Luxury Institute News

June 30, 2015

Online shopping? Wealthy still like going to store

Bloomberg News
June 29, 2015

Luxury Institute surveyed 1,600 wealthy people about shopping habits. They earn at least $150,000 a year with an average net worth of $2.9 million.

NEW YORK — Even as shoppers flock to the Internet to get the skinny on everything they want to buy, many wealthy patrons still prefer the traditional method. They want to go to shops, peruse the racks, and have a salesperson help them pick out the perfect item, according to a new survey.

Research and advisory firm the Luxury Institute surveyed 1,600 wealthy people about their shopping habits. The men and women earn at least $150,000 a year and boast an average net worth of $2.9 million. The study found that very few affluent shoppers research exactly what they want to buy, then go out and make the purchase. Instead, they’d rather walk around a store and see things up close. Plus, many insist on guidance from living, breathing humans.

“Luxury experts and luxury executives have bought into the myth that, whether its millennials or men or women, they’ve done so much research on the Internet that they can no longer be influenced in the store,” says Milton Pedraza, chief executive of the Luxury Institute. “This demonstrates the tremendous opportunity to create relationships based on expertise, trust, and generosity in the store.”

For instance, when buying jewelry, nearly half of women don’t do any research whatsoever before heading to the store, preferring to gaze at all the shiny baubles in glass cases and make their decisions on the spot. This number’s even higher when it comes to fashion accessories, with 60 per cent of women opting to forego online research before snagging a pricey handbag.

The only exceptions are men who want to buy a watch, with 28 per cent selecting the item beforehand, and women who are purchasing beauty products, at 26 per cent. That’s because buyers of pricey watches are often aficionados wholly familiar with the world of fancy timepieces, while makeup purchases usually occur to replenish items that were used up.

Though visiting stores without help is the most popular method of researching what to buy, many affluent shoppers prefer the guided path, with aid from a salesperson. Men especially want help picking out watches and jewelry, while women are most likely to want an associate’s expertise on beauty products. Perhaps those workers behind the counter may stay relevant after all.

As for salespeople, the perpetual quest to “sell” the customer is a model that no longer works, says Pedraza. Shoppers go to them for knowledge and guidance, not having products shoved in their faces. For this, luxury retailers must train workers to build real, human relationships over time.

“If you earn their trust, you earn the right to contact them again,” he says.

Source: http://www.thestar.com/business/2015/06/29/online-shopping-wealthy-still-like-going-to-store.html

 

June 24, 2015

7 Insights Into Today’s Jewelry Shoppers

JCK Magazine
By: Rob Bates
June 23, 2015

Even shoppers used to shopping online can be turned into loyal brick-and-mortar customers with the right experience, according to a new survey of high-income shoppers from the Luxury Institute.

Milton Pedraza, CEO of the Luxury Institute, says that retailers today need to focus on building relationships—both on- and offline. His survey quizzed consumers with an average income of $289,000, and $2.9 million average net worth.

Among its findings:

—Women still prefer to browse for jewelry at stores.

Forty-nine percent of female respondents prefer to shop in store before deciding what jewelry to buy, and are more likely to enter stores without a sense of what they want or looking online.

“Woman are still very open to having an experience,” says Pedraza. “Jewelry isn’t a commodity product. Jewelry and watches are more experiential than other luxury goods. Consumers may research online but they still want to experience your store. They place great value in the discovery process.

—That’s less true for men.

By contrast, only 21 percent of men relied primarily on in-store shopping to make a decision. Twenty-eight percent of watch-buying men said they entered stores knowing precisely what to buy. Still, 37 percent of men wanted assistance from sales staff for jewelry purchases; 33 percent felt the same way about watches. But 38 percent preferred to get the information online.

“Most men don’t enjoy the experience of buying in a jewelry store,” says Pedraza. “They are more tightly focused and less willing to change. Though that is mostly older men; I’d say young men are more likely to change their mind. Of course those are stereotypes but they are still valid.”

—The in-store experience is more critical than ever.

“Customers enjoy the in-store experience, but we have so many retailers that are drone-like and similar,” he says. “Retailers have to be Disney. A long time ago there were just amusement parks and then Disney reinvented them. Luxury retailers have to reinvent themselves.”

That means stocking unique products and upgrading your associates, plus trying to make your store look and seem different. He points to Warby Parker’s innovative new eyeglass shops, whose sales per square foot now rival Tiffany’s, as an example.

—A key part of your store experience: Your store associates.

One quarter of women shoppers say they want a sales associate to help them purchase. But the quality of the associate makes the difference, Pedraza says.

