Ever since the financial dominos began to fall last September, luxury purveyors have been wringing their hands in despair as customers disappear, stores sit empty, and inventory accumulates. The media, always quick to seize on a sensational angle, have been heralding the end of an era of conspicuous consumption, and according to popular pundit opinion, right about now the world’s super-rich should be swanning around in hair shirts, sober and repentant about their sins of spending excess.
Considering the mess that the rest of us are stuck dealing with, it’s a satisfying image to contemplate, but unfortunately, it’s just wishful thinking. Some of society’s upper crust might be taking a new shine to subtlety—turning their 5-carat brilliant-cuts upside down, perhaps, while promenading down Madison Avenue, or disguising their Barneys shopping spree in a humble grocery bag—but it’s naïve to think that the top tier is going to surrender its sense of privilege so easily and go quietly into the night. In truth, some of the world’s super-rich are starting to make defiant "let them eat cake" gestures, publicly flaunting their resources and creating the kind of spectacle that is supposed to be extinct, while those a bit lower on the socioeconomic totem pole make some concessions to a more-restrained status quo. In both cases, however, the rich aren’t about to surrender their right to lead the good life.
The change, if any, that they are experiencing is a recalibration of how to tastefully project privilege, not a desire to eschew all external trappings of success.
Take Prince Al-Waleed bin Talal, ranked by Forbes as the 22nd-richest person in the world. His net worth might have dropped from an estimated $21 billion to $13.3 billion, but happily, he still has enough money to indulge in his more extravagant fantasies. The owner of a $100 million, 317-room palace and over 300 cars, bin Talal is reported to have recently ordered an Airbus 380 that will be the largest (and most expensive) private jet in the world (not to mention the most newsworthy, lately). Equipped with an on-board garage, steam room, Turkish bath, concert hall, and holographic projection system, it’s an airborne, over-the-top pleasure palace, and all for an estimated $488 million.
Lest one think that this is an isolated expenditure, Roman Abramovich, the Russian oligarch with a fortune estimated at $8.5 billion, recently took delivery of a 557-foot megayacht, also the world’s largest. At an estimated cost of $450 million, it’s considerately equipped with a military-grade missile-defense system, bulletproof windows, submarine, two helipads and, in case he feels a little tense amid all these high-tech defenses, a swimming pool in which to unwind.
Clearly these perennial fixtures on the Forbes list didn’t receive the memo about austerity being the new black, but even among the merely well-to-do, expenditures on luxury goods are surfacing in industry pockets that one would have expected to be suffering the most. At high-end yacht design firm Azimut, for instance, more than 20 units of its new model, the Azimut 70, have been sold since October at a base price of €2.4 million—remarkable considering that the annual production target is only 10.
A similar story is unfolding at the fine jewelry firm Graff, famous for its over-the-top colored and clear diamonds, which rank among the world’s most coveted. Josephine Dunn, the company’s senior press officer, relates that their clients "haven’t changed in their behavior. As always—and maybe even moreso now—[they’re] looking for rare, exquisite pieces, collector’s items, and heirlooms to spend their money on.”
Fashion is perhaps the most approachable of luxury industries, given that price points tend to be within easier reach for consumers, and although sales figures from department stores are still anemic, reports of fashion’s impending demise are greatly exaggerated. In fact, some of the most opulent labels are digging in their heels and refusing to submit to financial pressures.
The house of Versace, known as one of the world’s most extravagant brands, has put the kibosh on any plans to reduce their prices. While the company’s profits are down, its reception over the past few seasons by critics and consumers alike has been the strongest since Gianni Versace was alive, largely credited to its re-imagined aspirational image which positions ostentation within a sleek, contemporary context. The blinged-out essence has been repackaged in a product line that is less obviously baroque, but still makes a bold impression—there’s no risk that anyone is going to think that you’re wearing Calvin Klein. This new approach to luxury is central to the sea change that has begun as result of the downturn, and it makes sense that people still want to attract attention if they’re spending thousands of dollars. After all, why would the rich shell out in order to appear as if they’re no better off than the rest of us?
Milton Pedraza, CEO of Luxury Institute, a leading luxury-research organization, observes that, “Right now, for the majority of wealthy people, subduing an ostentatious display of wealth is a priority, [but] there are exceptions. They tend to be newer money, and in countries where the wealth is more recent. Versace has great appeal to a particular audience, and they are finding a way to be more approachable and appealing. Fashion evolves, and sometimes it’s loud...and I don’t think that’s going to go away.”
“Priorities may shift for awhile, but true luxury, whether it be in a private plane, yacht, a handbag, or a watch will still survive.”
The trend is evident with smaller, emerging brands as well—American avant-garde label Rodarte has been carving out its own distinguished niche as an artisanal source of elaborately decorative showstoppers. The winners of the recent CFDA award for Womenswear Designers of the Year, the sibling designer duo Kate and Laura Mulleavy produce collections that run counter to received wisdom about what the market wants right now, eschewing subtlety in favor of pieces guaranteed to make the wearer the center of attention. They aren’t cheap either—dresses begin at about $3,000 and can stretch up to $30K.
Fern Mallis, vice president for fashion at IMG and star of Bravo’s The Fashion Show, points out that, “There will always be a market for luxury goods and services. There were a great many people buying handbags they couldn't afford, along with houses that are now for sale. Nevertheless, many people still have a great deal of money and live a lifestyle that is not changing measurably. Priorities may shift for awhile, but true luxury, whether it be in a private plane, yacht, a handbag, or a watch will still survive.”
It might be the end of the world as some us know it, but it appears that many of the world’s wealthiest still feel just fine. The change, if any, that they are experiencing is a recalibration of how to tastefully project privilege, not a desire to eschew all external trappings of success—the idea that challenging economic circumstances would change human nature is laughable. For the well-to-do, luxury goods are shifting in a slightly less in-your-face direction, but for some of the elite cadres of the super-rich, it’s still chic to be a walking status symbol and the message remains the same: “I’m richer and more fabulous than you can ever hope to be.”
Sameer Reddy is a special correspondent for Newsweek International, to which he contributes two columns—Top Shelf, which deals with luxury, and Tendencies, a survey of trends in culture. . Based out of Berlin, he edits a recently launched blog about aesthetics, www.the-comment.com, while consuming large amounts of sausage and gluten-free pretzels.