In this book we have shown how

fundamental technological

and societal changes have now

reached the luxury market, a market

once insulated from external

forces by its history, traditions and

wealthy customers. Technology

is making companies, products

and services more transparent for

consumers. Today’s shopper

knows exactly what item they want

to buy, where to buy it and

what their peers might think of it

before they ever make their

first live contact with a company.

We have argued that, in the past, marketers only had to cater to a handful of luxury consumer types, secure in the knowledge that they had covered every base. Today, consumers are far more varied, plugged into the always-on media cycle and with niche interests fed by hyper-personal blogs, pod-casts and upstart online magazines. The luxury sector is not immune to this trend and marketers now have to blur their focus and use deep fields of data to find their target audience. “This is a much more mature market that is challenging the most conservative of the luxury brands,” says Armando Branchini, executive director of Fondazione Altagamma, in our interview. “But that gives much more support and potential for growth to those companies that are the best performers in the use of digital tools.”

We believe that digital offerings will have to increase as generations that grew up with iPhones and tablets begin spending more and more money, but the luxury industry should be digital veterans by then, churning out web-based marketing innovations.

We have also looked at how the world is becoming more Asian, with hundreds of millionaires minted daily in China and India. Wealthy Chinese, for example, still spend plenty of money in Europe, but signs indicate they may also soon be spending more at home, and on Chinese designers. “Unfortunately, in the past 100 years China has faded from the cultural continuum,” Jiang Qiong Er, CEO of Chinese luxury brand Shang Xia, tells us. “I believe that the rise of the Chinese economy will foster craftsmanship and design, but it will take some patience.”

The Internet not only offers another channel to spread brand identity and reach consumers, but also makes it easier for companies to evaluate and store the purchases, interests and wishes of their customers. “Digital communication enables sales teams to connect with people and develop long-term relationships with them both in the store and beyond,” explains Milton Pedraza, CEO of The Luxury Institute, in our interview. “Sales teams can reach out to customers using their digital devices and information from customer relations systems.” The key point, he says, is that this enables sales teams to become radically more efficient and productive in building long-lasting relationships with customers.

Despite our enthusiasm for the Internet, we believe that the bricks-and-mortar store will not disappear. Online sales remain just a fraction of real-world transactions, and luxury has always been about surrounding customers in an overall experience of the brand. The Internet can help create terrific multimedia and interactive brand experiences, but it is no substitute for the personal and the tactile. “Without a strong base in stationary retail where people can handle the products, luxury brands don’t work,” Jörg Wolle, CEO of consultancy DKSH, tells us. He adds that, “We see shops as being the place where the aura and the brand experience presents itself to customers. E-commerce simply has an additional multiplier effect.”

However, marketers will now need to become more creative, both in where stores should be located and in what is offered in those stores. Private shopping apartments. Exclusive events. Sales staff that caters to customers in a way that is even more individual and sophisticated than before – all with the discreet help of digital tools. Stationary retail is not going away, but it needs to become something more than it was in the past. Luxury marketing today is all about the experience – not just in retail environments but at every touchpoint. Luxury customers have always wanted to be singled out and treated in a unique way, but now they often also want to be offered the opportunity to learn and feel something no one else has.

Not least because of the Internet, luxury consumers now also require transparency in sustainability. They know the difference between simple greenwashing and truly making a difference. “While most consumers don’t see it as an extra incentive to buy a luxury product because it is green, most of them actually expect the brand to produce sustainably in the first place,” says Barbara Coignet, founder of the 1.618 Sustainable Luxury trade fair, in our interview. For fashion brands especially she recommends that they “gain control over the whole supply chain” and then speak to the customer about it. “Explain what you do, and explain why you do it.”

Still, important questions remain. How will brands deal with increasingly fragmented customer groups? What happens when Africa starts being as affluent as Asia? Will customers keep purchasing goods or will health, self-fulfillment and even spirituality become the future of luxury, as our final interviewee, Bernd Kolb, suggests?