“The industry is hiring people as opposed to selecting people,” he says. “We need to help associates to build skills, and compensate them for the long-term. I was talking to someone and he was complaining his people leave. I said of course they leave, they don’t feel respected, they don’t feel they are valued. If you pay a little extra you can have them really engage with customers and help build the brand.”

—Customers want great service, regardless of channel.

“You can’t stop people from going online,” he says. “It’s all about building relationships, no matter what the channel is. It’s making people feel special. You can create wonderful long distance relationships with online shoppers, the same way we do in our personal lives.”

—There are no “tricks” to servicing Millennails.

“We say millennials are so different,” Pedraza says. “But increasingly they are the same, especially as they get into their 30s, and they have kids and aging parents.

“So it’s not as much about treating millenials differently,” he adds. “It’s about treating them as individuals. It’s about digging deep. I always ask millennials if they want sales associates to help them and they do. But they mostly see them as unprepared and not trustworthy.”

—Price is not the most important factor.

“There is still a tremendous opportunity not to sell on discount,” Pedraza says, “but to sell on value, craftsmanship, design, a story, and the engagement with another human being. All of those elements are not about price. There is still a tremendous opportunity for stores to really forge relationships with consumers.”

Source: http://www.jckonline.com/2015/06/23/7-insights-todays-jewelry-shoppers

June 11, 2015

Hotels Offer Luxury Shopping Inside Your Rooms

The New York Times
By: Shivani Vora
June 10, 2015

Luxury hotels are increasingly partnering with high-end retailers to give guests insider shopping experiences and perks. Many of these collaborations are at properties in New York.

The Mark Hotel on Manhattan’s Upper East Side has teamed with Bergdorf Goodman: Guests are ferried to and from the Fifth Avenue store in pedicabs and have access to shop before and after hours with Bergdorf’s director of shopping. Those staying in a suite receive a $500 gift card and a facial in the store’s beauty department. Rooms from $725, suites from $1,200.

The Quin in Midtown is also working with Bergdorf’s. The phones in each of the hotel’s 208 rooms have a direct-dial button to the store’s personal shopping team, which can set up appointments for a store visit and can order items to be delivered to guests. Terrace suite guests also receive a $300 gift card. Rooms from $499, suites from $2,000.

Travelers who stay three or more nights in a suite at the WestHouse in Midtown receive a $500 gift card to the online fashion retailer Net-a-Porter and can talk with the company’s personal shoppers by pushing a button on in-room phones. Suites from $999.

The St. Regis Washington, D.C. offers guests an opportunity to stock their room closets ahead of time with items from Neiman Marcus. Those interested answer a questionnaire about their style preferences and arrive to a find a customized wardrobe. The service is free, and guests can try on the clothes. There is no obligation to buy them unless the clothes are worn. Rooms from $395.

International hotels are also participating: Travelers staying a minimum of five nights in a suite at the Madinat Jumeirah in Dubai until the end of July receive a free pair of shoes from Harvey Nichols as well as a pedicure. Suites from $800.

These relationships are a way for stores to generate traffic and also appeal to travelers, according to Milton Pedraza, the founder of the New York-based luxury research and consulting firm the Luxury Institute. “Retailers and hotels assume that if you’re staying at a pricey property, you have the means and inclination to shop, and these partnerships give you an incentive to do that with a specific name,” he said.

Source: http://www.nytimes.com/2015/06/10/travel/hotels-offer-luxury-shopping-inside-your-rooms.html?_r=0

June 3, 2015

7 Rules for Peak Performance in Luxury Client Relationships

Posted in Uncategorized

Luxury Institute
By: Milton Pedraza, CEO of Luxury Institute, LLC
June 2, 2015

Through the first five months of 2015, luxury firms have reported operating results and issued forecasts for the remainder of the year that look dismal for the most part. Global economic growth has been underwhelming but it is certainly not the only culprit for disappointing performance. The luxury industry is also rife with self-inflicted wounds. Many brands cling to outdated management practices that prevent transformation of sales channels from low-loyalty transactions into centers of humanistic, high-performance relationship building. My experience advising executives at hundreds of luxury brands over the decade is that poorly performing firms fail to follow a set of true best practices for building better client relationships consistently, correctly, or at all. Those who have made the successful transformation from transactions to relationships have fundamentally changed the way that they approach their business in several key areas. Based on our successful Luxcelerate High Performance Client Relationships System, here are seven rules for changing the way you manage and measure your business if you want to create more loyal, meaningful, and profitable customer relationships.

