1.) Traditional Luxury Dramatically Accelerates its Internet Activities inResponse to Innovators

The Luxury Institute has been presenting the empirical case directly fromthe voice of the wealthy consumer for luxury brands to make their websitesthe centerpiece of their online and offline strategies since 2006.Nevertheless, the traditional luxury industry has been slow to adopt Web2.0. Meanwhile, innovators such as Gilt, Ideeli, A Small World, Portero,Vivre, Couture Lab and several off-the-radar players such as BespokeGlobal, are gaining traction online via membership models, globalcommunities, and by aggregating categories of bespoke luxury designers andproducers in one-stop-shop destinations. Their economics will become muchmore compelling as the economic downturn makes opening stores andtraditional advertising economically challenging.

Look for all types of traditional luxury goods and services providers tobegin to imitate the techniques of these luxury innovators, or to acquirethem.

2.) Luxury Awakens to the Influence of Generations X and Y on TechnologicalAdoption and M-Commerce

According to a Luxury Institute WealthSurvey of luxury consumers and mobiledevice usage, 22% of consumers have executed a transaction via a mobiledevice, while 21% have made a payment via mobile. Those doing so tend to beunder 45 years-of-age, but significantly wealthier, with HH net-worth at$5+ million.

Luxury should be leading M-Commerce innovation since it creates an enhancedexperience for all customer segments. Generation X and Y shoppers areinfluencing the lightning speed with which consumers of all ages, includingboomers, are embracing mobile technology for on-the-go entertainment,search, and transactions. Look for a few luxury innovators to make a moreserious effort to experiment with M-Commerce in 2009, especiallyinternationally, as luxury quickly discovers that it must seriously addressthe mobile needs of the wealthy constituents of Generation X and GenerationY, as well as the mobile needs of Boomers.

3.) Price Does Matter. Luxury will Appeal to the Rational Brain Again

In the recent boom, some in the luxury industry, and their cheerleaders,deluded themselves into believing that the more expensive an item, thegreater its appeal to the wealthy, regardless of quality, functionality andservice experience. University research suggested that the more expensive aconsumer was told an item was, regardless of the fact that it was the samequality as a much lower priced item, the more the happy chemicals in thebrain approached a state of bliss.

In times of economic crisis, that high can only last so long. Most of thewealthy are self-made, and have sacrificed to earn every cent whiledelivering great quality and service to their own customers. Like theircustomers, they use both sides of their brains to make luxury purchasingdecisions. One empirical example: an October 2008 Luxury InstituteWealthSurvey shows that when it comes to luxury travel, the top two factorsinfluencing vacation destination decisions are: scenery and nature (58%),and cost (56%). So, it's back to value-added luxury fundamentals in 2009.

4.) High-End Philanthropy Phase Three: Doing Good Becomes a Way to SalvageReputation for Discredited Wealthy

In 2007 we noted that Bill Gates and Warren Buffet's entry into big-leaguephilanthropy created the "alms race" we had predicted. Many billionairesfollowed. In 2008 we noted that their participation, and the trend theystarted, created a new level of scrutiny for ineffective philanthropies todeliver results. While this trend continues, we now also expect manydiscredited Wall Street executives to turn a new leaf in an effort to savefamily legacies and reputations and get into the high-end philanthropygame. It's not much fun for kids to have the wealthiest parents in privateschool when everyone knows they made their money in a Ponzi scheme thatbrought the world economy to its knees.

Repentant wealthy executives have begun to carve out new family legacies byengaging in serious philanthropy. The search for redemption is part of thehuman journey and the attempt by these super-talented executives to make adifference in world-class problems will be embraced.

5.) Luxury will Embrace Corporate Social Responsibility as a CriticalComponent of the Business Model, not Just a Slogan

For several years, the Luxury Institute's impartial research has documentedthe rise in relevance of Corporate Social Responsibility. Luxury Institutesurveys document that wealthy consumers have increased their preference forsocially responsible brands from 51% in 2006 to 57% last year. Expect thatnumber to rise dramatically by 2009.

The global crisis of confidence in governmental, financial and otherinstitutions will drive luxury consumers to demand that luxury brands servenot just them, but society as a whole. They will require luxury brands tobe ethical with all constituents, charitable in ways that make a differenceto their beneficiaries, and eco-friendly in ways that can be documented. Itmight mean we will see, among other changes, a reversal in luxury charityevents where 80% of proceeds go to lavish fun for the attendees and 20% tothe beneficiaries.

The good news is that these enlightened practices will elevate luxury to anew level in the eyes of all of its constituents, including youngaspirationals, who are even more sensitive about these practices than theirelders.

6.) Classic Luxury Spending and Selective Indulgence Coexist, Guided byTrusted Advisors

In the midst of this financial crisis, and the populist backlash onunearned financial services wealth, many wealthy consumers are a bitconfused and feeling a tad defensive about luxury, even if they have moneyto spend. Consequently, many wealthy consumers will opt for classic luxurythat is unique and exclusive, with exquisite artistic design,craftsmanship, and quality, delivered with impeccable service. They stillcovet their favorite Lamborghini sports cars, Judith Leiber handbags,Christian Louboutin shoes, Harry Winston jewelry, and Ritz-Carltonexperiences. That's good, because luxury spending has a strong and positivemultiplier economic effect on society.

At the same time, they are selectively looking for a few playfulindulgences in their favorite categories that they can enjoy in privacywith family and friends. Personal shoppers, travel agents, realtors, cardealers, interior designers and others who have earned the ironclad trustof clients over the years will have the advantage of curating customerexperiences that indulge, but don't overreach, for their loyal clients.

7.) Trust, Authentication, Validation and Certification Become Part of theLuxury Lexicon

The financial meltdown has its roots in a crisis of confidence that beganin real estate as far back as 2006. Trust in credit ratings institutionssuch as Moody's and Standard & Poor's, and in quasi-governmentalinstitutions such as Fannie Mae and Freddie Mac, and in financialinstitutions such as AIG, Bear Stearns, Lehman Brothers, Merrill Lynch,Morgan Stanley and even Goldman Sachs, has declined precipitously, asindicated by their financial results and stock prices. Several paid theultimate price for this lack of trust.

Luxury too, is down, partly because some purveyors have forgotten what trueluxury means to the customer. As online communities, social networks andratings hubs dot the Internet landscape, expect luxury consumers to lookextensively to their own trusted peers for guidance on what is, and, whatis not, true luxury. These now-wiser consumers, who are reeling from lossof net-worth and income, will scrutinize luxury brands far more carefullygoing forward, and will rely on authenticated, validated and certifiedratings to make purchasing decisions. They will expect luxury brands to betransparent, and to independently authenticate claims, such as country oforigin, quality, customer referrals, and social responsibility, like neverbefore.

Finally, in these troubled times, many experts will herald the death ofluxury. If you are a true luxury purveyor, you will not flinch. You will dowhat true luxury purveyors have done for hundreds of years in up, and down,cycles: execute the fundamentals as inspired and defined by your customers'needs and desires, consistently and extraordinarily well. Men and women whoachieve the best will always seek the best of everything. That is whyluxury has brands that span centuries, while most other industries don't.

Milton PedrazaCEOLuxury Institute, LLC New York Citywww.LuxuryInstitute.com

Contact:VISIBILITYLen Stein914.712.2610Email Contact