While the luxury market is moving away from hedonism and into critical consumption, the challenge of winning and maintaining loyal customers gets to the heart of what we have discussed in this book. Maybe Lutz Bethge, non-executive chairman and head of the supervisory board at Montblanc, puts it best when he tells us, “Today, by purchasing a luxury brand you’re buying a piece of a world. The question now is: How attractive is this world and how can I renew it regularly? How can I keep finding creative new ways to say something different about the same thing?” As a luxury marketer or manager, he says, you have to constantly think of new ideas for “how to bring people together, how to excite them and how to reach them digitally”. As CEO of the brand, Bethge, a sophisticated and immaculately groomed old-school gentleman, did something rather unexpected, even bold. He set up a Montblanc CEO Facebook page and personally sat down to reply to posts from customers.

That, in a nutshell, is what we mean when we talk about rethinking luxury.

“Real luxury is not made of material.”

An interview with Bernd Kolb, visionary, founder of the Club of Marrakesh and owner of the Riad AnaYela hotel.

You successfully started a business in the new economy and led it to the stock market and then were named a member of the board at Deutsche Telekom, responsible for innovation. So you were in the classic luxury customer target group. What did you buy back then and what criteria did you use when you purchased something?

With the career I’ve had, there came a point in my life when I was able to afford just about anything that I wanted as far as material things are concerned. As a customer you expect to receive very intense, joyful consumer satisfaction from all these luxury products. And I have to honestly say the promises and expectations were not fulfilled.

Could you give us a list?

It was the classic mix: house, boat, sports car, fashion items – you name it. Typical of the 1990s and the 2000s. However, for me things became disappointing relatively quickly when I discovered after three days that a luxury sports car is just a car. That’s one thing. The other thing is, I quickly became sated. The moment you’re able say, “I can afford anything”, the question arises: What do I want to afford? With all the products I’m capable of owning, I pretty quickly came to the disappointing and unsatisfying conclusion that purchasing things didn’t have a large impact upon how satisfying my life was. It was a different standard of living, but it had no effect on the actual longing that was, and is, in me. However, I believe that you can only first be the judge of that if you’ve gone through it once yourself. The power of seduction through the “dreams” that advertising is projecting is great, and the greed simmering inside us for glitter and trinkets is large.

With all the products I’m capable of owning, I pretty quickly came to the disappointing and unsatisfying conclusion that purchasing things didn’t have a large impact upon how satisfying my life was.

But there were some satisfying moments, weren’t there?

Anticipation is greater than the pleasure. Actually, purchasing something is already a depressing moment. It’s actually really good that you can’t, for instance, drive a car straight out of the show room, but may have to wait four weeks for it, because those four weeks are the best moment of the whole process. That’s where the fantasy and the illusion are still perfect. It’s destroyed when they become the reality. The trap that many fall into, and myself included for a while too, is to immediately try to find the next illusion. That is to say, maybe it’s not the sports car. Maybe it’s the sports car collection.

Always wanting more…

… it’s like an addiction. The whole thing has nothing to do with needs anyway, because luxury starts when you’re buying and doing things that you really don’t need. When I bought myself my first yacht, the seller congratulated me on having reached the status in life where I was now able to afford a yacht. A yacht is the ultimate thing that you don’t need. You are rich in luxury when you can afford things that have a disproportionate relationship between their cost and reward. A yacht is very expensive, and in fact you use it so infrequently because its true usefulness really doesn’t exist.

What happens when you realise that one more sports car isn’t going to make you happy?

In my case, I felt a certain amount of emptiness in the sense that, at some point, the fun I had fulfilling the dreams of my youth eventually ended. And when you see how much effort you must invest in order to live in such luxury – when you’re working 14-hour days, seven days a week, having expectations that are never met – because in the meantime I must say: Real luxury doesn’t come from luxury products. The next step is to ask yourself, if that’s not it, then what is it? Then we have to talk about all these issues such as true experiences and adventure, perhaps even mysticism, meaning, time, nature and love. In a representative study of new German status symbols (2013), the desire “to have time” was ranked number one by far.