 Rule #1: From Corporate Functions to Client Relationship Systems

Luxury brands are broken, literally. Despite all the omni-channel chatter you hear today, brands are broken up into departments and functions more fit for the factories and universities of the industrial era than fashion and luxury retailers of the digital age. Managers build fiefdoms at the expense of client loyalty and the company’s bottom line. All too often, executives from marketing, communications, retail operations and e-commerce fail to work together to deliver a coherent and optimized client experience. Instead they produce a dysfunctional set of activities. The solution is creating a mind-set of systems-thinking that recognizes how all parts and people in a company are organically interconnected and affect each other profoundly. To align competing interests, you can place all the silos that touch the client under one client relationship executive, and base compensation at all levels on achievement of relationship targets such as client data collection, conversion, recovery, retention, and referral rates.  A system cannot be divided artificially into independent parts and be effective, any more than a human body can be split into its parts, and still function.

Rule #2: From Competitive Benchmarking to Competitive Breakthroughs

Benchmarking is the process of comparing business processes and performance metrics to those of the best practitioners. Benchmarking has a small role to play in luxury; however, complex situations that involve creativity and human behavior call more for differentiation and efficiency than trying to emulate an imperfect comparison. Who did Apple benchmark in inventing retail stores, or the Apple Genius concept, or the iPhone? Who did Net-a-Porter benchmark when they invented edited luxury online shopping? One reason that the luxury industry is stalling is a lack of breakthrough innovation. The result has been the rapid commoditization of the industry. If you want your luxury brand to be highly valuable and profitable you need to move beyond benchmarking. Luxury brands need to go from continuous improvement to discontinuous improvement, which demands breaking the rules through innovation. If you are playing the benchmarking game your brand is destined to become a race-to-the-bottom commodity.

Rule #3: From Top-Down Leadership to Front-Line Empowerment

Most luxury executives believe that their job is to create a vision, communicate it, and convince their followers to execute it. If you work at a luxury brand, you need no examples to prove this; just step outside of your cubicle. The successful 21st century luxury leader knows how to engage and empower people to apply their talents and passions towards a worthy goal and recognizes that strong human relationships harness collective wisdom and innate genius to adapt and shape the future. Designing a client culture requires that leaders relax into success, and trust people profusely to adapt continuously. It is an imperfect process, but it works. Three leaders today who exemplify the best of luxury are Angela Ahrendts at Burberry (now at Apple), Natalie Massenet at Net-a-Porter (now at Yoox), and Marco Bizzarri at Bottega Veneta (now at Gucci). We could all do well to emulate these leaders in their capacity to trust front-line colleagues to achieve outstanding results, and provide them with the resources to do it.

Rule #4: From Big Data to Actionable Wisdom

Omni-channel client relationships are the coolest thing around now and they are fed by Big Data. Despite Big Data, Luxury Marketing campaign response rates have hardly moved from microscopic levels over the past decade, and offline client conversion and retention rates are stalled in the low teens. The problem is that Big Data is rarely transformed into actionable wisdom. Data is not information, information is not knowledge, and knowledge is not understanding, nor is understanding wisdom. Wisdom remains the domain of humans. Injecting human wisdom, and empowering your store and call center associates to use their judgment, along with data, to create appropriate one-to-one client communications might not be as sexy as developing an algorithm, or pushing a mass campaign button, but it can be far more effective in building client relationships. By leveraging Big Data with wisdom, one sales or call center associate, and client, at a time, luxury can finally go from doing the wrong thing right, to finally doing the right thing right.  

Rule #5: From Aggressive Selling to Genuine Human Relationships

With sincere love to Daniel Pink, author of “To Sell is Human,” whom I believe to be one of the most enlightened researchers on organizations, I completely disagree with the title and premise of his book. “Selling” even in its most well intentioned versions, is not human. As practiced today, selling reduces associates to being clerks ringing up transactions instead of brand ambassadors building long-term relationships. Selling is one key reason luxury brands, with their robotic “sales ceremony” concept, are so poor at client conversion and retention, never mind referrals. Thankfully, humans are wired to build relationships in order to survive and thrive. For the most part, we love the process. It does not require a game-face or pretension to execute. In Luxury Institute surveys over the past decade, consumers across all generations have repeatedly told us that they want three major over-arching qualities in a sales associate: expertise, trustworthiness and generosity. Without these, even a parent-child relationship falters. Let the mass brands do what they will, but luxury brands should immediately discard the aggressive selling playbook, and embrace the art and science of high-performance client relationship building, where value is created not from transactions, but from consistently and continuously outperforming and outbehaving the competition. Creating clearly measurable functional and emotional mutual value through a relationship is inherently imperfect, but alternative forms of selling are surely dead. 

