NEW YORK & LONDON – As Sotheby’s Institute gears up for another summer of art with a full schedule of Summer Study courses in New York and London, we thought we’d take a few minutes to highlight one of our most popular courses this year: Understanding the Luxury Market with Thomaï Serdari, Luxury Brand Strategist and Lecturer at Sotheby’s Institute of Art in New York. This course identifies how the market for art and other luxury items has evolved to answer the increased demand from sophisticated buyers. We asked Thomaï to share her tips on the five things you need to know about the luxury market.
Luxury does not necessarily mean “old.”
The market is inundated with brands that fight for your attention, curiosity and ultimately your wallet. In the last seven years, we have observed the rhetoric of brand messages to center on “authenticity” and “heritage,” both rightfully associated with luxury products and both blown out of proportion after the crisis of 2007-2008. The post-crisis luxury clientele rationalized excessive purchases by seeking out brands that have indeed been authentic and have distinct heritage and, as a consequence, long traditions in craftsmanship and commitment to innovation. At about the same time, other brands saw an opportunity to reach for the luxury consumer by claiming a long heritage (if their history in business attests to it). Remember that the date of its founding alone does not turn the brand into a luxury brand. It often happens that luxury brands are rooted in the past but what contributes to preserving their luxury status is exceptional quality of production and deep commitment to innovation. In other words, luxury may be old but it truly is a promise of value in the future. How many brands do you think can deliver on that promise?
A selection of cars from the Art of the Automobile, celebrating the motor car and its place in the history of design
The luxury market does not favor the rich but rather the smart shopper.
With an unlimited supply of funds to spend on luxury objects and accessories, one can always make good choices. Unfortunately, the opposite is also true. Luxury does not necessarily mean expensive. Pricing luxury products is a very complicated process that takes into account costs similar to those other businesses are assuming. Additionally, it takes into account a highly intensive production process that is usually greatly specialized, rare (in terms of raw materials, specialized labor, proper facilities in specific locations, and intellectual property), and very much dependent on artistic output. If one buys the most expensive object the store has to offer without questioning why this is the most expensive one, one risks buying into “hype.” As with investments in art pieces, acquiring luxury items imply a certain level of expertise that turn the consumer into a smart shopper. That shopper purchases the luxury object that will most probably be the most expensive item in the future.
Luxury is both an indulgence and an investment.
There is no question that humans are attracted to luxury (regardless of political beliefs). Sociologists and neuroscientists have started experimenting with humans’ reaction to beautiful images and particularly to works of art. (Art is the ultimate luxury after all). It turns out the neural signals that run through the human brain light up when the individual is looking at a work of art. While I am oversimplifying a very complex experiment, this actually means that the human brain reacts positively to aesthetics and does so without even engaging the person’s cognitive functions. Imagine what happens when we are in contact with or in possession of a precious luxury good, one that, in addition to good looks (that engage our vision), offers additional sensory triggers (tactility, weight, transparency, brilliance, smoothness, smell, taste, sound etc. that engage the rest of our senses). Certainly, luxury is an indulgence. It is also an investment when one purchases items from reputable brands, stores and, to speak of the secondary market, auction houses or galleries. As with any other type of investment, research ensures that the item under consideration is well made, unique in its type or history (even if part of a limited edition), with a traceable provenance and aesthetic merit, all of which become a guarantee of value.
A select vignette from the Extraordinary Jewelry of Alexandre Reza, the Paris-based maître joaillier.
The luxury market favors the well prepared.
This is particularly applicable to the secondary market for luxury goods. In addition to prominent auction houses, the Internet has allowed the proliferation of online establishments that deal in second-hand luxury goods. The collector’s homework should consist of research on both the item for purchase and the establishment that offers it for sale. Remember that the logo alone is not enough to prove the authenticity of the item. In fact, logos are prominently displayed on counterfeit products (for which there is, unfortunately, a colossal market). There is a myriad of special traits and product features, beyond the logo, that can be learned and that offer insights as to the authenticity of the item and its chronology (if this is not apparent, as in an inscription for example). Familiarity with these features can be gained off-line by frequent visits to second-hand stores and to brand boutiques. Reputable auction houses have in-house specialists who will educate you on your potential purchase and most probably will prepare you for your next one as well regardless of whether this takes place off-line or online.
The luxury market itself is not a thing of the past but constantly in flux.
I am often asked about the luxury market’s sustainability. Will luxury brands be able to sustain their status and market share amidst fierce competition? Will they survive for another generation (or two or three)? Well, no one said that the luxury market is fixed in stone. There are a couple of European luxury brands that have managed to thrive for about 400 years. There are several others that failed to adjust to the changing times and disappeared. Luxury, therefore, is about change. It is about commitment to experimentation, innovation, adjustment to modern times, ideas, materials, and processes. It would be naïve to expect everyone to do equally well against the challenges that the passing of time presents. As a collector of luxury, one should be open-minded. The landscape of luxury brands is in constant flux as it often incorporates newcomers, creatives with ideas, quality products, and ambition. Whether they will be around in the next 100 years is very much dependent on the quality of their work and the patronage of the sophisticated collector.
Sotheby's Institute of Art's Thomaï Serdari.
Thomaï Serdari, PhD, is a Luxury Brand Strategist, Lecturer at Sotheby’s Institute of Art - New York, and Adjunct Associate Professor at the Leonard N. Stern School of Business at New York University.