Luxury Institute News

August 9, 2017

Luxury camping, complete with lobster dinner delivery

CBS Money Watch
By: Irina Ivanova
August 9, 2017

Come August, many families leave the house for camping in the woods or on a beach. But those leery of leaving behind the air conditioning need not forego the natural experience. A newly opened campground in Maine might have just the thing.

Sandy Pines Campground in Kennebunkport has been open less than two months, but its 12 professionally decorated, luxury tents are pretty solidly booked through mid-October, according to a spokeswoman. Those come in addition to the campground’s 320 acres of campsites, lodges and RV hookups.

Each tent measures 450 square feet and comes with heating, air conditioning and a mini-fridge. Travelers also can choose from individualized quirky amenities, like mid-century furniture in one tent and a painting set in another. Rates start at $149 a night before taxes.

Would-be campers should note that dogs are not allowed in the luxury tents, although pets are welcome elsewhere in the park. The glam tents also don’t permit individual barbecuing, but they do offer delivery of a fully cooked lobster dinner right to your tent flap.

sandypines-blixensoasis-bynicolashome.jpg

Blixen’s Oasis, a safari-themed tent designed by Nicola’s Home.

 SANDY PINES CAMPGROUND

 

Glamorous camping, or glamping, has taken off in recent years as the travel industry tries to come up with novel attractions for well-heeled travelers who prefer experiences to things.

“When you have the money, you want to splurge,” said Milton Pedraza, CEO of the Luxury Institute. “Yes, you’ll go out and hike, but you’re going to want to have those luxuries when you come back and when you wake up.”

The Oxford English Dictionary, which added “glamping” in December, defines it as an activity with “accommodation and facilities more luxurious than those associated with traditional camping.”

But the experiences range widely between having a slightly more comfortable sleeping floor and ordering lobster delivered to the tent. Pedraza predicts the less-than-rugged segment of glamping, rather than full-on luxury, will grow the fastest in the coming year. Young families in particular might appreciate camping facilities that are set up with basic amenities, he said.

“They’re pretty spectacular,” camper Katie Latulip told CBS affiliate WGME. “The fact that they’re all equipped with all the amenities that a camper would need to essentially just show up and you know, have a great weekend, is pretty phenomenal.”

sandypines-nauticalnights-ext-bychatfielddesign.jpg

Nautical Nights, a tent by Chattfield Designs, at Sandy Pines.

 DOUGLAS MERRIAM FOR SANDY PINES CAMPGROUND

 

Sandy Pines originally intended to rent two of the tents and sell the other 10, but after “overwhelming interest in the glamping experience,” it’s renting all 12 of them, a co-founder of of the site told Boston.com. For those interested in a more permanent camping experience, the campground also offers mini-cabins for sale, which measure about 650 square feet and sell from $71,000 to $98,000.

The concept of traveling in luxury, of course, is nearly as old as luxury itself. A famous example from medieval Europe is the Field of the Cloth of Gold, a summit in Northern France in 1520 between Henry VIII of England and Francis I of France and their respective retinues. They gathered, ostensibly, to celebrate peace between the two countries, but in reality to see which monarch could throw the more impressive party.

An actual wrestling contest during the summit ended with King Henry as the winner, according to Vice, but the question of who was the more successful glamper remains shrouded in the mists of history. © 2017 CBS Interactive Inc.. All Rights Reserved.

Source: http://www.cbsnews.com/news/glamping-kennebunkport-maine-luxury-camping/

July 28, 2017

THE ROLLS-ROYCE PHANTOM PERSONALIZES OPULENCE

Wired
By: Brett Berk
July 27, 2017

 

 

ROLLS-ROYCE

 

FOR MORE THAN 90 years, the rich, famous, and beautiful have been ferried to their special occasions inside Rolls-Royce Phantoms. The car epitomizes imposing elegance, a status symbol that signals, “I’m loaded, but I’m also very classy.” On Thursday, Rolls-Royce unveiled its newest version of the Phantom, a four-door, $500,000-dollar sedan. The car’s design illustrates the balance Rolls-Royce must strike to make the vehicle feel new, innovative, and personalized—worthy of its half-million-dollar price tag—while also maintaining connection to its storied eight-generation lineage.

The general state of the luxury goods market further complicates things. “Wealthy buyers are placing a strong premium on more emotional and personal priorities: travel, food, adventure, and family,” says Milton Pedraza, CEO of the Luxury Institute, which tracks high-end spenders. The challenge for Rolls is to incorporate those spending behaviors into the car’s design.

Making the vehicle stand out is a matter of throwing wide the suicide doors. “If you said to me, ‘What finally defines this Phantom?’ I’d say, ‘Please step inside,’” says Giles Taylor, Rolls-Royce design director.

The feel is “slightly edgy of its time, but not beholden to its time,” says Taylor. That rules out a Tesla-style giant touchscreen. And the Rolls interior has to feel exclusive, so no replicating the health and wellness monitors that respond to drivers’ moods, which Mercedes installs in top-end models.