Rule #6: From Front-Line Associate Training to Front-Line Associate Mastery

Top-tier luxury brands have instituted elaborate training programs and skyrocketing costs to prove it, but rates of client conversion and retention remain stuck in neutral. Luxury brands need direly to redefine training into education, and elevate education into mastery of building high-performance client relationships. Training is something you do to people, and people reject being trained into success, which is why all the talking-head training is ineffective. When it fails, brands keep adding more old-school training, but this only compounds the problem. It is often said that in a college classroom, the only one learning is the teacher, so part of the secret lies in transforming everyone from a trainee into a learner, and a teacher. It is also true that online education, when used in a humanistic and empowering way, such as is done by the Khan Academy, combined with daily one-to-one, metrics-based coaching, peer-to-peer learning techniques, and inspirational reinforcement, can make learners, teachers and relationship masters out of all your front-line associates.

Rule #7: From Front-Line Managers to Front-Line Coaches

The store manager is the spine of the luxury brand. Since 75% of the people who work in a luxury brand are front-line associates, the front-line leaders who engage them daily are critical in ensuring that employees consistently apply the brand’s relationship values and standards to drive results. How much time do store managers spend on the floor? In the more enlightened luxury brands, about 50%, and in far too many cases, they’re on the floor less than 30% of the time. That means that store managers are store administrators and back-of-house experts. Many who do spend a great deal of time on the store floor have absolutely no clue how to coach high performance client relationships. All they know is bossing and selling. Coaching is an art and a science backed by research. Coaching relationship building is a craft that requires expertise. The solutions are to hire experts to run the store operations, perhaps regionally, and to redefine the store manager job into coaching and client relationship building. The store manager should spend 90% of their time observing and coaching associates and/or engaging with top clients to develop experiences where they can bring their friends and family. Innovative, empirically-based coaching programs need to be developed to educate our armies of store managers in the art and science of coaching for client relationship building. Until that happens, expect your costs to go up while results falter because more of the same harder won’t work this time around.

Capture Opportunities With A Client-Focused Culture

Despite sluggish economic growth, the ranks of the wealthy around the world continue to grow. Luxury brands are faced with a tremendous opportunity, as the world’s wealthy people have the capacity and the desire to spend lavishly where they choose. The only companies that stand to capitalize, however, are those that approach their business from the perspective of these customers and create systems that cultivate relationships instead of simple transactions. No less than long-term survival for luxury firms depends on the ability to effect key transformations in the seven areas addressed here.

 About Milton Pedraza and Luxury Institute, LLC

Milton Pedraza is the CEO of the Luxury Institute. Over the past 12 years, Milton has established the Luxury Institute as the most trusted global luxury research provider, and the proven high performance luxury client relationships consulting firm. Known globally as the foremost resource for affluent and wealthy consumer insights and client experience best practices, the Luxury Institute has served over 1,000 global luxury goods and services brands across dozens of luxury goods and services categories.

Milton advises and coaches luxury CEOs and serves on the Boards of top-tier luxury and premium brands, and luxury startups. He is sought after worldwide for his practical, innovative and humanistic insights and recommendations on luxury and is the most quoted global luxury industry expert in leading media and publications.

Milton is also an authority on CRM Technology, Analytics and Big Data. Prior to founding the Luxury Institute, his successful career at Fortune 100 companies included executive roles at Altria, PepsiCo, Colgate, Citigroup and Wyndham Worldwide.

Milton was born in Colombia, raised in the United States, has lived in several countries, conducted business in over 100 countries, and speaks several languages.

 

For more information please contact:

CEO, Milton Pedraza

Luxury Institute, LLC

115 East 57th Street, 11th Floor

New York, NY 10022

mpedraza@luxuryinstitute.com

 

 

April 28, 2015

Luxury Panel: What Millennials Want

Previews Inside Out
Topic: Life & Style
April 27, 2015

When you hear the words “affluent millennial,” do you picture a 30-something tech mogul buying a trophy home in the hills of LA? Or a hashtag-happy celebrity starting a lifestyle brand? Clichés aside, millennials—more than 74 million adults ages 18 to 34 in the U.S.—are changing the luxury landscape as we know it. For our “Luxury: The Next Generation” issue, we decided to go straight to the experts—the Luxury Institute’s Milton Pedraza, Luxury Daily editor Mickey Alam Khan and Forbes’ millennial reporter Larissa Faw—to find out what this increasingly influential group really wants when it comes to luxury.

Previews Inside Out: What does the next generation of luxury consumers want from brands today?

Milton Pedraza: Across the generations, millennials, Gen Xers and boomers all want the best in design, quality and craftsmanship, along with great service.

Mickey Alam Khan: The next generation of luxury consumers want to build stronger emotional connections with brands. They not only want to experience the products in-store, but also via digital media such as online and mobile. They also want to feel good about their luxury acquisitions from an ecological standpoint. In other words, the next generation of luxury consumers want to see authenticity, digital savvy and environmental nobility from their favorite luxury brands.

