These days, luxury is about "services, experiences and conveniences," explains Brown. The rich "want something different."
A survey of 3,500 consumers released in November by Accenture, however, reveals that even the wealthy may not be spending as often as they'd like. Nearly 87 percent of Americans earning more than $150,000 said they'd be willing to spend more if they could find "better" products and services. Wealthy respondents, much more so than people in lower income brackets, lamented the lack of innovation in clothing, household appliances, housing, home furnishings and personal care over the past two years.
The wealthier the consumer, the more they feel that lack of innovation--along with a lack of satisfaction in the companies they buy from, says Nunes, who co-authored Accenture's study. With businesses in cost-cutting mode, "there's a feeling that 'Retailers don't care about me after I've left their store,'" Nunes says. "It [doesn't] feel like a relationship to the wealthy."
Creating relationships is what success in the luxury space is all about, says Jon Robbins, owner and COO of HiFi House, a 47-year-old family-owned stereo store that made the transition to the high-end luxury audio and video electronics market in the 1980s. "We needed to establish a niche," says Robbins, 44. Today, HiFi House has three locations and annual sales of more than $20 million.
One of HiFi House's hottest sellers is the 50-inch flat-panel plasma screen TV, which sells for about $10,000. The company custom-installs these TVs with DVD players and surround sound to create a home theater system. HiFi employees also teach owners how to use them.
An average HiFi sale is between $20,000 and $25,000, and the company sold 40 plasma TV packages in December alone. Upscale professionals looking to furnish million-dollar homes constitute a "significant percentage" of HiFi's business.
Robbins says his biggest challenge is finding employees with expertise in design and installation, as well as a flair for personalized customer service. It's no accident that most of the Broomall, Pennsylvania, firm's 75 employees have been with the company for 10 years or more. "This is their career," Robbins says. "You do the job right, and the dollars take care of themselves."
Hiring employees who view their jobs as careers is essential in the luxury business, says Gregory J. Furman, executive director of the Luxury Marketing Council in New York City. This means building a team from the start and offering great pay and incentives. "Your employees have to be strategic partners," he says.
You also have to think about whom you're trying to reach. Although the rich have been stereotyped as tireless shopaholics, the opposite seems to be true. When Accenture asked those earning more than $150,000 a year if they enjoy shopping when they don't have a specific purchase in mind, 80 percent said no. Says Nunes, "They tend to be very directed in their shopping in terms of how they can save time."
If your luxury service targets the very wealthy, be prepared to expand in ways you can't anticipate, Pericon warns. Her company is doing things she never imagined it would do, such as finding electricity for a remote island one of her clients had bought. The very rich "make the assumption that you'll do anything," she says.
Pericon keeps an extensive database of contacts ready for any situation: "In the luxury lifestyle, you have to have a lot of people you know you can call upon."
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Chris Penttila is a Washington, DC-based freelance journalist who covers workplace issues on her blog, Workplacediva.blogspot.com.