Rather, Rolls’ approach is to install something called the “Gallery.” That the feature’s term borrows from museum nomenclature is no accident. The Gallery covers the entire central expanse of the upper dashboard with toughened glass, and carves out a three-dimensional display shelf behind it—72-inches wide and 6-inches in tall. The perfect place to install, well, anything you want. You can’t get much more personalized than that.

The Rolls Royce design team and craftspeople at the company’s British headquarters are standing by with some posh ideas for buyers, should they need them—or they’re happy to create installations from scratch. For instance, the company’s most dignified customers might choose to festoon their Gallery with a family crest laser-etched in platinum; a miniature landscape of an ancestral manse fashioned from Austrian porcelain; an abstract wing rendered in feathers and laser light; or a burst of precious gemstones refracting the aurora borealis.

Automakers love this level of personalization because—surprise!—they command hefty price tags. Rolls expects each new Phantom owner to spend almost $100,000 on individual details alone. The company offers Rolls-Royce staples like book-matched burl walnut veneers and preternaturally smooth animal hides, but also novel options like black pear and grey oak woods, outrageous carpet color palettes, even satin and silk seats. The company sees its Gallery as a new way to enhance its up-sell.

THE INSIDE THAT COUNTS

  • The Real Auto Revolution Is Already Happening—Inside the Car

  • Tomorrow’s Cars Won’t Just Drive Themselves. They’ll Feel Different

  • Prepare Yourself for the Sweet, Sweet Luxury of Riding in a Robocar

Now, personalization isn’t a new concept for cars. Pre-war Rolls-Royces were delivered as a rolling chassis to a coach builder, to fit a custom body. The intro of assembly lines standardized things, but now technology means cars can be given bespoke touches with relative ease. “With the digital production we have now, we can make it very individual, but produced in a high industrial quality,” says Thorsten Franck, an industrial designer commissioned to build Gallery concepts. Well into the 21st century, that process gives the Phantom some continuity.

Here’s the best news for those who can’t drop half-a-mil on a car: In the automotive world, what starts as a high-end option often trickles down to the mass market. Watch out for 3D-printed, dash-adorning, family crests at a dealership near you.

July 27, 2017

Jimmy Choo purchase just the start, says Michael Kors CEO John Idol

South China Morning Post
July 26, 2017

Michael Kors isn’t done with deals. The fashion house, which agreed to buy luxury shoemaker Jimmy Choo for about US$1.2 billion this week, is planning to build a portfolio of upscale brands. And that means acquiring more businesses, possibly in the same billion-dollar range, according to chief executive officer John Idol.

The company is turning to deals as it tries to regain lost sales – a slump brought on in part by its flagship brand becoming too exposed. Michael Kors plans to focus on integrating Jimmy Choo, known for its Sex and the Citystilettos, in the next six to 12 months. Then it will start shopping around again, Idol says.

The Jimmy Choo acquisition was Michael Kors’s biggest effort to expand beyond its own brand name since its initial public offering in 2011. The takeover gives the company a greater presence in higher-end luxury – and helps it play catch-up with Coach Inc., which agreed to buy Stuart Weitzman in 2015 and made a US$2.4 billion deal to buy Kate Spade & Company in May.

It also helps decrease Michael Kors’ reliance on handbags. Both Michael Kors and Coach are trying to become something akin to European luxury conglomerates, with a diversity of brands.

“These two fashion houses are trying to achieve what Kering and LVMH have done in an American way,” says Milton Pedraza, a New York-based luxury consultant.

But Michael Kors faces a critical challenge: maintaining the cachet of Jimmy Choo while building up its distribution.

“You don’t overexpose it, you don’t oversell it and overexploit it,” Pedraza says. “You can still grow viably without growing like a weed and becoming a weed.”

Like Ralph Lauren, Michael Kors opened too many stores and stretched itself too thin. The company also has relied heavily on struggling department stores and discounters like T.J. Maxx, where steep discounts hurt the brand’s image. On the Macy’s website, for example, Michael Kors’s signature US$298 tote bags are currently sold for as low as US$149.

Its stock tumbled 32 per cent in the past year as the company struggled to mount a turnaround plan.

As Michael Kors works to regain its prestige, it will close up to 125 retail locations in the next two years. The company also is renovating the stores that remain, stepping up product innovation and further cutting promotions – part of the Runway 2020 turnaround plan that Idol announced in May. The Jimmy Choo acquisition will increase the sales contribution of its footwear business to 17 per cent from 11 per cent currently, Idol says.

Michael Kors is buying Jimmy Choo from JAB Holding Company, owned by the billionaire Reimann family. It will pay 230 pence a share for the shoemaker, a premium of 18 per cent over Monday’s close. The price is equal to about 13 times Jimmy Choo’s adjusted earnings for 2017, according to Bloomberg Intelligence analyst Deborah Aitken.

Jimmy Choo rose to prominence in the late 1990s, boosted by high-profile fans, including the late Princess Diana and the fictional Carrie Bradshaw in television series Sex and the City. The brand gets its name from its Malaysian-born co-founder, who created it in 1996 with British designer Tamara Mellon.