Larissa Faw: The key words are “make them feel special.” They want to be the only ones able to experience that product or opportunity. The worst thing in the world is to be mass and beige. Everywhere and generic. Coach got itself into trouble because it opened up an outlet shop in every city. It became overly accessible to everyone. The worst thing for luxury buyers is when some downscale shopper has the same item. That is the kiss of death for affluent shoppers. That brand is no longer luxury.

Milton Pedraza: Hey, and also respect brand heritage! But only as long as the brand stays relevant to them.

Previews Inside Out: There was a recent survey published in Luxury Daily that found the majority of affluent consumers have a different definition of luxury than they did five years ago. What do you think the definition of luxury is today?

Mickey Alam Khan: One of the biggest changes in the last few years has been the shift in the luxury-consumption mindset from “I have” to “I experience.” So it’s gone from simply material acquisition to a collection of exquisite memories to be cherished for a long time from unique experiences. That said, as defined by Luxury Daily, luxury must have these time-proven qualities: exceptional craftsmanship and customer service, brand authenticity, limited distribution and high perceived value. That hasn’t changed.

Larissa Faw: Once upon a time, luxury meant price. You almost just knew something was a luxury product because it was insanely expensive. Now, luxury means exclusivity and authenticity. One-of-a-kind items that come from a true place. A product can be $5, but if it is the only one and rare, that is luxury.

Milton Pedraza: Today’s luxury consumers also demand demonstrated expertise, trustworthiness and generosity from the brand ambassadors. These days, they also prefer a brand with a social conscience that treats associates, clients, suppliers and the less fortunate in society like human beings. Along with the best product, that is what creates an extraordinary experience for most.

Previews Inside Out: Do you think millennials are partly responsible for this shift? How so?

Mickey Alam Khan: Yes, the millennial generation is quite responsible for the shift in luxury’s definition. This generation is digitally savvy and is responsible for the evolving approach in marketing and retailing. Presence on social media enables brands to stay connected with their younger customers and prospects, dialoguing with them in the lingua franca of the day.

Milton Pedraza: Yes, the millennials, with their more humanistic values, are influencing the business world to deliver extraordinary product innovations, but also extraordinary human empowerment with kindness.

Larissa Faw It is great that millennials have moved beyond the materialistic nature of what has been considered luxury. Many traits that typically define luxury—like fawning treatment or rich, indulgent services—are no longer acceptable or cool. Can you imagine being served by someone wearing a uniform and white gloves? I shudder at the thought.

Previews Inside Out: Beyond that, how are millennials transforming the luxury industry?

Milton Pedraza: They tend to take the design, quality, and craftsmanship and service for granted. They want customized, personalized solutions “now, now.” As Four Seasons says, “Show me you know me.”

Mickey Alam Khan: Four words would reflect the transformation in the luxury business: high touch, high tech. Millennials want that kind of experience with their brand, and so do Gen Xers and, to some extent, digitally savvy baby boomers. Luxury brands are being shepherded along a digital path where online and mobile are the start of the research process that may or may not culminate in a store sale.

Larissa Faw: They are making everyone rethink what it means to be a luxury brand. Just because you charge $5,000 for a bag does not mean you are luxury. Just because you operate a nice hotel does not mean you appeal to affluent millennials. What was once considered top-flight treatment—like that white glove treatment—does not necessarily align with younger generations. This presents opportunity, but it is also challenging, because what once worked, no longer does. You don’t earn five stars by doing what you did for decades. That said, I also think millennials take for granted a lot of what is known as luxury. Like top-sourced leather goods. They expect all brands, even discount ones, to offer that. They expect great service, like immediately tending to their demands. Those services used to separate luxury brands from regular ones.

Mickey Alam Khan: Also, for many young people, it’s not simply about flashy identification with a lifestyle or a product, but a reflection of their values. Hence, the importance of storytelling and codes for luxury brand and luxury retailers to get their message across.

Previews Inside Out: Let’s talk more about this push toward authenticity in luxury, which is an important value for many millennials. In what areas of the marketplace have you seen authenticity play out most dramatically?

Milton Pedraza: They require authenticity across the board. But let’s face it—many product offerings are copycats and commodities, even in some luxury circles. So the authenticity is more about the founders, the brand purpose, the brand ambassadors and “how” they do what they do.

