The new luxury: it's all about dog bowls and cake

Who would have thought that the recession could have had such a positive effect on the luxury industry? Not in terms of sales of course — every business has felt the pinch. But it has brought a shift in values.

Back when we saved an entire month’s salary for a shiny new bag that we’d spotted on an identikit celebrity in the pages of Grazia magazine, we forgot that luxury wasn’t about labels, or celebrities, for that matter. “It is about being honest,” says, Michael Sacher, owner of the pet shop Mungo and Maud.

I know, now you’re wondering why I have quoted a pet-shop owner when I’m talking about luxury. Pet shops, after all, are dusty places that smell of kitten pee. Well, yes, some are, but Mungo and Maud, in Belgravia, London, is different. Part of a growing number of small brands that are satisfying our demands for cosy, stay-at-home luxury, Mungo and Maud is emblematic of what Michael Ward, managing director of Harrods, calls cocooning: “As the market is becoming increasingly tailored to the individual, so the ‘cocooning’ effect (where people buy luxurious and comfortable items for their home and themselves) has seen a particularly strong growth.”

As well as selling stylish dog beds and feeding bowls that you don’t need to kick under the kitchen cabinet before receiving a guest, Mungo and Maud is one of eight small companies recently chosen as Brands of Tomorrow by Walpole, a non-profit-making organisation that represents the British luxury industry.

Its choices speak volumes about the trajectory of the top end of the market. As Walpole has identified, we aren’t just investing in our pets, we are filling our tummies (the Little Venice Cake Company is another Brand of Tomorrow), spending money on clothes to lounge in (Pyjama Room) and making sure that our babies are immaculately swaddled (Caramel Baby and Child). Old luxury connotations — watches, jewellery, handbags — didn’t get a look in.

“There is something embarrassing about spending money on mindless, flashy things,” says John Ayton, who launched (and recently sold) Links of London and is the brain behind and chairman of Brands of Tomorrow, which offers business advice and mentoring to winners. “There’s a move towards Granny’s values,” he continues.

Granny might not sound very sexy, but at least she knew the difference between hype and quality. Somewhere during those heady boom years, the rest of us lost our levelheaded approach to shopping. The luxury industry became a choppy sea of passing trends that repeatedly swelled up and died down with the same ferocious pull, until we were all drowning in designer superfluities that, frankly, had nothing whatsoever to do with the original designer. Everything became too international; too soulless.

You could cross the threshold of, for example, a Gucci store in Dubai, Melbourne or Las Vegas and enjoy exactly the same experience, purchasing exactly the same dress. Andrew Tuck, the editor of the trend and design publication Monocle, thinks that the new adjustment needs to come in three forms: staying local, emphasising craft and understanding provenance. “People are starting to wonder what exactly they were paying for with the big price tags,” he says. “Reclaiming local links is one of the corrections we need.”

Staying local does not, of course, mean that luxury literally needs to grow in the back garden, though buying a cupcake from an exclusive bakery, as Tuck points out (and as the Little Venice Cake Company in Marylebone is proving) can be one of the small pleasures new luxury encapsulates. Business at Little Venice is soaring, with sales in the first two quarters of 2009 up 50 per cent, despite a 10in birthday cake retailing for a gobsmacking £250.

In fashion terms, this shift means a strengthening of the loungewear market. The Pyjama Room, which sells soft cotton trousers and wraparound cardigans for around £70 a piece, might not be an obvious recession winner — especially considering that you can still pick up a pair of tracksuit pants in Gap for less than £20. Yet women are spending their spare pounds on clothes that help them to feel special at home. Sales at the Pyjama Room are up 140 per cent in the first half of this financial year compared with the same period 12 months earlier.

It is a similar story at Hush, the online retailer that specialises in stylish nightwear (vintage rose-print pyjamas cost £45), which last year had a turnover of £1 million, and which has had a 56 per cent rise in sales since Christmas.

Both companies cite a trend for bedding down at home as the impetus for their healthy figures. Emma Howarth, one of Pyjama Room’s co-founders, has another point about new luxury fashion. For her, during the boom years, the designers were in charge; it was they, she says, who decided to rewrite the trend book each season. Customers followed blindly because they could. Now, though, change is coming from the bottom up: “People can no longer afford to buy a different outfit for every occasion,” she says. “Instead, women have become skilled at working a variety of looks from a single, classic item.” This simplicity — a desire to invest in classics for the future — is reflected on the catwalk.

Of course, with every adjustment in the market, there will be losers. As Ayton sees it, the brands that identify luxury simply as having a connection to the champagne lifestyle need to watch out. In essence, these massive global designer brands sold mass manufacturing as expensive luxury. In their 2007 book Trading Up, Michael Silverstein and Neil Fiske called this phenomenon “masstige”.

Today, however, luxury isn’t about trying to keep up with the celebrities, it’s about investing in your home life. Luxury, as Michael Burke, the president and CEO of Fendi, said recently, is not about instant gratification — one should aspire to it. And that can include slouching in front of the television eating a very nice cake.

ALICE OLINS