For future acquisitions, Michael Kors could seek luxury-footwear and accessories makers with visionary designers, Idol says. The company is looking for names that aren’t already widely distributed. “We are definitely interested in having things that we can help develop.”

Source: http://www.scmp.com/lifestyle/fashion-luxury/article/2104185/jimmy-choo-purchase-just-start-says-michael-kors-ceo-john 

July 25, 2017

Wine as Beethoven … or pop tunes

In Daily
By: Philip White
July 25, 2017

 

Last summer I visited a winery tasting and sales room with a mate from New Orleans. Dr Robert DeBellevue is a music fiend as much as a top-flight wino and obsessive bird-watcher; he’s been to Australia more than 30 times pursuing such delights.

We were under deep cover: plain clothes. It was fascinating to watch the staff trying to discover the level of our vinous expertise, especially that of the tall unassuming dude with the gentle Louisiana accent.

“What do you usually drink at home?” the vendor sensibly enquired.

Dr Bob answered, in all honesty: “Grange.”

Once the staff realised he was fair dinkum – he’s one of the biggest collectors in the USA – everything changed. We got what we’d come for: a leap-frog to the top shelf.

Dr Bob’s story of discovering Grange by accident at a Queensland medical conference in 1978 is a lesson in how such passionate addictions can occur. The big door prize was a bottle of Grange. He didn’t win it, but he heard it was Australia’s greatest wine. So on his way home he called in at Len Evans’ Bulletin Place wine shop in Sydney and bought a dozen mixed vintages from the ’50s and ’60s for $6 a bottle.

The lads on duty that day obviously had no more idea of their value – or price – than the Doc, who knows all too well that price is what you pay but value, good or bad, is what you get.

Once home, he went to a restaurant with a wine merchant mate, and opened his first, the 1965. Value? He couldn’t believe his luck. He was a goner. Gone for all money.

Just as political journalists get free politics to grease the gears of their knowledge, the wine critic is exposed to great volumes of wine. One becomes very aware of the gap between top and bottom shelves, in both value and price, and remains confounded by the discrepancies in both measures.

These kidneys have processed wines of prices so far up the scale one daren’t usually admit to drinking them, much less gratuitously boast of it. One could never possibly afford to buy them. Very few can.

Probably just as well in many instances: I’ve had very famous wines at ridiculous prices that given a glass, many of our winemakers would never get to within thousands of the wine’s true price if asked to make an estimate.

Similarly, I’ve wallowed in legendary bottles whose brands, regions, or even varieties would rarely be recognised by the same crew if presented blind.

Nevertheless most who have never had the readies to risk in those nether regions above, say, the price of current Grange, have favourites they treasure and fondly recall that might cost 1 or 2 per cent of such enormous spends. What obsesses me is the mystery of how different folk measure these fluffy calibrations of true quality and fair charge.

There was a fascinating discussion around the cobweb last week when Peter Martin, the brilliant economics editor at Fairfax, reviewed and considered The Memory of Music, a new book by composer Andrew Ford, who hosts the cognoscenti Radio National program The Music Show.

Most wine drinkers have one or two easy chart-toppers they recall as fondly as a favourite ehrwurm

Andy has written about how a mighty Beethoven symphony can invite the listener into its confounding, mysterious world, while a simple formularised pop song moves instead into us.

“It is small wonder, then, that we associate pop songs with the time and place in which we most vividly encountered them, the girlfriend we had at the time, the summer holiday we were on, the college we were at,” Andy writes.

Which triggered me to write this. Consider, say, the new Domaine de la Romanee-Conti La Tâche 2011, whose 6 hectares of Pinot noir in Burgundy produced 18,196 bottles which sell around the world at between $3000 and $4500 each. This is such a disinterested, remote and easily misunderstood wine it could just invite you in like Beethoven if you’re very, very lucky.

And you listen.

On the other end of the scale, most wine drinkers have one or two easy chart-toppers they recall as fondly as a favourite ehrwurm.

“Songs are like elevators between floors of our lives,” Peter Martin wrote. “They transport us to where we were when we first heard them: the faces, the places, even the smells …

“We share our love of special songs with others who grew up loving them, but not necessarily because they are objectively special. Mostly it’s because they’ve been made special … They are precious, but not necessarily because they are good.”

And so it goes with much wine. Unless you’re feeling exceptionally carefree and bearish, it might pay to forget the Beethoven/La Tâche/Grange world and pursue more bottles of that affordable, unforgettable hit single you had with a lover at the beach, on the grave of a brother, by the campfire in the desert … learn your old favourites; their sources; their makers.

Then comes the tricky bit. In a recent white paper on the future of retail, Milton Pedraza, CEO of the New York-based consultancy The Luxury Institute, wrote: “Today, consumers are at their best. They are educated, informed, and they have a mindset that is light years ahead of retailers. Retail will have to reinvent itself in order to become flexible and constantly adapt to keep up with the consumer.”