Mickey Alam Khan: I’d say authenticity continues to play a key role in leather goods and accessories. Look at Hermès. While other luxury brands such as Gucci are suffering from logo fatigue and endless line extensions, Hermès continues to post above-industry growth. What does Hermès do differently that attracts all generations to its brand? Attention to quality, to its codes, to its heritage, to its line of products. Its messaging is consistent. The equestrian and travel themes are embedded in most ads. And, most of all, the product standards have been maintained over the decades. Hermès is France at its best, and that’s what millennials and other consumers are buying. Pedigree continues to matter to millennials.

Larissa Faw: Fashion and watch brands are really overplaying their histories and design backstories in order to capture that authentic hook. Upscale alcohol brands are also trying too hard. I don’t need to see another old-timer posing with his dog on a farm to tell me a brand is authentic—and that this makes it okay to charge $300, since it has been aged in a barrel for 100 years. This authenticity does matter to millennials, but I see it becoming too commonplace.

Previews Inside Out: Can you identify any luxury brands you think are already starting to make this adjustment in their marketing? You know—moving away from exclusivity to authenticity.

Mickey Alam Khan: Well, let me just point out that exclusivity and authenticity can’t be mutually exclusive. You have to have both to survive long term as a luxury brand.

Milton Pedraza: Bottega Veneta is a prime example of expertise, trust and generosity with all constituents. And they have the numbers to prove it. Burberry is there, too. We see Van Cleef & Arpels moving in that direction. Sephora, too.

Previews Inside Out: Why are some of the top luxury brands a bit stalled today?

Milton Pedraza: Their products are too common, too logoed, and they have disengaged brand ambassadors. So the customers become disengaged, too. The brands have become passive transactors rather than humanistic relationship builders.

Mickey Alam Khan: Gucci comes to mind for me. It’s had some turbulence over senior talent most recently with the departure of the CEO and creative director. While the successors are in place, what Gucci needs to do is rethink its positioning. It’s become rather common, which is the kiss of death for a luxury brand. If too many people have access to the product, it loses its allure. I foresee something similar with Louis Vuitton. Way too many people sport its handbags, thus diluting its exclusivity. It’ll end up catering mostly to aspirational consumers and risk alienating those with serious money. It pays to be slightly discrete in luxury. I know Louis Vuitton is working to scale back on plastering its logo everywhere. The wink-and-nod in luxury should be the styling that those in the know are aware of.

Larissa Faw: Millennials are like cats. If you try too hard, they don’t want anything to do with you. I know Honda isn’t a luxury brand, but its recent commercials featuring top toys from the 80s—like Strawberry Shortcake and Skeletor from He-Man—speaking to the camera to try to sell me a car were pathetic in how hard they were trying to appeal to millennials. My mom had no idea who that skeleton-looking toy was, since these toys were totally millennial-centric, but both my sister and I knew immediately. No one likes a desperate brand that is obvious with its advertising. Pretentiousness is another reason brands are toxic to millennials. Jewelry brands that continue to embrace that silly fairy-tale engagement proposal turn off a lot of millennials. That isn’t how our world looks, and we don’t want any part of it.

Previews Inside Out: When you look at the luxury market as a whole—travel, auto companies, fashion, jewelry—where are you seeing the most innovation when it comes to imparting authentic experiences?

Larissa Faw: I recently saw an ad for a jewelry brand that lets people create their own rings. That is exactly what it takes to reach millennials. Who wants a ring that his or her nemesis in high school might have? Everyone wants to brag he or she has the only one of something. Any company that is able to develop customized and personalized experiences will win them over.

Milton Pedraza: Electronics are the obvious answer. But since technology is invading every space, we see autos, apparel, accessories and really all luxury categories using technology online, in-store and after the sales to enhance the client experience and build a long-term relationship. The most interesting innovations, however, will come from empowering and enhancing the brand ambassadors to build human relationships with their clients. No algorithm can replace a powerful and kind human relationship.

Mickey Alam Khan: There is digital innovation across luxury sectors. Some of it is consumer-led, and some of it brand-driven. Travel and hospitality is a leader in the space. The sites, apps and social media are nonpareil—as are the unique culinary experiences, meet-and-greets with famous chefs and tours in the vicinity of hotel properties that respect the land and traditions. Fashion is also a leader in authenticity. See the abundance of live streams of runway shows that deliver the live experience to the desktop, lap or palm.

Previews Inside Out: In terms of real estate, where do you think the industry needs to move in order to cater to more affluent millennials?

Larissa Faw: Good question. The industry needs to make them feel special, by offering services that understand their life stage. For instance, maybe arrange for Uber accounts so they can have private car services. I recommend taking a page from luxury hotel brands and how they cater to them with dry cleaning, maid services, food delivery. If you come at millennials with the mindset to make them feel special, you can’t go wrong.

