SF/Employed, ISO a Good Deal

London is the epitome of a global city. People come from all over the world to work and play in a metropolis whose history, location, and regulation make it an attractive destination for personal and corporate wealth. Growth in the banking and financial services sectors over the last two decades in the City of London has been phenomenal: London has over 480 overseas banks, more than any other city in the world, and more US dollars are traded in London than New York. And, for people in front-room positions in the industry, fat bonuses became the rule rather than the exception. In 2006 alone, average pay in The City rose 26% in comparison to only a 4.5% general rise in wages.

Big bonuses at the top in London's largest industry, an honour still held by banking and finance, have fuelled a pricing boom in everything from property to cocktails, making London the most expensive city in the world in 2008, according to the latest UBS Survey. Carol moved from New York to London quite a few years ago to advance her career in finance and has managed to beat the statistics in an industry with a massive gender pay gap that is only magnified at bonus time: the average bonus for a man in the City is 80% higher than for a woman.

But Carol, whom I met on Saturday to go shopping, doesn't let that, or the downturn which has brought an estimated 70,000 layoffs in the financial industry in London alone, stop her. She took me to a Boutique Sample Sale in London’s trendy Shoreditch neighbourhood. She first started shopping sample sales when she lived in New York. Now in the UK, and even though there isn’t quite the same culture around getting a ‘good deal’ as there was on the other side of the Atlantic, she hasn’t given up the habit. When she gets an email telling her Paul and Joe will be on the rail, she tries to get there early.

In her mid-thirties and without children, Carol, by her own account over a cup of coffee, lives a very comfortable life and is confident she’ll be getting a bonus again this year. So has anything changed for her in the economic downturn? London definitely had a tireless ‘spend-spend’ mentality that perhaps has rubbed off on her. She remembers when Chloe bags seemed as common as Nike trainers, and there seemed to be ‘must-have’ items every few months. While Carol tries to avoid fads, she believes her appearance is important and looking the part has helped bring her success, so she 'invests' in the right look. Nevertheless, 2009 has flown by and there have been very few- if any- whimsical indulgences. In fact, she just hasn’t experienced that ‘must-have’ feeling. It’s not just about shopping either. She’s noticed a change in the sentiment around spending more generally.

Her friends are socialising more at home and over lunch at a gastropub rather than meeting at the latest bar or restaurant. After all, the location is secondary when it comes to catching up with friends and she, at least, doesn’t particularly miss cocktails at Hakkasan. That’s important given the uncertainty around income for some of her nearest and dearest. One of her friends who works in private equity has already lost her job and is probably heading to Singapore, the only place she’s had an offer, in a month’s time.

Her goal today is to only buy clothes that she can wear to work- classic suits, nice tops- that kind of thing. We arrive at the sample sale. There is no line out the door, no cover charge, and none of that frenzied tone I had imagined a sample sale would inspire. Carol says it’s still worth coming early because there is no line to try things on. Gone are the days of grabbing what looks good and worrying about the fit later. There are racks of Paul & Joe, Acne, and Missoni amongst others, and none were left un-scrutinised. But about an hour and a half later when we exit clutching our finds, Carol hasn’t faltered from her plan very much and walks away with exactly what she came looking for… plus a few cosmetics as well.

Passion and Purpose

Dean is Managing Director at a major global bank and a father of two. He refers the recession as a ‘dislocation’ because “things didn’t just recede, they came apart.” Dean is interested in the new popularity of middle-men or mediators in the banking process. His bank is doing a lot of this work – mediating large transactions for a ‘small’ fee.

“The arrogance has been stripped out… people are making an effort to do things right... by the book. And also, more importantly, people don’t want to be blamed if things go belly up. They’re allergic to negative press.”

But he wonders if this will last. “I hope it will, but I think that when people forget this pain the arrogance will slowly come back.”

Like many people in similar positions*, Dean is reconsidering what’s important to him. He believes he’s more honest with himself, but admits that this could be a function of his life stage.

“I’m not a big football fan, but I used to make the effort to stay informed so that I could be a part of those conversations (with other senior executives in finance.) Now I realize it’s not worth it. If you’re not passionate about something it soon becomes very obvious.”