While he referred of course to the buyers of Louis Vuitton, Ferrari, Dior and the like, this observation can be applied to retail liquor outlets: there are some wine sales people who know their field inside-out, but most are part-timer Shoppies working to pay for shoes for their kids or their own education and rent, who have bugger-all knowledge of the products they pump.

At which point it’s pertinent to go back to Peter Martin explaining that a lot of hit singles become so only when the record company pays to get songs played on the radio, citing CBS routinely paying $10 million a year to radio stations in the 1980s.

This happens, too, in wine retailing. The maker of that pallet of discount stuff inside the front door has often paid handsome rent for the floor space. That’ll be what the staff are pumping hardest.

So you have to quite literally shop about until you find somebody you can trust, who knows what you like, and can reliably recommend other wines of the type and price of that favourite that’s stuck in your brain like that catchy ehrwurm pop tune. Once you find such a vendor, be they in a shop or a cellar-door, culture them. Nurture them. Teach them about you as they teach you.

Regardless of your budget, you can save a great deal of money and have a helluva lot more fun. I’ll do my best with fairly priced recommendations.

As for the luxury goods shopper, or the aspirant, try the analogy I made reading the shiny magazine for collectible car perves, Octane:

“I had no interest in something fashionable,” wrote Winston Goodfellow, who was looking for a collectible supercar on a limited budget, “I wanted a car with desirable characteristics at a price less than those same attributes would cost elsewhere. Landmark design, history, performance, rarity, potential capital preservation/appreciation … [providing] a memorable, lingering experience that couldn’t be found anywhere else … Like stepping onto the dance floor with the most perfect partner.”

As Dr Bob discovered, sometimes, if you’re diligent and determined, you can find that most perfect partner for $6. So maybe there is something to be said for the wine retailer with such scant knowledge they don’t even know what Grange is, much less recognise a new wine likely to achieve similar glory.

If you have such luck, proceed realising this love affair is likely to end up costing you a lot more than $6 per bottle. In which case you’ll need more than ever that retailer who does know their business and who you know you can trust.

Nurture them. As the robots march in and internet shopping takes over and outlets become self-serve caverns full of muck, such caring professionals are precious indeed.

Source: http://indaily.com.au/eat-drink-explore/wine/2017/07/25/wine-beethoven-pop-tunes/

Is Tiffany & Co. Amazon-proof?

CBS MoneyWatch
By: Jillian Harding
July 24, 2017

Though many major American retailers have had their foundations shaken by Amazon (AMZN) and the wider explosion in e-commerce, Tiffany & Co. (TIF) appears to be a rare diamond in the rough of brick-and-mortar retail.

Exhibit A: The company’s stock price has jumped nearly 30 percent over the last year, even as department stores like Macy’s (M), J.C. Penney (JCP) and Sears struggle with shrinking growth.

Analysts point to several reasons why Tiffany’s, despite a recent dip in sales, remains in favor among investors. Those include the touch-and-feel experience of shopping for fine jewelry, the company’s potent brand, and a global, and well-heeled, customer base.

Another advantage is Tiffany’s small physical footprint of 125 stores in the U.S. and roughly 300 total worldwide. Its stores also are in upscale malls, which have been less affected by the mass department store closings that have affected other malls.

That helps keep Tiffany’s operating costs low and its stores churning out profits, with sales of around $2,600 per square foot in 2016 and a sparkling 62 percent gross profit margin.

Like other retailers, of course, Tiffany must cope with the impact of e-commerce and, as ever, the changing tastes of consumers. To that end, it recently named Alessandro Bogliolo, a veteran of luxury retail who is known for his ability to revamp brands like Bulgari, as its new CEO.

As with many luxury retailers, Tiffany also is looking to add millennial buyers that may be more interested in experiences and paying down student loans than spending on big-ticket jewelry. The trick is to attract younger shoppers while maintaining its core high-end client.

One way to appeal to younger buyers is by offering lower-priced fashion jewelry, which does not include gemstones and carries a lower price tag than fine gemstone jewelry. The fashion jewelry category was responsible for 33 percent of Tiffany’s sales in 2016.

Edward Jones analyst Brian Yarbrough said the company must be cautious about not devaluing its brand. While having different price points opens the door to a different mix of consumers, “You have to be careful — they had this problem in the early 90s… People who are buying $20,000 or $30,000 pieces don’t want teens running around,” he said.

Retail consultant Howard Davidowitz, CEO of Davidowitz & Associates, said that for Tiffany to retain the luxury customer, the company might consider looking to do an offshoot for fashion jewelry or acquire a brand like Pandora to appeal to a different kind of consumer.

“If you have a store and you load the store up with a lot of middle-level merchandise because you are trying to sell to tourists and everyone else, they are going to want to buy a small item and get the Tiffany bag. If you do that, you are a going to lose luxury customers.  I don’t think there’s any way to do it unless you can come up with a store within a store strategy — there is clarity in that.” he told CBS MoneyWatch.

In reporting its first-quarter earnings, the company laid out a new strategy for driving growth, including finding ways to more effectively engage with customers, adding new products, and revamping or even closing some stores.

