Being rich no longer means looking at the bottom-line alone. Here's what it means to be rich in the new world.
Have you heard of it? If you haven't, you should probably hide your ostrich face in a Louis Vuitton hand bag and shed crystal tears. The world of luxury has been gasping over Louis Vuitton's new store in — ah, the irony — New Bond Street in London that can never be called, well, a store. It must, whispers LV, be always called a Maison.
This, as has been reported reverentially numerous times, has — among other things — a trunk wall, a handbag bar, an LED staircase across three floors and a private shopping area called, snootily aptly, The Apartment. All this across 1,500 sq m! (BTW, has it ever occurred to you that in order to be a customer of luxury, does one have to live in a home bigger than the luxury store, eh, maison? In this case in a home bigger than 1,500 sq m?)
What does this mean to you apart from the fact that you can now do two things: clutch on to your LV clutch with greater vehemence or bemoan that you shall never be LV-ed and are destined to remain in the ignominy of non-luxury.
What this also signals is — along with the new Fortune cover that grins “You can still retire rich” — that being rich is back. We will still look down, to a degree that is, at the investment bankers but hunting for them on shaadi.com is back with a bellow. The consultancy firm Bain & Co has declared the “end of shame” predicting luxury sales worth €158 billion up four per cent, far more optimistic, as the Financial Times noted, than Bain's crystal bling gazing last October of a rise of one per cent.
But what does the being rich in the new world really entail? As Deepak Chopra recently told me we, in our lifetime, are seeing the end of the world of the bottom-line-only rich. The only businesses that will succeed in the future, says Chopra, are the ones that equally take care of the bottom-line and the ecosystem. So what does the new rich do? Here then, in this column and the next, five rules of Being Rich in the New World. Three in this column and two in the next:
Brand is not enough
(Did someone just die?) Well, even if this causes death by muscular atrophy (especially in the muscles on the forearm that drive retail sales), the truth is that unless a product has some special value stratospheric luxury pricing will be virtually impossible. I keep going back to this example as it has stayed in my head for years.
At one point Salvatore Ferragamo started selling cotton t-shirts for Rs. 27- 30,000 in India. When I first saw this pricing in a Ferragamo store in Mumbai, I instinctively knew that this just cannot be successful in India. And lo behold! It isn't. This is the kind of pricing strategy that in the future will not only bring disrepute but disdain for luxury brands because from now on, just the brand is not enough to demand price. There has to be integral rarity, value and product differentiation. Anything with a LV or double G of Gucci is not luxury.
The You Plus Formula
The ecosystem, remember, includes a few more people than just you. I mean, OF COURSE it's mainly you, but just think that they might be just a few more people on the fringe. And everything you do, must accommodate the well-being of the eco-system. More than ever, consumers and customers will want to know whether you use exploitative labour, whether you recycle water and paper, whether you treat your employees well, whether you provide insurance and health benefits and whether you pay a fair price to craftsmen.
Whether you like it or not, the age of the sweat shop is coming to an end. Will it end in five or 10 years? Maybe not. Human beings will always look to exploit others for advantage. That's a natural survival instinct but as business model there are clear signs that gross exploitation of labour is a mass model that might end in the next 30 years.
Money will not be an end unto itself. Will we still hurtle towards profits? Naturally. But from customers to shareholders to investors will run shy if the model is purely based on exploitation and just a method of rock bottom prices or maximising profits.
Will this be the dawn of the humane age of business? I don't know. But it is clear that communication methodologies allow no injustice to continue unfettered ad nauseum. If not immediate redressal, there is immediate exposure.
Return of Noblesse Oblige
Yes, yes, the term died at the guillotine of the French Revolution but we are entering — have entered — an age where more will be expected from the rich than ever. We are passing out of an age where indiscriminate ostentation was the norm. Will we be less gaping and more judgmental of our rich in the future? Perhaps. Will we hold them more accountable and ask questions about what they have given back? Probably.
The rise and rise of corporate social responsibility not just among the biggest companies but also the smallest means that we will seek greater responsibility from our rich and rich institutions. From the collapse — and greed exposure of Wall Street — to the BP oil spill, it is clear that another Bhopal would never happen again and if it did, no Warren Anderson would ever be able to escape.
What does this mean? It means being rich will become, in a sense, tougher. You will no longer merely be admired for your acumen of collecting endless cash but will be questioned about what you were contributing to society at large and your failure to connect to the ecosystem — and any attempt to wipe out the blue faced natives — will directly haemorrhage your bottom-line.
Being rich will come with obligations. We used to call it Raj Dharma in India, aka noblesse oblige.
Hindol Sengupta is the author of two books on luxury.