%. For example the European market is forecast to reach 1 trillion by 2010!"

The figures are also piling up across the Atlantic. According to the Boston Consulting Group—a strategy and management consulting firm that has been studying the luxury phenomenon for the last several years—the luxury industry in the United States has exploded from under $100 billion in 1995 to more than $505 billion today.

While high-end brands come out with increasingly exclusive goods and services to stay on top, even mass market businesses are scrambling to connect with their customers. For in this era of conspicuous consumption, it's not just the super-rich who are splurging. Even the middle classes are digging into their pockets, shelling out cash for premium quality products and services.

"The middle class household in the U.S. is very rich by historical standards," said Michael Silverstein, co-author of Trading Up: the New American Luxury. "They have enjoyed a doubling of real per capita income over the last three decades. That's a fantastic development. Discretionary spending is up. And net worth for these 50 million households is higher than ever, even higher than the Japanese household."

Consumers aren't all splashing out on Range Rovers, Hermès handbags and Jimmy Choo sandals. Much of their spending goes into "New Luxury," as Silverstein calls it, premium quality goods and services that retail at 20 to 200 percent above the average mid-market entry. We're talking Viking ovens, Pioneer plasma TVs, even Starbucks coffee.

In short, consumers are seeking out the best of what they can afford, forcing even the lowest-end retailers to improve their offerings to stay competitive.
"If you read the recent statements of Wal*Mart, you will hear them using the language of Trading Up," said Silverstein. "They are talking about better quality goods, serving more upscale consumers and providing a broader range. The same is true for Target and Home Depot. This is a movement and the retailers are listening to their consumers."

So, with luxury goods being snapped up by anyone with a bit of spending power, how will the super-rich, the ultra-wealthy, the crème-de-la-crème stand out from the pack? Logic dictates that luxury brands will now have to present these discerning consumers with much more than just high-quality goods. They'll have to offer top-notch service, the kind that makes a consumer feel pampered, privileged, and unique.

"Today, it is no longer sufficient to sell expensive products," said Burden. "The luxury customer expects more. They want to be surprised, entertained, moved. They want an experience."

World Luxury Congress
17th to 19th October, 2005
Four Seasons Hotel George V
31, avenue George V
75008 Paris, France

To register:
T: +44 (0) 20 7827 4174