Yarbrough said Tiffany needs to refresh its product line and improve its marketing, while adding that a greater focus on supply-chain efficiency could boost the retailer’s profit margin. But he also thinks that the company’s core strengths — its allure in overseas markets and high-end jewelry niche, in which customers want to make purchases in person — help buffer it from the competitive ravages of e-commerce.

“We think it’s a brand, as well as a retailer, that is more Amazon-proof,” he said.

Echoing this theme, Cowen senior retail analyst Oliver Chen wrote in a recent note, “In our view, Un-Amazon-Able qualities include… store and vertical integration focus at Super-Premium luxury stocks (Tiffany, LVMH, Sotheby’s),” he said in a recent note.

But Tiffany can’t rest on its diamond-studded laurels, Davidowitz said, noting that high-end clothing retailers with strong brands have been hurt by e-commerce and that Amazon could eventually decide to encroach on the jeweler’s turf.

“They have to have a plan to address the gigantic change taking place… Now is the time to do it. There is no way to say people are not going to buy jewelry online.”

Milton Pedraza, CEO of retail research group the Luxury Institute, said the key for Tiffany is to foster strong relationships with customers built on its compelling products and prestigious brand. 

“I think the world will become a barbell — at the one end it will be Amazon, commoditized products — and then there will be real luxury,” he said. “There are a lot of ‘luxury’ pretenders….Tiffany is no pretender. I think they will continue to survive and thrive.” 

Source: http://www.cbsnews.com/news/is-tiffany-co-amazon-proof/ 

May 12, 2017

‘The unfortunate thing about Macy’s’: Just about everything

The Washington Post
By: Abha Bhattarai
May 11, 2017

Macy’s, it seems, can’t catch a break.

The beleaguered retail chain, which has been aggressively closing stores in recent months, announced more bad news Thursday: Sales were down in the first quarter of the year, leading to a 39 percent drop in profits.

As a result, the company’s stock price plunged more than 16 percent Thursday, to its lowest level since 2011.

Macy’s steady decline, analysts say, is the result of a number of factors, including the demise of shopping malls, as well as competition from online stores and off-price retailers such as TJ Maxx. Another issue: The company tends to sell run-of-the-mill products that shoppers can find more easily — and often more cheaply — elsewhere.

“Here’s the unfortunate thing about Macy’s: There’s nothing that sets it apart,” said Milton Pedraza, chief executive of the Luxury Institute, a New York-based research firm. “It’s crowded, it’s messy, the service is poor. The business model of Macy’s is no longer justifiable in a world dominated by Amazon and Walmart.”

The company’s woes come as other longtime retailers like Sears and JCPenney face similar headwinds. Americans are increasingly skipping the shopping mall in favor of buying online, which means department stores are left with hordes of inventory and pricey real estate. Macy’s last year announced plans to close 100 of its stores, and analysts said more closures may be in the works if the company’s fortunes don’t change soon.

“There are so many structural issues here that it’s going to take years for all of these challenges to play out,” said Sucharita Mulpuru, a retail analyst for Forrester Research. “This is a company that is fundamentally tied to shopping malls, and I don’t know that there’s any hope of rejuvenation there.”

After a dismal holiday season, 2017 hasn’t turned out to be much better. Same-store sales — a closely-watched industry metric — fell 4.6 percent, marking the ninth consecutive quarter of declines. Profit, meanwhile, plunged nearly 40 percent to $70 million from $115 million a year earlier.

“These are unusual and challenging times for retail, especially for mall-based department stores,” Jeff Gennette, who took over as Macy’s chief executive in March, said in a Thursday morning call with Wall Street investors. “We don’t have our head in the sand as to the significant challenges we face in getting the business growing again. We certainly don’t have all the answers yet, but we are working on them with a sense of urgency.”

To that end, he said, the company is revamping its fine jewelry and women’s shoe departments, adding furniture and mattresses to 60 locations, and forging exclusive partnerships with brands like DKNY. It is also planning to expand its buy-online, pick-up-in-store options in an effort to win over shoppers who have grown accustomed to shopping from their homes.

“The consumer has fundamentally changed,” Oliver Chen, a retail analyst for Cowen Group, told CNBC earlier this year. “Customers really expect speed, and the way in which customers shop now, they want their goods immediately.”

The retailer is facing considerable competition online. Amazon.com, which has a private-label clothing brand and is experimenting with custom-fit items, is widely expected to usurp Macy’s as the country’s largest clothing retailer this year. (Jeffrey P. Bezos, Amazon’s founder and chief executive, owns The Washington Post.)

Macy’s, founded nearly 160 years ago in New York, has been a household name for decades. Through the years, it has bought up a number of regional chains, including Hecht’s, Foley’s, Rich’s and Bullock’s, and consolidated them into the country’s largest department store brand. Today, Macy’s parent company also owns the department store Bloomingdale’s and beauty chain Bluemercury.

In recent months, it has also begun experimenting with its own off-price store, Backstage, which it has been quietly opening inside existing locations. The goal, executives said, is to target shoppers who might otherwise go to Nordstrom Rack or TJ Maxx. Two-thirds of Macy’s most loyal customers and 70 percent of millennials shop at off-price retailers each month, Gennette said.

