Providers of luxury find receptive market

The "1 per cent" of society said to control 40 per cent of the world's wealth are, not surprisingly, hard to find. Apart from the sheer mathematical equation, these rare folk have been blamed by protesters and politicians alike for all the ills of the world.

The modesty with money is particularly prevalent in New Zealand where the wealthy tend to shun the spotlight.

"New Zealand is a strange country in that it doesn't shout wealth, so consequently there's no real sense of brand logic within the country," says Stephen White, whose mission is to help luxury brands reach their target market.

"I know two dairy farmers who have a Ferrari at their beach houses, but probably their workers don't know."

It's not uncommon to see Bentleys trundling through the Waikato, he says.

But are the one-percenters dwindling, as you might expect following one of the worst global financial crises in memory?

And aren't those high net worth individuals who are left, suffering survivor's guilt?

Not likely. On the contrary - luxury brands are flourishing.

International advertising consultancy InterBrand recently issued its annual Best Global Brands report which ranks international brands by their financial performance as well as premium brand strength and consumer influence.

Included among the Top 100 best brands were seven categorised as "luxury": Louis Vuitton, Gucci, Hermes, Cartier, Tiffany & Co, Burberry and Prada, all with an average increase in brand value of 12 per cent. Revenue for Louis Vuitton's parent company Moet Hennessy Louis Vuitton, in the three months to September, was up 15 per cent to [Euro]6.9 billion (NZ$11b), with special mention for strong sales in Russia and China.

The company says it has been able to "shrug off" the economic crisis thanks to the wealthy's insatiable taste for handbags and cognac.

"International brands are really targeting that small percentage of society that usually has got enough finances even during the hard times," says Auckland socialite and Rascals ad agency director Gilda Kirkpatrick. "They are very stable and from what I see they are not hurting at all."

But money is relatively scarce, those LV purse strings are bound to pull fractionally tighter, making the high-end market in places like New Zealand more competitive.

Luxury brand marketers have always had to find creative ways of getting their exclusive products in front of exclusive people.

The rise of "affinity marketing" - or aligning two or more complementary brands for mutual benefit - is becoming more popular.

The entry of The Luxury Network into New Zealand is a symptom of the effectiveness of this type of brand collaboration, says White, who is the network's local franchisee and director.

The network was established in London in 2007 by Kevin Rose to help luxury brands work together to market their products to those rare customers, of particularly discerning and demanding tastes.

Sharing their client base through combined events or product offers benefits to both the business and the end customer. There's also a business-to-business dimension, with preferred supplier arrangements emerging from the top- level discussions that The Luxury Network organises.

"You could be a small cashmere company in Gisborne but you're still a luxury brand, and you could end up making all the picnic rugs for every new Aston Martin sold in Auckland," says White.

Aston Martin was one of the network's foundation clients in Britain and the marque's New Zealand general manager Greg Brinck backs the affinity approach.

"I've been in this for 10 years and with times being tougher you tend to see more results from this type of marketing than spending $4000 on a magazine ad," he says from his Auckland dealership amid the polished steel of several $350,000 super-cars. "The key for us is it's an emotional buy . . . no-one needs one of our cars, they'll probably convince themselves they need it, but it's really what they want - it's a desire."

He says the sales process is about flattering those emotions: "We need to get them to feel, touch, hear [the cars] and the more we can do that, the more we increase our chances of getting people emotionally involved."

Another approach is to flatter the customers. Sofitel New Zealand's general manager Wouter de Graaf is an expert in providing luxurious experiences, and the downturn in the economy has only reinforced his devotion to superior service.

Sofitel's new Auckland hotel inhabits the premises vacated by The Westin hotel group last year after a stoush with unit owners over low investment returns. In its new incarnation as Sofitel Auckland, the premises now include the Sabrage bar where you can delicately open your bottle of fine champagne with an ancient French sword.

"It doesn't matter how tough an economy is, there's always that need for pampering and recognition," de Graaf says.

Despite the growing domination of global glamour brands, there is space in the elite ecosystem for Kiwi brands, says White.

The Luxury Network already has 17 members in New Zealand, including five local companies: RJB Design suitmakers, Vaka fine art and jewellery, Me magazine, JML Communications and Cruikshank Furniture. White expects the membership list to reach about 50, with many being smaller, boutique operators who are ready and willing to collaborate with larger brands to get their products seen.

Arrowtown-based British expat Ed Cruikshank couldn't be further away from the international markets that buy his designer furniture and art pieces but being "networked" keeps his business growing.

The Luxury Network's first business-to-business meeting won't happen for another couple of weeks but already Cruikshank is eyeing a collaboration with Auckland-based RJB Design to upholster one of his chairs.

Private banks also play an important role in the network, says White. A seaside soiree - promoting TLN member Silversea Cruises' venture into New Zealand waters - is in the planning stages, he says .

"We'll probably use one of our private banks that's a member and perhaps one of the major car suppliers like Rolls-Royce or Aston Martin to ferry their customers to the ship, and there we'll do a private lunch with the captain for 25 people." Fairfax NZ

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