But you can’t market mysticism, nature and love.

Oh, I believe you can.

Do I need to be a Bernd Kolb who completely refurbished a riad in Marrakesh and turned it into one of the best hotels in the world, which is both a think tank for sustainability and place of spirituality? Or does this work if I’m Gucci, Patek Philippe or Bulgari as well?

As a good marketer, you just have to recognise the true needs – this is why luxury brands are now increasingly branching out into experiences. Armani, Bulgari and others have also developed and opened hotels in recent years in which their brand can be “experienced” at its core.

How did you do it?

I was in Marrakesh and from my own experience I said, “Wow! What an incredibly mystical place. As long as I live, I will never forget those five days I spent there.” Then I bought a riad in the most labyrinthine part of the old town, where no tourists actually go, and rebuilt it using very authentic and traditional construction methods, the way it was done 200 years ago. Electric tools were prohibited. We wanted to achieve that our guests are immersed in a bygone, mystical and no longer tangible world. We then packaged it as a luxury hotel. And it was a huge success worldwide.

Luxury for people who have seen and done everything?

Exactly. Not a holiday in a shielded-of space, like in clubs, that’s so old luxury. Rather, new luxury. That means not everything is clinically clean and perfect, but that guests find themselves in a dirty backstreet and at first might think: My child can’t play here, that would be dangerous. But we tell them, “Come with us, we’re your hosts, we’ll take you back there.” And then they see that their children are not going to get killed, but on the contrary, that they’re having a great time kicking around knotted together shreds of plastic that you could call footballs. A lot of guests were downright shocked at first because they had imagined something completely different in a luxury hotel. But almost all of them were deeply touched and grateful in the end for the dream they lived. New luxury is the experiences, the learning, travelling in the Goethean sense.

Self-actualisation is the ultimate human need and it certainly can’t be reached through “having”, but only through “being”.

In that case, new luxury would be authenticity, surprise…

… and also learning something, to be able to tell stories afterwards and perhaps it makes you more interesting to other people. I no longer just show off my new watch at my next dinner party at home, but can also say, “You won’t believe what I experienced!”

In the end, is it primarily about telling stories?

When customers in saturated markets have reached the final stage of Maslow’s hierarchy of needs – Maslow sees physiological needs at the bottom and self-actualisation at the top. And this is exactly the state Seneca is describing with the phrase “money has never made anyone rich”. In the luxury segment you are often speaking of a desire for “things that money can’t buy”. In the 1980s, you made it possible for your customers to gain access to the driver’s lounge at a Formula One race because the average person is not allowed in there. “Things that money can’t buy” then turned into “things that money CAN buy”. Self-actualisation is the ultimate human need and it certainly can’t be reached through “having”, but only through “being”.

How important is sustainability to the idea behind new luxury?

I have been working for years now on the issue of sustainability, but I don’t like hearing that term anymore. Somehow, it has run its course. It’s technocratic, creates pressure and has no pull. There’s nothing seductive about it, it isn’t cool, but at best it’s useful. It is really about true quality of life, in other words, the quality of what I’m experiencing.

What would be a better name then?

I’d like to replace the term “sustainability” with “quality of life”. In other words, the quality of my experiences, my being, and not about useless things that wear off with time. This isn’t a criticism of the idea of sustainability, because that’s non-negotiable. I believe that luxury brands must tell a story about quality and that the quality they promise can, over time, turn into criteria for sustainability. It’s no longer sufficient to speak of “high quality” nowadays. You have to explain what you specifically mean by that, what quality actually means. So then you can tell a story with “added value”, and in the end, it always has to be a story that has a sustainable truthfulness to it.