“Macy’s needed to solve for that,” Gennette said, adding that the company is also lowering prices in certain departments, such as housewares. “We’re obviously dropping our prices to be competitive. We don’t want to have like-products that are more expensive online or in our stores than our competitors. That is why we have really pushed to make sure we’re giving customers value.”

But Pedraza, of the Luxury Institute, says that may not be a viable strategy.

“All they’re going to do is dig a deeper hole,” he said. “They may get a little bit of a dead cat bounce that way, but other than that it’s not a long-term strategy.”

In recent years, analysts say, retailers have been engaged in a race to the bottom, offering never-ending promotions and sweeping discounts as a quick fix for long-term problems, and Macy’s has been no exception. But the plan has also backfired: Customers have become trained to expect large-scale discounts on everything they buy, which means retailers are increasingly settling for slimmer profit margins.

“If you missed last week’s sales numbers, you can literally make that up with a promotion this week,” Mulpuru said. “That’s the only short-term lever retailers have. Anything else — new real estate, new inventory, new vendors — is going to take six months to three years, which is why retail has degenerated into a promotional business.”

As Macy’s executives scramble to shore up sales, they are also finding creative ways to bring in extra income. The company has sold off the top floors of certain properties, including stores in Brooklyn and Seattle, to be converted into office space. Its flagship in New York’s Herald Square, which takes up an entire city block, is also being floated by analyst as a potential source of cash.

“The value of that real estate alone is billions of dollars,” Mulpuru said. “This is a company that’s in trouble, but they’ve still got a few aces in their back pocket. It takes a long time to kill a retailer, and I don’t think Macy’s is there, yet.”

Source: https://www.washingtonpost.com/news/business/wp/2017/05/11/the-unfortunate-thing-about-macys-just-about-everything/?utm_term=.fec3244ec83b

May 9, 2017

Millennials think Coach is ‘boring.’ Will acquiring Kate Spade help?

The Washington Post
By: Abha Bhattarai
May 8, 2017

Luxury handbag maker Coach is buying rival Kate Spade, a brand known for its whimsical designs and colorful patterns, for $2.4 billion in cash, the companies announced Monday.

The deal would bring together two New York-based brands that have competed in recent years to win over younger customers and build a global presence.

“This deal gives Coach a real toehold into the millennial market,” said Ed Yruma, a retail analyst at KeyBanc Capital Markets.

“Kate Spade can substantially expand in China and Japan — there are so many new opportunities for revenue — and Coach is in a great position to take that on,” said Oliver Chen, an analyst at Cowen Group. “The fact that Coach has transformed itself before gives it credibility to do it again.”

Coach executives have spent three years trying to persuade customers to think beyond its ubiquitous logo bags and outlet stores. To that end, Coach introduced its 1941 luxury label, acquired shoemaker Stuart Weitzman, added more stores abroad and stopped offering as many discounts. The changes seem to be working: After years of stalled growth, profits and sales are up.

Now executives say they would like to make similar changes at Kate Spade — where 60 percent of sales come from millennials — to turn it into a larger, more global brand.

“The lessons we have learned during our own transformation provide a blueprint for guiding our strategy with Kate Spade,” Victor Luis, chief executive of Coach, said in a Monday call with investors. “We believe our extensive experience in opening and operating specialty retail stores can unlock Kate Spade’s largely untapped global growth potential, notably in Asia and Europe.”

Among his first moves, Luis said, would be to cut back on online flash sales and deep discounts on Kate Spade goods.

“These channels are profitable and can drive growth,” he said but warned that “they can lead to brand deterioration over time.”

On Monday, for example, Kate Spade’s website was touting half-priced cross-body satchels for $149 (“today only!”). Another bag, the Cobble Hill Adrien, was discounted 60 percent, from $428 to $171.

“There’s been a vicious cycle of overproducing, then discounting prices and hurting your own brand,” said Milton Pedraza, founder of the Luxury Institute, a New York-based research firm. “It will be painful to dial this back — surgical, even — but it needs to be done if Kate Spade is going to become a lean, efficient brand.”

Coach is paying $18.50 for each share of Kate Spade, a 9 percent premium on Friday’s closing price. The deal is expected to be finalized in the third quarter of this year, and executives say they hope to save $50 million by consolidating parts of the business over the next three years.

But while Wall Street seemed pleased by news of the takeover — shares of Kate Spade rose 8 percent Monday, while shares of Coach were up 5 percent — some customers were wary. Kate Spade shoppers took to social media to voice their misgivings.

“WHY WHY WHY UGH,” a user named HellOnHeelsGirl tweeted in response to the news.

“I find Coach to be boring with their brown, unoriginal bags,” tweeted another. “Kate Spade had color and uniqueness! Bye bye pretty bags.”

Coach executives said Kate Spade will remain an independent brand with its own design, merchandising, marketing and sales teams. In addition to handbags and wallets, the company has expanded into jewelry, children’s clothing and homeware.