Mickey Alam Khan: I’d say real estate needs more digital moxie. Not just PC sites or mobile-friendly versions, but better social media and app executions. Younger luxury consumers are researching on tablets and smartphones, and real estate’s presence on those devices can be improved.

Milton Pedraza: Empower the agent through technology, data and coaching to enhance the client. Real estate is not a game of bricks and mortar; it is a game of hearts and minds.

Source: http://www.previewsinsideout.com/2015/04/luxury-panel-what-millennials-want/

 

February 20, 2015

Can Kate Spade Recover From Closing Its 2 Spin-Off Brands?

Seeking Alpha
By: Eryn Johnson
February 18, 2015

Kate Spade & Company (NYSE:KATE) designs and markets branded women’s and men’s apparel, accessories, and fragrance products. The company’s portfolio of brands includes most apparel and non-apparel categories, and their products are available at retail locations throughout the world, including its own retail and outlet stores, and on its e-commerce sites. The company operates the Kate Spade New York brand as well as the Jack Spade brand, since closing Kate Spade Saturday. The company has a very competent management team, including CEO and board member Craig Leavitt, who has been CEO since 2010; COO George Carrara, former CFO of Tommy Hilfiger and Liz Claiborne; and CFO Thomas Linko, who has been with the company since October 2014 after being CFO/COO of Juicy Couture Inc.

According to the Kate Spade investor relations site, the brand “inspires women to live colorfully, delivering on our promise to help her lead a more interesting life. In every time zone and on every continent, kate spade new york is a global lifestyle brand offering aspirational luxury with a clever wit and playful charm that is distinctly our own.” The site also explains that Jack Spade “grew out of the simple idea that useful products could also be stylish. Jack Spade understands that taste and style say more about someone than fashion or trends. As a brand it stands for smart designs and ideas to help men live a layered life, and speaks to an expanding collection of discerning customers in the U.S., with a small but burgeoning business abroad.”

Click the link to read the entire article (subscription required) which includes quotes from Milton Pedraza, CEO of Luxury Institute: http://seekingalpha.com/article/2926306-can-kate-spade-recover-from-closing-its-2-spin-off-brands

January 22, 2015

Luxury Institute Analysis Shows Strong Potential for Firms Serving Wealthy Consumers as Ranks of High-Income Americans Swell to All-Time High

Marketwired
January 21, 2015
By: Luxury Institute

A surge in the number of high-income households signals a source of potential strength for firms selling high-end goods and services, according to a metadata analysis of the Federal Reserve’s 2013 Survey of Consumer Finances by the New York-based Luxury Institute. The number of U.S. families earning at least $150,000 has grown 25% from 10.6 million households in 2010 to 12.8 million 2013, but even as more Americans achieve “high-income” status, luxury merchants still face challenges in turning these high-earners into loyal customers.

Favorable trends in household finances, since 2010, have thus far failed to produce a broad-based rebound in luxury on par with the boom before the Great Recession. Despite rising levels of income, wealth, and recoveries in stocks and real estate to pre-recession levels, many providers of high-end goods and services continue to struggle with sales growth more than six years after the financial crisis that devastated asset values and consumer confidence.

Long memories of the crisis are partly to blame for restrained spending: 30% of consumers from households with at least $150,000 in annual income say that they spend more when their assets appreciate in value, but the wealth effect cuts both ways, and even more deeply when asset values decline. Two-thirds of high-income Americans say that when the value of what they own goes down so does their spending.

In addition, luxury marketers are also facing fundamental shifts in consumer shopping habits brought on by the ubiquity of tablets and smart phones, and the influence of social media.

“Compelling products and extraordinary experiences lead to long-term client relationships in luxury,” says Luxury Institute CEO Milton Pedraza. “Firms thriving today are those with systems and personnel in place to leverage new technologies into smarter ways of communicating and doing business with customers that reflect the new reality.”

Conducted every three years since 1983, the Survey of Consumer Finances provides detailed demographic profiles and insights into household wealth, income, saving, and spending. Since 2004, the Luxury Institute has mined the survey data to identify emerging trends that can impact companies serving a wealthy clientele.

Source: http://www.marketwired.com/press-release/luxury-institute-analysis-shows-strong-potential-firms-serving-wealthy-consumers-as-1985040.htm

December 29, 2014

Luxury Brands Often Misidentify Their Target Consumers

MediaPost Communications
December 26, 2014
By: Steve McClellan

Luxury brands lose 50% of their top customers annually because they routinely misidentify their demographic and economic profile while also failing to create a personalized sales experience for them, according to new research from global marketing and crm agency Epsilon and research and consulting firm The Luxury Institute.

Epsilon analyzed and compared 30,000 luxury shoppers to uncover insights, myths and stereotypes of the luxury shopper, the firm said.

