Luxury Marketing Consultant and Journalist
talks with …
Pandora Mather-Lees, Director, IORMA Luxury
Spain, a sovereign country with considerable heritage and a distinct culture has undergone a radical shake up along with the rest of southern Europe in the past few years. Following the end of the Franco era, Spain grew largely as a result of tourism and a more open, de-nationalsed economy as it forged a path to the advent of the EU. Joining the EU naturally fuelled its economy and spawned a stronger currency. With the Euro, Spain saw more tourism and more inward investment it the form of British and other nations purchasing property. The growth of the fashion industry brands such as Zara, Mango and Massimo Dutti, further strengthened export trade.
Nevertheless, Spain has suffered following the economic crisis and businesses have seen a sharp and worrying decline.
Luxury Marketing Specialist and critic Albert Simó explains the nature of ‘Lujo’ in the Spanish market
PML: How have you been involved in the Luxury Market in Spanish language countries?
AS: I have been working as a journalist and marketing communications consultant in this sector for many years, starting specifically in the world of yachting, golf, tourism and gastronomy. During this time, I’ve realised there was limited media specializing in the luxury sector in the Spanish language. Hence, I decided to launch VIP Today Luxury MarCom & News (www.viptoday.es). Currently, the situation is changing and there is more interest and media awareness, but unfortunately, the culture of luxury has a long way to go in Spain.
PML: Is there still a luxury market given the economic crisis hitting Spain?
AS: Yes it is for different reasons. It’s important to note that the greatest ‘engine’ of the Spanish luxury sector is the tourism Industry. The various Spanish administrations are working to attract and improve the ‘quality’ of the tourists visiting Spain, looking to seduce the luxury tourist coming from countries like USA, UK, Russia or China. So the companies working in Spain are now specialising in services focused on richer visitors.
The most important values of the Spanish luxury tourism sector are the gastronomy, the climate and shopping, located in certain streets of the main cities. The business of tourism is very important for cities like Barcelona as well. In this sense, huge events like the Mobile World Congress in Barcelona are absolutely strategic. Nevertheless it is important to analyze tourism region by region, to realize that each area is experiencing a very different state of affairs. The Spanish middle class has been hit strongly by the crisis, so nowadays only 20% of Spanish families are able to afford luxury products or services. But the Spanish are great travellers so it’s a good time to promote premium destinations.
PML: What is the nature of the Spanish luxury market? By this I mean size, types of brands, location of businesses, and service vs. products.
AS: As I said, there are in Spain three sub-sectors in the luxury area and they are closely linked. One of them, the most important, is that of luxury tourism, focused in Catalonia and the Costa del Sol regions. Another is high end Real Estate. This is recovering right now thanks to declining prices and attractive circumstances for wealthy investors from Spain and also from countries such as Russia and China. The third is gastronomy. There are in Spain some of the most important restaurants, chefs and gastronomic investigation centres in the world. Nevertheless, besides the high end gastronomy, the visitor has lots of options to discover smaller restaurants that offer an excellent quality with a modest price.
PML: How has the luxury sector been affected by the general downturn in Southern Europe?
AS: In Spain the number of ultra rich people is growing and the country attracts millionaires from China and Russia who are looking to invest in luxury properties in the most exclusive areas of the country, located along the Mediterranean coast. Many people from Russia and other countries in Eastern Europe are investing in properties in the most exclusive parts of Spain. Thus the rich in Spain tend to be foreigners. The majority of the middle classes can’t afford luxury purchases, so the divide is polarizing day by day between rich and poor. The middle class that is building up in countries like China, India or Russia, is disappearing in Spain as it is in the rest of southern Europe. Spain is a good market for the international luxury brands, not because the Spanish people afford it, because of external investment and visitors looking for luxury tourist experiences and goods where they enjoy good discounts in comparison to their own countries.
PML: How does the Spanish market differ from other luxury markets in terms of taste, types of products or services sought after buying behaviour?
AS: For the Spanish luxury consumer it is deeply linked with leisure, experience and price. Before the crisis a lot of Spanish bought extravagant products only for feign, a classic predisposition of the ‘new rich’. This tendency was reversed by the crisis. Nowadays, the notion of success is to find best price when you buy a luxury product or service and for this reason the Spanish e-commerce is one of the most interesting and growing activities in the country, particularly in fashion. The Spanish nation is increasingly engaging in online shopping looking for opportunities. This is very different to the other countries, for example Russia. For the luxury consumer from the east of Europe the most expensive is always the best.
PML: Do you see more distinctions in Latin America compared to Spain?
AS: In terms of marketing communications, one can apply, with success, strategies in LatAm that do not work in Spain or Europe, so it’s very important to have a deep knowledge of the different markets. The rules can and do change by region and even in by city. When doing business, the rules, the protocol and the time frames are also absolutely different. As for the sector in general, markets like Mexico, Colombia, Perú or Chile, Ecuador and Panamá are growing and the luxury brands are investing considerably to promote their products and services. Much of this is enabled now because of the ‘democratization of luxury’. In LatAm the collective of people able to afford luxury products and services is growing. The number of millionaires is growing as is the local middle class, avid to spend money in the classical luxury goods areas such as cars, watches or fashion.
PML: I understand you are currently consulting with a robotics healthcare company in the luxury field. How big is your market in Spain?
AS: For the Spanish people their health is very important and there are some of the best hospitals and doctors in Europe. Clearly robotic surgery is the future and is developing not only in Spain but also in the rest of the world.
PML: What trends do you see in the future that we should look out for?
AS: The growth of e-commerce across the world and the role of mobile. The successful companies will be able to offer online, a valuable experience to the luxury consumer and will solve the privacy issues in communications. Winning companies will secure our online activity and the information kept in our electronic devices from the hackers. With the issues arising now, this will be one of the most important priorities in the immediate future.
Is also very important to better understand the psychology of the luxury consumer, to pre-empt their wishes and to understand the motivations underlying their desires. The new luxury Marketing 3.0 is focused in the values of the consumer, in their dreams and soul; it’s based on respect for people, diversity and environment. The result of this mix of criteria will be the fuel of the Luxury Industry around the world. Marketers need to know how to maintain the prestige of a luxury brand as the brand becomes global. Moreover, they need try to find the best ways to pay back to society some of the profits generated as a means of corporate social responsibility.
PML: Tell me one fascinating fact about the Latin Luxury Industry?
AS: In Latin America there is the best natural treasure in the world: the Amazonian Forest that we have to respect and preserve. In my opinion, there are in the region some of the best places in the world, most of them hidden from the massive tourism. The Luxury sector in Cuba is waiting in its shadow and The Caribbean will be the next important point of reference.