Kate Spade founded the eponymous brand with her husband in 1993. (She recently legally changed her name to Kate Valentine to coincide with the launch of her new brand, Frances Valentine). The couple sold a majority stake of Kate Spade to Neiman Marcus in 1999. Liz Claiborne bought the brand for $124 million in 2006. (Liz Claiborne was later renamed Fifth & Pacific and is now called Kate Spade & Co.)

In December, the Wall Street Journal reported that Kate Spade began looking for a potential buyer after shareholders said a larger company could help the brand grow faster. Analysts quickly began speculating that Coach would be the buyer.

“This has long been expected,” said Dana Telsey, chief executive of Telsey Advisory Group, a research and consulting firm in New York. “Being part of a larger organization will obviously get [Kate Spade] going where it wants to, faster.”

And, she added, this is part of Coach’s long-term plan to assemble a collection of brands into what it is calling a “New York-based house of modern luxury.”

“This won’t be the last acquisition for Coach,” Telsey said. “This is part of something much bigger.”

Two years ago, Coach paid $574 million for Stuart Weitzman and hired a former Valentino executive to become the brand’s chief executive. In the quarters since, the luxury shoe brand has turned a steady profit and helped boost its parent company’s earnings.

“With Stuart Weitzman, Coach has demonstrated that it can bring in another brand and nurture it,” said Pedraza of the Luxury Institute. “Now the challenge will be, can they do the same for Kate Spade without watering it down?”

Source: https://www.washingtonpost.com/business/economy/millennials-think-coach-is-boring-will-acquiring-kate-spade-help/2017/05/08/50bd9e9c-33f9-11e7-b4ee-434b6d506b37_story.html?utm_term=.ce0be13f8676

 

High-end bag maker Coach splurges and buys rival Kate Spade

Marketplace
By: Jed Kim
May 8, 2017

Luxury goods maker Coach announced today it’s splurging. It has agreed to buy rival company Kate Spade for $2.4 billion. Coach has already acquired high-end shoe designer Stuart Weitzman, and with the Kate Spade purchase, it seems it’s on a mission to create a stable of luxury brands.

To hear the fully story, including insights from Milton Pedraza, click the link below to access the Marketplace website for the audio story: https://www.marketplace.org/2017/05/08/business/high-end-bag-maker-coach-splurges-and-buys-rival-kate-spade 

April 21, 2017

Ducati Stretches Its Sex Appeal

Departures
By: Brett Berk
April 20, 2017

Can the exclusive Italian superbike manufacturer change its game without sacrificing its reputation? Necessity suggests the brand has no other choice—if it wants to survive.

It came as a surprise to supercar purists when, in 2012, Lamborghini first hinted that it would release an SUV—a vehicle seemingly antithetical to the brand’s aggressively impractical essence. But what may be experienced by some as a sign of brand suicide is actually an act of survival: The performance-oriented Urus is expected to double Lamborghini’s sales once it hits stores by the end of this year. In the eternal quest for increased market share, the automaker known for its fiendish six- and seven-figure supercars has had no choice but to diversify. And in this competitive market, they’re not the only ones.

The 90 year-old Ducati brand is the Lamborghini of motorcycles: exclusive, expensive, performance oriented, and effusively Italian. The brands’ spirits have only become more kindred since 2012, when the motorcycle marque became a wholly owned subsidiary of Lamborghini (itself owned by German carmaker Audi, and part of the Volkswagen Group). And just like its hyper-potent owner, Ducati has begun to dip its toe into the market beyond the high-speed, high-price racing bikes for which its known.

 

Working on a Ducati Multistrada. Courtesy Ducati

 

This year alone, Ducati plans to release eight new bikes across a number of new, more accessible segments the brand has shied away from in the past. New models include the Multistrada 950, a touring “multibike” (January 2017, $13,995); a suite of Scramblers, as part of the two-year-old sub-brand, including the off-roading Desert Sled (March 2017, $11,395) and a 1960s-inspired Café Racer (April 2017, $11,395); and a versatile, entry-level sport/comfort SuperSport (April 2017, $12,995). The XDiavel, a cruiser intended for an aging buyer (someone over 40 in motorcycle-speak), launched in December 2016 ($23,495).

These additions are a far cry from the developments of previous years, which saw R&D dollars generally go to making their superbikes ever faster and more technically advanced. But those investments have had an unforeseen side effect: As progress has allowed high-end motor vehicles to become incredibly fast, safe, and easy to drive, access to the full experience they offer has become almost impossible to achieve on public roads.

 

The Ducati Scrambler Café Racer. Courtesy Ducati

 

“The risk,” says Jason Chinnock, CEO of Ducati North America, “is that the motorcycles, like supercars, get so far advanced that it limits their actual use.” The brand had to adapt or perish—or at least, start collecting cobwebs in the garage. Already the move seems to be paying off. Global sales are up nearly 25 percent, reaching a record 55,450 bikes purchased in 2016. Part of this can be attributed directly to the new offerings, especially the Scramblers, which immediately became Ducati’s bestseller when the line was introduced in 2015. “It was very important for us to able to expand,” Chinnock says. “Now I can say that we cover about 60 percent of all motorcycle segments, versus in the past where we were around 23 percent [with just superbikes].”

