January 23, 2006

Luxury Marketers Now Listen to Customers

Marketers of luxury goods used to listen only to their muses. Now many of them are listening to their customers, and the results are very strong indeed.

Coach, for example, annually spends more than $3 million researching its customers and testing new products. 80% of its products come to the market pre-tested.

Ermenegildo Zegna, the high-end men's clothing design company, interviews about 1,000 customers every month.

And classic brands like Burberry and Louis Vuitton have successfully updated and expanded their product lines after extensive customer research.

What has been so basic to most other industries is now being adopted by key players in the luxury field.

Meanwhile, these product lines are presented in showplaces that are increasingly fantastic in their design (and cost). The shopping experience is heightened for sure.

But along comes the Spanish clothier Zara which brings upscale apparel to the mass market, and wow what a success they have become. Zara customers visit the store an average of 17 times a year, vs. an industry average of 3-4 visits per year. That's because Zara features new designs twice a week! In fact, nothing stays in a Zara store for more than a month.

So we're seeing two important trends in the luxury market: the increasing commitment to consumer research and the mass marketing of luxury through very clever (and fast-paced) merchandising.

Bottom line is there's much more dependence on smart marketing, not just creative design.

And Speaking of the Rich...

The top 20% earners in our country have increased their share of consumer spending. They now do nearly 40% of the nation's consumer spending, according to a new report. They accounted for 57% of consumer spending on "other lodging" (including hotels and vacation homes), 51% of fees and admissions, 40% of apparel...and on it goes.

Meanwhile, the bottom 20% are spending a lower share of total consumer spending than they were 20 years ago. So much for trickle down economics....a complete sham....or "voodoo economics" as Bush I so accurately put it.