One of the drivers of Miami’s growth is its position as a global hub for luxury
By Jerry Haar
The New Testament asserts that the poor will always be with us. Well, so will the rich – and given a choice of residence they will invariably choose Miami rather than Bismarck, North Dakota, or Wet Beaver Creek, Arizona. Wealthy individuals, comprising current residents, new arrivals (including CEOs and top executives), and snowbird tourists, are driving luxury to a new level in Greater Miami. The word luxury is never far from the description of any high-rise or mansion for sale.
While “wealth” and “luxury” are invariably intertwined, only the former can be quantified; for “luxury” is subjective, ever-changing, and subject to both short and long product life cycles (a fad for just one season, or enduring). So, who is the luxury consumer, what do they seek, and how do luxury brands respond to (and create) demand?
First, let’s have a look at the luxury market. After a severe contraction in 2020, the luxury market grew back by over 20 percent in 2022, with 95 percent of brands experiencing growth. The market is expected to expand by 50 percent by the end of the decade to $718 billion.
As for who is the luxury consumer, it should come as no surprise that GenY (aka Millennials), GenZ, and the emerging Alpha generation (those born after 2010) are and will continue to be the biggest buyers of luxury. Millennials and GenZ alone accounted for the entire growth of the global luxury market in 2022, and by 2030 Millennials will hold five times as much wealth as they do today.
Today’s consumers are changing how they define luxury and new paths for purchasing are redefining marketing strategy. As pointed out by marketing and branding guru Michael Solomon, luxury consumers are not a monolith. Some prefer visual icons, logos, monograms, and patterns (e.g., Louis Vuitton bags) while other prefer understatement without signs, like the woven Bottega Veneta handbags. For Millennials, they seek purchases that define their personal values and are twice as likely to purchase from firms with a good ESG track record.
In one recent international study, researchers found that the key factor in making luxury desirable was its power “to impress others, combined with a high price.” Simply stated, shoppers have a psychological need for status and exclusivity. The message? Exhibit the logo and brand yourself. According to Deepak Ohri, CEO of Lebua Hotels and Resorts, “passion and emotional connection” are what drives spending on luxury.
In terms of business strategy, luxury brands are positioning themselves to capitalize on the increasing drift of in-store to online merchandise sales. All indications are that online will be the leading channel for luxury goods, with one-third of the market share followed by monobrand stores such as Acqua di Parma at Brickell City Centre. At the same time, luxury brands are taking control of their own second-hand markets– Rolex’s certified pre-owned program is a prime example. Overall, second-hand luxury has witnessed a 65 percent increase from 2017 to 2021; just look at Burberry’s and Gucci’s arrangements with The RealReal.
For Dr. Anna Pietraszek, Director of FIU’s Pino Global Entrepreneurship Center, luxury clusters like the Miami Design District can spur economic development adjacent to their locale. The big question is: how does Miami keep the luxury renaissance moving forward? The answer is key, since luxury plays a symbiotic role in our economy with a dynamic relationship between real estate, automobiles, hotels and resorts, restaurants, clothing, footwear, jewelry, and recreational activities. Economic conditions both globally and locally will impact spending patterns, but the luxury-seeking will continue to dine at L’Atelier Joël Robuchon, shop at Bal Harbour Shops, and purchase a Porsche 911 Carrera. For Greater Miami, luxury is self-propelled. For, as the late model and designer L’Wren Scott discerned: “Luxury is a state of mind.”