“There are always going to be purists out there,” says Milton Pedraza, CEO of luxury research and consulting firm the Luxury Institute. “But I think most of us are willing to accept a more sedate, or different versions of a brand that is still in the same category. The Ducati brand has a sex appeal, besides the performance appeal.”

 

The Ducati XDiavel. Courtesy Ducati

 

Ducati won’t completely leave its past behind: In May, the brand will debut the 1299 Superleggera ($80,000), the fastest twin-cylinder in history (at 215 horsepower) and first-ever street-legal full-carbon fiber structure superbike. But the marque will continue its expansion into existing and incipient categories moving forward. Chinnock hasn’t ruled out a fully electric motorcycle, which, with its instant power, stealthy silence, and eco-friendly approach, may soon garner significant demand. “It’s something that we’ve continuously looked at, but the technology isn’t at the point yet where we can insure the proper experience for our brand,” he says, citing Ducati’s rousing heritage, founded in part on its aggressive and mechanical sound.

One style Ducati fans likely won’t find any time soon, however, is a self-driving motorcycle. “I think that autonomy has an excellent place in the world of transportation, but why people get on a motorcycle is not necessarily to move from point A to point B,” Chinnock says. “We ride to escape, we ride for sport, we ride to clear our head. That’s the difference between entertainment and transportation.”

Source: https://www.departures.com/lifestyle/automobiles/ducati-dips-into-new-motorcycle-segments

January 22, 2017

Luxury Executives Talk About How To Get More Of Your Money

Forbes
Doug Gollan
January 18, 2017

Global luxury from autos to jets to watches, jewelry, home, arts, beauty, and travel is a trillion dollar industry. What will it take for luxury brands to successfully sell and serve you? Top executives gathered in New York today at Luxury Daily’s annual Luxury FirstLook 2017 to discuss best practices in getting you to open your wallet. Below are some highlights.

1. It takes impeccable service. Luxury providers need to give front-line staff more decision-making authority. Mehdi Eftekari, the general manager of Four Seasons Hotel New York, says the group allows its employees to resolve complaints. As an example, he says a customer checking out complains his room service coffee was cold. The typical hotel rulebook would have the clerk get a manager. Instead, Four Seasons’ employees can take the charge off the bill on their own. He says removed charges actually decreased. Hotels and airlines are often concerned about travelers who try to game the system. Eftekari told the audience, “That’s 1/10th of 1 percent. I tell my team to focus on the 99.9%.”

2. Look to Jeff. Amazon is already a powerhouse in luxury sales, according to Bob Shullman, CEO of The Shullman Research Center. He said 74% of the top 1% bought luxury from Amazon in the past year. Moreover, as luxury brands try to figure out how to better sell their wares in an omnichannel world, he says Amazon customers rate the retailer better than other retailers by an 110-to-1 margin. He says top luxury brands typically score a 2- or 3-to-1 margin. “(Amazon CEO and Founder) Jeff Bezos doesn’t see any limitations,” Shullman told the group, noting it has launched its own private label fashion line after many top luxury brands eschewed the sales platform. What’s more, Amazon has a power database of both customer emails and home addresses. Moderator Milton Pedraza, CEO of The Luxury Institute, noted the online retailer needs to fix its reputation that it doesn’t treat its employees well. “It matters,” he says.

3. Shopping needs to be memorable. Retail stores have to move “from nicely furnished stock rooms with well-dressed stock people” to centers of experience, says Ken Nisch, chairman of JGA.. He notes with retail leases running 10 years or more, retailers are under pressure to figure out how you will shop not next month but five years from now. He says malls have increased “experiential” retail space that includes things like restaurants, exhibits and hair styling to 25% from 8%. He quoted Walt Disney, telling the executives, “A picture is worth a thousand words but an experience is worth a million.”

4. Sustainability needs to be relatable. Luxury companies haven’t done a good job communicating what they are doing let alone making it inspirational to you the consumer. Charles Stanley, US CEO for De Beers’ Forevermark said there are a multitude of statistics about how the diamond industry supports sustainability, however, to make an impact his company created short films to show consumers real examples. One vignette shows a single mother who was able to launch a successful business creating more jobs based on funding from Forevermark. Kane Sarhan, marketing boss for 1 Hotels, a new group based on the core value of sustainability (They know where everything from carpets to bathroom fixtures were made and how.) wants guests to go away understanding how they can bring sustainability back into their regular lives. He says a survey of over 50,000 guests found “49% said staying at our hotel made them change life at home.” The hotel has meters in its showers so you can moderate your water use. He says in the future the hotel may reward guests who consume less water or electricity.

5. Brands need to rethink their approach to events you get invited to. David Friedman, co-founder of research firm Wealth-X says most event marketing is based on trying to one-up other events and the guest list isn’t well targeted. He coined the phrase “Hope Marketing.” In other words, hold and party and hope the right people show up and then buy. