Luxury Concierge Market in the UK - Literature review Example

Running Head: LUXURY СОNСIЕRGЕ MARKET IN THE UK Luxury Соnсiеrgе Market in the UK: Is London the Cарitаl of “Cооl” for the Rich and Famous? – A Review of Literature Name Course Tutor’s Name Date Luxury Соnсiеrgе Market in the UK: Is London the Cарitаl of “Cооl” for the Rich and Famous? – A Review of Literature The Free Dictionary (2014) defines the concierge as either a “member of a hotel staff in charge of special services for guests or an employee in an apartment house who directs or carries out various services relating to the building or its tenants (Para. 3-4). Concierge services are therefore diverse and can include in-hotel/apartment services and arranging for hotel/apartment customers to seek services such as shopping, tutoring for their children, booking into theatres and/or restaurants, and finding exclusive consumer items such as jewellery as indicated by Urquhart (2012). It is pretty obvious that luxury concierge services are often sought by the super wealthy patrons, who do not mind splurging their wealth. According to Concierge Culture (2007), the wealthy have become wealthier in the last decade, their number has increased, and as a result, the quality and quantity of concierge-style services has increased. The providers of such services create the impression that they can help the wealthy manage their homes and/or their social lives. Ideally, concierge services create a less hectic life for the wealthy people by affording them more time, and generally letting their wealth ‘do the work for them’. Resultantly, the wealthy people have more exciting lifestyles since they get to concentrate on things that they like doing and paying others to do the difficult jobs and perform the boring roles for them (Concierge Culture, 2007). Interestingly, the increased uptake of concierge services is not well documented in literature. Most coverage on the issue is given by newspapers and magazines, which indicate the changing trends in consumer preferences. Bowring (2012) for example found out that only 23% of apartment buildings in London offered concierge services. However, the author noted that concierge services would be readily welcome in many more apartment buildings. The foregoing means that there is a ready market for concierge services that is yet to be utilized. Bowring (2012) however found out that concierge services were common in affluent neighbourhoods, where services such as walking the dogs, grocery shopping, and buying movie tickets among other things would be catered for by concierge service providers. As middle-class groups become wealthier, Bowring (2012) indicates that there is an increasing ‘hunger’ for improved services and this has made concierge services more desirable to people who can afford to pay for them. In other words, as long as people are able to pay, they are willing to spend on better and higher levels of services that would meet their expectations. The UK is home to 17 percent of Europe’s wealthiest individuals (Bryan-Low & Whalen, 2007), and Rippingale (2014) places the exact number of billionaires in London at 104 billionaires. London is also attractive to high-net worth individuals from other countries and continents (Bryan-Low & Whalen, 2007). The city is especially attractive because of its ease of doing business and the convenient time zones, which makes communication with developing markets in Asia easy. Bryan-Low and Whalen (2007) indicate that most business people are drawn to London by the convenience and include a mixture of Indian billionaires, Russian oligarchs, Arab oil sheiks, and financiers from Europe and the Americas. In addition to being successful business people, these wealthy people are not afraid to showcase their excess wealth by requesting for services that are ordinarily out of what ‘ordinary’ hotels and restaurants can offer. This trend has therefore given rise to concierge services that can cater for the different service demands requested or ordered by the wealthy customers. Luxury concierge providers are more inventive and willing to ‘go all the way out’ in order to get as much of the billionaires’ money as they can. The service providers are creative in the delivery of products requested from them by the customers. Rippingale (2014) quotes a concierge provider who indicates that a billionaire wanted a diamond for his wife’s birthday, “so we went one better and delivered it encased in a solid block of ice for her birthday” (para. 3). Ice by itself has no value because it would eventually melt, but it is the ingenuity and creativity of the delivery that earned the service provider some extra money from the billionaire. What the excess wealth can lead to is further illustrated by Rippingale (2014) who, quoting another concierge provider, indicates that they have “sourced llamas for clients, refurbished supercars in Louis Vuitton, had chess sets built from black and white diamonds, arranged dinners for clients with people like Al Pacino” among other extreme activities of display of wealth. In addition to running expensive ‘errands’ for the billionaires, concierge service providers also supply domestic staff who include chefs and butlers who, as Rippingale (2014) indicates, “run around and after some of Britain’s wealthiest individuals” (para. 7). Other service providers organise for what the billionaires would not ordinarily be able to access. For example, one concierge firm indicated that it arranged exclusive meet-ups for movie celebrities and musicians with their clients. Interestingly, such meetings are not arranged because the billionaires want to broker deals with the musicians or movie celebrities, but just for the fun of it (Rippingale, 2014). Arndt, Solomon, Kasser and Sheldon (2004) indicate that concierge services are at times sought for the self-esteem they provide to the wealthy clients. Some of the people who splurge the wealth were married into wealthy families and therefore try to fit in by boosting their self-worth through expensive massages, manicures, pedicures and other services (Arndt et al. 2004). As Rippingale (2014) notes, some wealthy people in London will even request concierge providers to arrange