Business trend
‘Fractional luxury’ is the new buzzword in business and marketing, allowing consumers to buy into a niche lifestyle without breaking the bank
LUXURY FOR LESS
‘FRACTIONAL LUXURY’ ALLOWS ASPIRATIONAL CONSUMERS TO BUY INTO A NICHE LIFESTYLE WITHOUT BREAKING THE BANK – AND BRINGS BIG BENEFITS FOR BUSINESS TOO
words: martin raymond
NOTHING SUCCEEDS LIKE excess, and over the past five years luxury has become just that: excessive. But it has also become demographic, or at least more available to a generation of consumers who once upon a time thought Dolce & Gabbana were the sweet bits on an Italian menu. Now, not only can we pronounce them but we can buy them discounted on eBay, where top-drawer brands can be haggled for, or even rented, if the price proves too steep.
Luxury, then, has become both democratic and devalued. Thus, brands such as Louis Vuitton, Hermès, and Giorgio Armani have attempted to reverse the trend by launching niche products or services that are only available to an invited list of select consumers. But this need to make things exclusive is also being balanced out with a need to ensure that wannabe-millionaires, or those who have a little more disposable income on hand, can still buy into the super-premium world of the super-modern jet set. Enter, then, a notion and a trend that has been called ‘fractional luxury’.
A bit like the old concept of the time share, this is one that has been re-branded for the consumer who wants to own their own private members’ club, their hotel, an island perhaps, even an olive grove in Italy, but not fork out the full amount.
The premise is a simple one. Instead of you ‘renting’ a room for a night, for an ‘investment’ of £235K, GuestInvest in London’s Notting Hill, for instance, offers you a 999-year lease on a room, where you can live for 52 nights a year. And when you are not there, the room is rented to guests and you receive 50% of its rental value. Hotel chains such as the Starwood and the Hyatt are considering similar proposals.
M1nt, a private members’ club that opened in Chelsea in February this year, offered 500,000 shares to 250 A-list celebrities, aristocrats and high-net worth individuals who wanted to buy their way up the luxe-leisure ladder. As a ‘fractional owner’ you could then partially sell your shares on to a small number of ‘chosen people’ so that your investment could be capitalised on, while those who are less rich could enjoy a taste of the high life.
The Classic Car Club, in London and New York, now allows you to fractionally own Bentleys, Morgans, Ferraris and Rolls Royces for as little as £500, while Zipcar, in Boston, New York, Denver and Washington, allows you to own a fleet of high-end cars, which can be delivered to your home, work or the airport, via your Zipcard, when you require them.
Vineyards such as St Helena in California and the Nudo olive grove in Le Marche, Italy, run a scheme where you can ‘own’ your own trees. In such cases, you receive the produce of the tree – a bottle of wine, virgin olive oil – or you can allow them to sell the produce and send you a cheque.
In business and marketing circles, this is one of the most talked about trends this year. It is an original and profitable way of dealing with niche market customers on one hand, and of developing niche market products on the other.
More importantly, clever brands are using it to ‘test market’ new ways of building a long-term relationship with their customers that replaces old-style transactional models.
And why not? In a world where a growing number of consumers want niche experiences at mass-market prices, fractional selling allows brands and businesses to create a club that is exclusive without being elitist.