According to the findings, luxury brands mistakenly believe their customers are typically female and on average 45-years old with a net worth over $1 million. However, 57.5% of luxury spenders are in fact male. They are likely to be of Asian and Middle-Eastern descent with a net worth over $500,000. In addition, nearly 13.8% of shoppers with a net worth over $1 million invest mostly in modern, contemporary decor and gifts as opposed to high-ticket apparel items.

“Luxury brands need to truly understand who their customers are and what they are looking for in a luxe shopping experience,” said Jean-Yves Sabot, vice president, retail business development at Epsilon. “This is critical in creating a personalized experience for the customer that drives engagement, retention and satisfaction.”

The report categorizes luxury shoppers into four groups including the so-called “True Luxe” shopper who has the means to purchase luxury items at will without financial concern. But there is also the “Aspirational Shopper,” described as shoppers who “desire to own pieces from a brand, but may not have the means to do so on a regular basis.”

Another group is labeled “Moments of Wealth,” comprised of shoppers that may save for specific piece but do not purchase from the brand frequently. And the “Dressed for the Part” group buys luxury items to give the appearance of someone who lives a luxury lifestyle but often does not have the financial resources to be a true luxury buyer.

The study also found that online shopping accounts for less than a quarter of sales for multichannel luxury retail brands, because these consumers typically want to see and touch the product. While 98% of luxury shoppers use the Internet regularly, more than 50% of the time they are researching products and comparing prices on their mobile devices.

Luxury shoppers “crave the experience of the brand and look for a VIP interaction,”  according to the report.

Recommendations include using insights to tailor marketing communication to the optimal targets for more personalized and relevant communication. Luxury brands also need to do a better job of leveraging external shopper behavior for true one-on-one interaction both in-store and online, the report surmises. They also need to get a complete picture of their consumer target set. Third-party data will help. More on the report can be found here.

Source: http://www.mediapost.com/publications/article/240785/luxury-brands-often-misidentify-their-target-consu.html

The Average Luxury Shopper May Surprise You

The Wall Street Journal
December 24, 2014
By: Nathalie Tadena

The average luxury shopper doesn’t look like a Real Housewife of Beverly Hills.

According to a report from marketing agency Epsilon and boutique research and consulting firm Luxury Institute, a true luxury shopper — one that has the financial means to purchase high-end items frequently throughout the year  – is most likely to be an Asian or Middle Eastern single man between the ages of 25 years and 44 years old,  with no children.

Luxury brands have traditionally pitched their products to women over the age of 45 with a net worth more than $1 million, so many have apparently been failing to engage their best customers. Half of luxury brands lose 50% of their top customers every year, the report said.

The study compared the top 30,000 luxury spenders with a yearly spend over $30,000 in specialty retail and average transactions of over $1,200 to the shopping patterns and profiles of individuals with a net worth of more than $1 million and financial resources over $2 million.

According to the research, there are four types of shoppers who buy luxury goods. The “Aspirational Shopper” desires to own pieces from a luxury brand but doesn’t have the means to do so on a regular basis and might turn to an outlet or discount boutique like Rue La La to buy from a luxury brand. The “Moments of Wealth” shopper saves for a specific luxury piece, but doesn’t buy from that luxury brand frequently. The “Dressed for the Part” shopper purchases high-end items but doesn’t have the financial resources to be a true luxury buyer.  The” True Luxe” shopper — a luxury retailer’s best customer — has the financial means to purchase high-end items and purchases from luxury brands frequently throughout the year.

Nearly 60% of these True Luxe shoppers are male and more than half are single, the report found. The True Luxe shopper also has a net worth of more than $500,000.

Luxury shoppers prefer to shop in stores, where they can get VIP treatment from a salesperson and touch and see products in person, the study said.  Online shopping represents less than a quarter of sales for multi-channel luxury retail brands.

A rude or inattentive salesperson is the biggest reason that a consumer won’t come back to a particular luxury brand, said Luxury Institute Chief Executive Milton Pedraza. Only 10% to 15% of luxury customers said they have a first-name relationship with a sales professional, according to the report.

Brands that use information about an individual consumer’s buying habits and preferences during in-store visits can create a stronger buying relationship, the researchers said.

Source: http://blogs.wsj.com/cmo/2014/12/24/the-average-luxury-shopper-may-surprise-you/ 

December 1, 2014

Marketer of the Year: Stuart Weitzman

By: Irene Park
Women’s Wear Daily
December 1, 2014

Click on the link to read the entire article (subscription required): http://www.wwd.com/footwear-news/markets/marketer-of-the-year-stuart-weitzman-8049600?gnewsid=a161467a3da489b5897b97c969ca7fb8

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