While regular consumers watch their gas pumps, grocery store receipts, and utility bills climb with horror and dread, consumers for whom price is truly no object are having a rather different, far sparklier consumer experience in these strange economic times. The fortunate and rarefied few, for example, may receive invitations to visit a hidden floor in Chanel’s Paris flagship store. There, VVIPs (very, very important persons) enjoy the most exclusive of shopping experiences in a “secret space” containing rare archives, unique objects, and deep signifiers of Chanel’s storied history. Reflecting a novel attempt to woo the ultra, ultra-rich, “This is a unique tool to offer to some of our specific clients,” according to Frédéric Grangié, Chanel’s president of watches and fine jewelry.
But hold my champagne, says the French luxury watchmaker and jeweler Boucheron. It doesn’t just invite big spenders to visit its most elite spots; it even allows them to move in and take up residence. Boucheron offers the penthouse of its Paris boutique to the customers it refers to as VICs—very important clients—and contracts with a nearby Ritz Hotel to provide concierge service. Guests can stay up to five nights per year to enjoy this “‘money can’t buy’ experience,” as described by Hélène Poulit-Duquesne, chief executive of Boucheron. “It is not about money, as the stay has no price, but all about arousing emotion, and experiencing something that will live forever in your memory.”
Of course, it’s also about money. According to the consulting firm Bain & Company, the personal luxury goods market is expected to hit $322 billion by the end of 2022, up from $283.6 billion in 2021. These gobsmacking figures are driven by the more than 2,660 billionaires currently living, and buying, all around the world, whose collective worth is approximated to be $12.7 trillion. Most of them live in the United States; China ranks second in the number of billionaire residents.
The fancy gambits—penthouses, secret shopping floors, custom experiences tailored to an uber-wealthy consumer’s specific wants and preferences—seem to be paying off. Take Cartier. Among other inducements, it plans to bring top-tier customers to the Venice International Film Festival, allowing them to be photographed walking the red carpet, attend movie premiers, and hobnob with movie stars. Cartier’s parent company’s sales rose by 46 percent between March 2021 and March 2022—similar to Chanel’s 50 percent jump in revenue in 2021 from the year before, up to $15.6 billion.
Thus, not only is Chanel (and likely other luxury firms too) “very happy and satisfied with our growth,” but in addition, as they continue to appeal to consumers with luxurious, one-of-a-kind experiences, they are “confident in the post-pandemic recovery.”
Discussion Questions:
- Why are companies pursuing high-end customers so hotly?
- What is the best way to attract the wealthiest customers, beyond providing them products they want to buy?
- Are such luxury inducements and experiences elements of a sustainable business model?
Source: Nazanin Lankarani, “Jewelers Court the Superrich, and it Seems to Pay Off,” The New York Times, July 4, 2022; “Global Personal Luxury Goods Market Reaches €288 Billion in Value in 2021 and Experienced a Remarkable Performance in the First Quarter 2022,” bain.com, June 21, 2022, “Richemont Delivers Strong Performance for the Year Ended 31 March 2022,” richemont.com, May 20, 2022; “Chanel 2021 Sales Exceed $15 Billion,” CEO Today, May 25, 2022