Dean’s true passion is music. He’s in the middle of an Opera phase – he’s been listening to Opera almost exclusively for 3 months. “I’ve been wondering if it has something to do with all this (the financial crisis). I feel a total connection to it.”

“I’ve even been speaking to people about God and the afterlife… almost as a social experiment. I think people are searching for a god. Or for a purpose.” Dean sure doesn’t seem like a religious guy, but he is curious and thoughtful and obviously seeking more from life than another step up the ladder.

*An except from a recent article by Manhattan socialite Tatiana Boncompagni titled “The Party’s Over for the Hedge Fund Wives” describes a new candour amongst super affluent consumer;

'Many even seem relieved to finally be able to drop the bombast and get real… seated next to me was a hedge fund manager who, mid-way through his filet mignon, revealed that he was going through a mid life crisis. “I look back on the last five years and think ‘yes I’ve made good money but what do I have to show for it?”

Truth: Beneath the drive for wealth and success lies a very human need to for meaning and purpose. 

Challenge: Ignite their passions. Go beyond their surface desire for status and achievement.

Class Vs Classless

Belinda and I spent the afternoon in luxury car dealerships on Park Lane. We started in BMW where the atmosphere is professional, but reserved. The perfectly parked and posed cars are like caged animals at the zoo, lifeless and a little sad. The dealers are adamant that the recession hasn’t affected business… at least not for new cars.

“This is Park Lane, our customer buys a car and sells it back to us a few months later when they go back home (to Russia or the Middle East). They just want a nice car to drive while they’re here. A BMW is not a big purchase for them.”

There’s a sense of arrogance, or perhaps denial at BMW, but next door at MINI - their sister dealership – things couldn’t be more different. We feel like we’re in a futuristic and funky club, not a car showroom. We’re welcomed with smiles and energy. The models on display are colorful, bold and full of character.

At Mini Ryan tells us how he’s seen people trading up and down into Mini’s over the past 6 months.

“I had a customer sell his Aston Martin to move to a Mini. We have Mini drivers who were in Porsche Cayennes and Mercedes. But we also have people who were drove a Fiat or a Renault. The Mini is a classless vehicle. You can park next to a Porsche at the polo and feel like you belong or you can drive to the pub or the supermarket.”

Sophie (the only female sales person we could find) added, “The only real difference between a BMW and a Mini is space. Mini drivers can still have the leather and luxuries, they still have the speed and power. And in a Mini you make a statement… but it’s not ostentatious. It’s a statement about who you are as a person, not how much money you have.”

Truth: You don’t need to play by the old rules of luxury to appeal to affluent consumers. Mini has performance, character and heritage. They reject the idea that luxury is about wealth or class. And people love them for it.

Challenge: Make luxury classless.

Breaking the Conventions of Luxury

Monocle is a magazine, a perfume, a bag, a notebook, a global following… but more than anything, a group of people passionate about global affairs, business, culture and design. www.monocle.com

Monocle Publisher Pamela Mullinger gave me a tour of their chic but comfy London headquarters where journalists sit next to designers and the walls are lined with custom publications for high end brands.

We talk a lot about the reader, who is hard to pin down.

“Sure they’re wealthy, but they work hard, they travel, they’re quite young, they’re not your typical ‘wealthy target market.'"

By ‘typical’ we mean older – the bulk of high net worth individuals are over 50. Yet while the Monocle reader has a high income, they’re younger and less conventional. And for this creative company, conventions are made to be challenged.

Just take a look at their latest issue, which includes the Monocle Singapore Survey. A magazine within a magazine, funded by Singapore Government but created and edited entirely by Monocle.

“Everything tells a story; whether it is an ad for a watch or an article about a city, these things have a past, they have a story to tell.”

Flicking through the magazine you really notice the difference. The first five pages are still dominated by ubiquitous luxury fashion brand ads, but the grainy paper gives them a more authentic feel and the lifeless mannequins seem to be less prolific. That’s the biggest problem with luxury brand advertising… “mannequin whitewash”… after a few pages it’s hard to determine one uber expensive brand from the next.

Yet with their unique story telling, Monocle helps luxury brands break free of the conventions, giving them a new opportunities to reveal their past, and shape their future.

Opportunity: Shake off the tired conventions of luxury marketing. Tell old stories in new ways.