Sharing the wealth: never mind the dismal economy. Escape to a world of champagne wishes and caviar dreams, where you'll find rich opportunities to start a luxury business

Entrepreneur, May, 2003 by Chris Penttila

FLYING A DOG FIRST-CLASS TO AN exotic island so it can be shown off at an exclusive wedding. Planning an elite Manhattan soiree. Chartering the Concorde to fly to Antigua. Welcome to the world of very, very high-end luxury services. It's a world that Victoria Pericon, 30, lives in every day as founder of lifestyle-management firm Victoria Pericon Inc. in New York City.

Her "Club VP" is an invitation-only club that charges clients a $120,000 annual retainer fee, plus expenses, to take care of anything they need, from the glamorous (planning glitzy Mediterranean parties) to the mundane (waiting on hold with customer service to ask a software question). Pericon has three employees and hires outside consultants to work with the company's clients, who tend to be celebrities, socialites and CEOs. "We don't allow people to just call up," says Pericon, who has run the company for four years with her husband, Roman, 30.

Maybe you've wanted to start your own luxury business ever since you watched Joan Collins and Linda Evans duke it out on Dynasty. But maybe you're thinking now may not be the time to make your move. Retailers just had their worst holiday season in 30 years. Unemployment is at an eight-year high. Consumer confidence seems to be sputtering, too: The Consumer Confidence Index, a monthly survey of 5,000 U.S. households, fell 14 points in February, and consumers' feelings about the economy were at their lowest since 1993.

Although the average consumer is spending conservatively, there's still a lot of money out there. The number of "almost rich" (households earning between $100,000 and $150,000 per year) has doubled. Last year, 15.1 million U.S. households earned more than $100,000 per year, according to the U.S. Census Bureau. The very rich, meanwhile, are getting richer: Between 1991 and 2001, the incomes of the top 5 percent of U.S. households increased from 18.1 percent to 22.4 percent of the total of all personal income earned in the United States.

The reality is that there are several categories of wealth today, says Arnold Brown, chairman of Weiner, Edrich, Brown Inc., a trend analysis firm in New York City. There are the ultra-rich (those worth at least $100 million), the rich (those earning at least $250,000 per year and having assets of at least $3 million, not including their homes) and the upper middle class (those earning $100,000, with assets of least $500,000, not including their homes).

The creation of wealth in the past decade is giving entrepreneurs more opportunities to sell luxury products, says Paul Nunes, senior research fellow at the Accenture Institute for Strategic Change in Cambridge, Massachusetts: "We're seeing companies coming into [the luxury] space as they recognize there's this segment now that has a whole lot more money."

Pericon won't dish names or sales figures--"Discretion is important," she says--but her business continues to grow. In June, the Pericons are launching their own magazine, Manhattan Syndicate, devoted to the affluent Manhattan lifestyle.

Creating Relationships

These days, luxury is about 'services, experiences and conveniences," explains Brown. The rich "want something different."

A survey of 3,500 consumers released in November by Accenture, however, reveals that even the wealthy may not be spending as often as they'd like. Nearly 87 percent of Americans earning more than $15,000 said they'd be willing to spend more if they could find "better" products and services. Wealthy respondents, much more so than people in lower income brackets, lamented the lack of innovation in clothing, household appliances, housing, home furnishings and personal care over the past two years.

The wealthier the consumer, the more they feel that lack of innovation-along with a lack of satisfaction in the companies they buy from, says Nunes, who co-authored Accenture's study. With businesses in cost-cutting mode, "there's a feeling that 'Retailers don't care about me after I've left their store,"' Nunes says. "It (doesn't] feel like a relationship to the wealthy."

Creating relationships is what success in the luxury space is all about, says Jon Robbins, owner and COO of HiFi House, a 47-year-old family owned stereo store that made the transition to the high-end luxury audio and video electronics market in the 1980s. "We needed to establish a niche," says Robbins, 44 Today, HiFi House has three locations and annual sales of more than $20 million.

One of HiFi House's hottest sellers is the 50-inch flat-panel plasma screen TV, which sells for about $10,000. The company custom-installs these TVs with DVD players and surround sound to create a home theater system. HiFi employees also teach owners how to use them.

An average HiFi sale is between $20,000 and $25,00 and the company sold 40 plasma TV packages in December alone. Upscale professionals looking to furnish million-dollar homes constitute a "significant percentage" of HiFi's business.

Robbins says his biggest challenge is finding employees with expertise in design and installation, as well as a flak for personalized customer service. It's no accident that most of the Broomall, Pennsylvania, firm's 75 employees have been with the company for io years or more. "This is their career," Robbins says. "You do the job right, and the dollars take care of themselves."