for simulated movie experiences that require National Geographic-like camera men to be in attendance to document the entire experiences. In other words, the wealthy want to get as much authentic experiences as their money can buy, and the creative concierge service providers are always at hand to make such experiences possible. Trying to reason out the insatiable need for more services that money can buy, Arndt et al. (2004) argue that if the “human beast” has money, he buys everything he can afford because in “the back of his mind he has the crazy hope that one of his purchases will be life everlasting” (p. 203). Others are however cognisant of the limitations placed on their longevity and as such, try to get as much fun and authentic experiences as they can, which can be facilitated by their wealth. Scientific reasoning reveals that luxury connotes refinement, quality and rarity, which those people who have money can afford to buy (Bellaiche, Mei-Pochtler & Hanisch, 2010). The quintessential attribute of luxury is embedded in it being superior to the ordinary. To concierge providers, this implies that they have to be willing to provide extra services and experiences to their clients. Notably, there is a business performance element in the concierge market that is closely related to consumer behaviour. There is also a motivational element that can be addressed through motivational theory. Motivational theory and the concierge market in the UK Motivation is defined as “the process of arousing, directing, and maintaining behaviour toward a goal” (Greenberg, 2005, p. 188). The first part of motivation involves arousing the targeted people/market towards something of interest. In UK’s concierge market, the arousal stage involves alerting the wealthy people that their wealth can afford them more exclusive services that other people are not able to experience (Bellaiche et al., 2010). Inwardly, Greenberg (2005) indicates that the need for validation and recognition of the power granted by their wealth pushes wealthy people to seek for more authentic experiences. The direction component of motivation relates to the behaviour of a person. Normally, a person can have self-directed behaviour, or the behaviour can be influenced by external stimulants. The super-wealthy people can personally choose to engage concierge services, or their friends, family or marketing communications can direct their behaviour. The maintenance component is according to Greenberg (2005), “concerned with people’s persistence, their willingness to exert effort until a goal is met” (p. 188). The more wealthy people seek for authentic experiences as offered by concierge service providers, the more new authentic experiences are invented by the market, hence meaning that they would continue pursuing that ‘elusive’ satisfaction that they really never get to, and which continuously costs them more money. Greenberg (2005) however indicates that motivation is a highly complex theory, and people (even the super-rich) have different things that motivate them. Hedonic experiences are among key motivators that drive the demand for concierge services in the UK. The foregoing involves the consumption of services that are intentionally designed to enhance sensory stimulation, elicit desirable emotional reactions and/or create fantasies. The desire to have even more hedonic experiences is perhaps best explained by the optimum stimulation theory, which indicates that some people have a desire to “maintain an optimal level of stimulation”, which motivates action (Hoyer, McInnis & Pieters, 2012 p. 8). In other words, the authentic experiences offered by the concierge market in London motivate the ‘pleasure seekers’ to demand for more enhanced service offers. According to Jansoon-Byod (2010), there are several ‘threats’ that motivate the wealthy to purchase concierge services. First is the social threats presented by pushy sales people in the concierge market and scarcity appeals. Scarcity appeals work by enticing the wealthy to take advantage of the limited availability of service providers. For example, Bellaiche et al. (2010) note that there is a concierge service provider in London that admits only a limited number of clients into its ‘fold’ based on subscription. The service provider argues that by limiting the number of clients it serves; it is able to concentrate hence offering the best possible services. Impersonal threats also affect the wealthy people’s motivations to engage the concierge market. According to Hoyer et al. (2012) some concierge providers package themselves as premium service providers and as such, only admit a limited number of clients. This means that there is a limited supply of quality concierge services in the market. Consequently, the wealthy people are willing to pay more. Further, the ‘shortage’ of quality concierge providers instils an urge to buy ‘now’ in the wealthy clientele. Closely related to the motivation theory is the point that consumers’ perceptions about the risks and/or rewards involved also affect the luxury concierge market in the UK. To some, concierge services provide them with the social, psychological, time and performance rewards. The Maslow’s hierarchy of needs indicates that human needs must be satisfied in a hierarchical manner. At the bottom of the hierarchy is physiological needs including food, housing and clothing. To the wealthy market, the concierge luxury market must meet such needs by providing (or facilitating their clients to access) healthy foods, exercise equipments, premium drinks (e.g. expensive champagnes) and /or medicines when needed. Safety needs are second on the needs hierarchy. Such include preventative medicine and insurance cover among other useful services that could assure the wealthy of their safety. Esteem needs are third on the hierarchy, and are defined as needs that “reflect on self-esteem, personal worth, social recognition, and accomplishment” (Cherry, n.d., para. 4). They include such things like booking and facilitating the wealthy people’s acquisition of custom-made cars, jewellery, houses, and travel packages among other services that boost their esteem. Self-actualisation needs are at the apex of the Maslow’s