Investing in luxury

Whether buying shoes, jewellery or a yacht, the experience of purchasing exquisite goods in attractive settings is a major boost to an individual’s sense of enjoyment and worth, and an important contributor to their lifestyle.

Few know this as well as Muriel Zingraff, who recently joined 3i as a senior adviser for retail, luxury goods and fashion. With a background in such prestigious businesses as Jimmy Choo, L'Oréal, Paco Rabanne and Harrods, Muriel has a deep insight of the psychology of luxury:

“The appeal of luxury brands comes from the emotional dimension which is woven in the very fibres of their DNA. Real luxury is about following your own path, having a unique voice that at the same time stays true to the spirit of the brand and evolves with the times.

The brand’s vision follows through in the craftsmanship of the products, the exclusivity of the distribution and the prices that suggest indulgence. Great luxury brands have also mastered the art of creating an amazing buying experience for their customer.

Whether it is the aesthete’s joy of possessing a beautiful object or the feeling of empowerment of owning a recognised brand, the universal language and international values of luxury speak to men and women from all over the world. Recognising and respecting the essence of such brands is key to the understanding of the luxury industry.”

3i has been a leading investor in the retail and consumer sub-sectors for decades. In the last five years alone, we have invested in more than 40 consumer businesses with a current value of over €1.2bn. Increasingly, we have focused on strong brands that attract consumer loyalty and premium pricing.

Many of the demographic and economic factors that we see driving the growth of the broader consumer sector are also supporting the growth of luxury brands.

Across Asia, Eastern Europe and other emerging markets, economic growth is rapidly increasing the number of high net worth individuals. This is fuelling phenomenal rates of expansion in the demand for luxury goods.

In Western Europe and North America, real incomes have climbed significantly in recent years. At the same time, ageing populations have amassed stores of wealth, and there are many more single people who are keen to indulge themselves.

Increasingly, consumers globally are using the extra funds at their disposal to trade up – switching to brands that carry a sense of aspiration. Influenced by a celebrity culture that brings images of opulence to the mainstream media, consumers increasingly want to ‘buy in’ to the images that they see.

All of this has helped to create a new world, in which luxury is no longer the sole province of the super-rich. Instead, many businesses specialise in affordable luxury, supplying high-end products to aspirational middleincome customers.

For women, the appeal of luxury brands is particularly strong, helping to create many successful, distinguished businesses in fashion, accessories and shoes.