VICs: How do the ultra-wealthy want to shop?

London – There are shoppers out there that most of us will never see. They shop in private spaces, buy products that others can't afford, and spend millions of dollars each year at their favorite brands and retailers. In fashion industry parlance, he is considered VIC (“Very Important Customer”) or EIC (“Very Important Customer”) because although he only accounts for 2% of all customers, he accounts for about 40% of the revenue. customers (customers). And in a market where aspiring shoppers are cutting back on luxury purchases, competition is heating up to offer elaborate experiences to the wealthy VIC, including wining and dining.

How to reach these valuable customers is the focus of the first BoF Professional Case Study of 2024.Sell ​​luxury goods to the 1%.” Our senior correspondent Tamison O'Connor interviews executives from Gucci, My Theresa and Tiffany & Co. to understand the strategies and tactics these companies are using to build relationships with market-leading VICs. did. Case studies are packed with examples and insights. Here are my four key points about how the ultra-wealthy want to be courted.

The end of the pandemic has sparked a luxury goods boom. BoF columnist Luca Solca said: In addition to luxury goods, discretionary spending also increased significantly compared to pre-pandemic levels. ” Since then, the aspiring consumer has tightened his wallet, but VIC still continues to spend like he's in 2022.

Currently, the revenue and profit growth of major luxury goods companies like LVMH is not due to mass sales of products, but rather through price increases and one-off, unique products designed to attract VICs. This is brought about by sales of high-ticket items, including

High jewelery is particularly in demand because it naturally lends itself to personalization. Jewelry also conveys a sense of permanence and tends to hold value better than softer items. According to Lumineer, a London-based company that provides VIC Shopping and his 1% experience, the total amount spent by all its customers on high jewelery will increase from 40% in 2022 to 1% in 2023. He increased to 60%.

To that end, Victoria Reynolds, Tiffany's chief geologist and vice president of high jewelry demand and gemstone sourcing, is making “once-in-a-lifetime purchases” of the rarest stones, including a 71-carat Fancy Vivit gem. he told Tamison. A yellow rough diamond from the Ekati mine in Canada. Last year, CEO Anthony Redl said Tiffany's high jewelry business had grown 300% since LVMH acquired the business in 2021.

VIC requires complete privacy and discretion when purchasing these special items. During the pandemic, many luxury brands have started opening private shopping spaces in China, a trend that is spreading around the world. A recent visit to Cidade Jardim, an upscale shopping center in São Paulo, revealed that all newly opened stores (as well as some established ones) are private, where customers can wine and dine away from the public eye.・I was building a shopping suite.

Our new case study details Gucci's VIP salon strategy. Reaffirming its position as a luxury product and moving towards the upmarket market, the company allows its top customers to buy products worth more than 40,000 euros, and up to millions of euros for high-value items, in a more intimate and customized environment. We have started opening invitation-only stores where you can purchase them. jewelry. The company opened its first salon on Melrose Avenue in Los Angeles last April and is now rolling out the concept internationally.

Engaging with customers in this way increases spending, and brands like Gucci hope to build one-on-one relationships with these customers and keep them coming back.

Rich people are short on time. Bain's Claudia D'Arpizio says that VICs are “more short on time than money. It's easy for them to buy products. It's even harder to convince them to spend time with you.” In fact, they can pay for their own luxury vacations and Michelin-starred dining experiences. That's why luxury brands and retailers are offering access to the kinds of experiences their money can't buy in order to develop personal relationships with these VICs, and brands are finding it easier to get more money. I learned what it means to spend .

The most interesting aspect of our case study is that this engagement can include invitations to events that are not normally accessible to clients. Last September, when quiet luxury goods entrepreneur Brunello Cucinelli hosted a personal 70th birthday celebration for the brand's family and friends, luxury retailer My Teresa attended the event with 30 of its top customers. I was able to invite people. There were no reports or reports about their attendance, so they were able to participate in complete privacy and discreetness.

“Customers are so busy that they always need that 'money can't buy' factor,” said Isabel May, Managing Director and Chief Customer Experience Officer at MyTheresa. “I can’t just make lunch.”

The bonus is that just being invited to one of these events can increase your spending. Many customers end up purchasing from her Mytheresa to meet their favorite designers and look their best when rubbing shoulders with other big spenders.

VICs are used to people trying to get things from them, so they never want someone to give them a shilling. You need to focus on building relationships and trust, and that's where business comes from.

“If you think about yourself, traveling with people and having dinner with them creates a different kind of connection,” added My Theresa's May. “Spending two days with a customer creates the ultimate emotional connection. And we're selling luxury goods, so that emotional connection is invaluable.”

If you haven't downloaded it yet, Case Study Don't miss it yet. This is also Tamison's last case study before joining his BoF team. Elle She is a fashion feature director in the UK. She is a BoF 500 member and is very excited about her new role working under Kenya Hunt. She wishes all of us at BoF the best of luck.

BoF Podcast this weekend

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Brandis Daniel, founder of Harlem's Fashion Row, is a change agent. For over 15 years, she has worked to build bridges between the fashion industry and Black and Latinx designers who are not from prestigious fashion schools such as Parsons or her FIT.

After the killing of George Floyd sparked a focus on diversity, equity, and inclusion, headwinds slowing progress are increasing.

“We have regressed so quickly. It’s a real shame, especially in an industry that is supposed to be at the cutting edge… How can you be innovative without addressing DEI?” she said. Masu.

This week on The BoF Podcast, we sit down with Brandice Daniel to discuss how the industry can drive real change.

Imran AmedFounder, CEO, Editor-in-Chief, fashion business

P.S. would you like to join A live masterclass will be held on February 8th at 16.00 GMT / 11:00 EDT. beauty businessPriya Rao, Editor-in-Chief, reveals what BoF is all about. Case Study How to launch and grow your hero product.

plusOther top picks from our analysis on fashion, luxury and beauty include:

1. Why logo-free luxury is here to stay. “Quiet luxury” may have faded on TikTok, but the strong performance of Zegna, Brunello Cucinelli and Loro Piana suggests demand for modest offerings has staying power.

2. H&M's new CEO's challenges: Wrong products, pricing, channels. In a surprising shake-up on Wednesday, the Swedish fast-fashion chain promoted longtime executive Daniel Herbert to CEO. Critics say his lack of experience outside the company will make it increasingly difficult for H&M to undertake the changes it needs.

3. Can AI carry on the legacy of designers? Norma Kamali teaches an AI system to replicate her design style. In other words, she's “downloading my brain,” she says. So even when she retires from the company, her creative legacy will live on.

Four. Where is the money to make fashion more sustainable? Decarbonizing the industry is expected to cost $1 trillion over the next few decades. Where that money will come from and how it will be distributed remains an open question.

Five. Why Chinese brands are better at down jackets. Local fashion designers are experimenting with downwear and downwear, achieving collaborations with outerwear companies such as Moncler and attracting the attention of prominent international retailers such as H. Lorenzo.

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