needs hierarchy (Camilius, 2011) and are defined as the need to fulfil one’s potential. They include things such as facilitating the provision of gourmet foods to the wealthy clients, providing tutoring services for their children, booking sporting holidays for them, and arranging for them to visit museums among other activities that are part of their hobbies. When dealing with the wealthy clientele, Magelonsky (2014) underscores the need for luxury concierge service providers to know that the wealthy people to not just purchase concierge services for the sake of it; rather, they purchase the services in the hope that they will offer solutions to their problems or provide satisfaction to an unmet need or desire. Clark, Friedman, Crosson and Fadus (2010) for example document the increased demand for concierge medicine, which ostensibly offers alternative medical practice to people who are dissatisfied with services offered by physicians who attend to limitless patients. Consumer behaviour and luxury concierge market in the UK Dazinger (2005) indicates that “luxury is no longer restricted to income levels, personal wealth, or spending budgets” (p. Ii). Rather, luxury constitutes experiences that everyone is yearning to have, and believe they deserve. Arguably, everyone who can afford luxurious living is willing to pay for it. In the UK, and mostly in London, concierge services promise to offer luxury concierge services that are unique and authentic. To Dazinger (2005), luxury is “handcrafted perfection” and as such, concierge market players who are willing to be creative and imaginative will always attract people who are willing to spend money to have authentic experiences no matter the cost (p. 64). Drawing from the dictionary definition of luxury, it is rather clear that luxury concierges offer more than hand-crafted perfection. The Merriam Webster dictionary (2014) defines luxury as “a condition or situation of great comfort, ease and wealth; something that is expensive and not necessary; or something that is helpful or welcome and that is not usually or always available (Para. 1-3). From the foregoing definitions, it is clear that luxury is expensive, not always necessary or available, but usually helpful and/or welcome to those who can afford it. Similarly, luxury concierge is costly, helpful and/or welcome to those who can afford it, and not always available or necessary. Concierge service providers in the UK have an increased business opportunity born by consumer market perceptions that indicate that as opposed to material possession, authentic experiences make people happier (Nunes & Johnson, 2004; Twitchell, 2002; Van Boven & Gilovich, 2003). Authentic experiences are defined as those activities that have meaning, connections and interactions with the client such that he/she is able to make lasting memories from the experiences (Twitchell, 2002). In the example offered earlier of the diamond ring that was given to a billionaire’s wife in an ice cubed casing, the ingenuity of the manner in which the ring was issued was perhaps a more interesting experience as opposed to the ring itself. After all, a billionaire’s wife must have had several other diamond rings. Bellaiche et al. (2010) argue that some consumer behaviours are lasting in relation to the pursuit of luxury. For example, the UK has always had an aspirational mass market which consists of trendy metropolitans who aspire to live above-average lives, and once in a while, they spend in luxury items and services. There are also rising middle-class groups which have well-paying jobs, and they too can afford to purchase luxury services once in a while. Bellaiche et al. (2010) further indicate that there are the new-money households which are made of high net-worth individuals who have personally earned their monies and are therefore more willing to reward themselves through luxury service purchases. The next consumer segment constitutes the old-money households that inherited their monies. They do not spend as much money on luxury, but still, some splurge their wealth when they are able to without their benefactors limiting them. The beyond-money households are another consumer segment which according to Bellaiche et al. (2010) are extremely wealthy, but are indifferent to their wealth status. As such, they disdain public displays of wealth, and can only spend on luxurious concierge services once in a while, and only when they are assured that their privacy is well protected. According to Bellaiche et al. (2010) the consumer behaviour of the new-money households, the rising middle-class and the aspirational mass market is responsible for increasing the demand for concierge market in the UK. As would be expected, the rising demand has led to concierge services that cater for different levels of luxury depending on the level of disposable income different people are willing to spend in the pursuit of luxury. As long as the demand for concierge services exists, London will most possibly become the capital of ‘cool’ as more concierge providers capitalise on the excessive wealth whose owners do not mind spending as long as they are assured of authentic experiences. As Easterbrook (2003) indicates, life is a paradox in that the better life gets in terms of riches for some individuals, the more badly such people feel. To acquire a sense of wellbeing, such wealthy people will therefore seek concierge services in the hope that life can be a little interesting for them. Incidentally, once satisfied, they spread the word among friends and family thus creating more demand for similar services. Davis (2002) also indicates that the culture of desire will continue driving the demand for concierge services as more people seek ways through they can acquire happiness and satisfaction from their accumulated wealth. References Arndt, J., Solomon, S., Kasser, T., & Sheldon, K. M. (2004). The urge to splurge: A terror management account of materialism and consumer behaviour. Journal of Consumer Psychology 14(3), 198-212. Bellaiche, J. M., Mei-Pochtler, A., & Hanisch, D. (2010). The new world of luxury: Caught between growing momentum and lasting change. 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