Bourgeois Bling: New-Money Millionaires Flood Luxury Market
Luxury retailers like Bulgari are wooing a new class of preferred customers.
Aug. 17, 2007 — -- The merchandise is eye-popping, the prices astronomical and the clientele, not exactly old money.
Not so long ago if you walked into a really exclusive luxury purveyor the only people who could conceivably afford the real bling were princes, sheiks or crooks. Now a growing number of self-made millionaires are changing the face of the luxury market, demanding the kind of lavish lifestyle that used to be reserved for royals.
Take for example, three of the world's great luxury brands Tiffany, Cartier and Bulgari. They inhabit a single intersection in Midtown Manhattan. Walking into one of their stores is still like walking into a museum. Jewels encased in glistening glass cases fill the room, and handbags hang like paintings on the walls. But unlike a museum these things aren't being saved for posterity.
On a recent visit, Bulgari CEO Francesco Trapani proudly showed off his jewels, rattling off the price tag attached to each in a calm, even tone. "This one is even more expensive," he said. "The ring is maybe $1.6 million. We're talking about really beautiful material here."
Trapani isn't in denial. For an increasing number of people these items are affordable. And unlike the elegant clothing Trapani sports, some customers in Bulgari now arrive in khakis and T-shirts, but they walk out with some major bling.
The luxury retail business is booming. Already a $150 billion a year industry, that market will grow by at least 6 percent annually over the next five years, analysts estimate.
When second quarter results were released at the end of July 2007, Bulgari showed a 13 percent increase in revenue over 2006. Trapani attributes the spike in income to the monumental growth of wealth across the globe. In the United States alone, the average net worth of the American family increased 12 percent according to data from the Panel Study of Income Dynamics. Trapani says that surge has been good for the top end of the market.
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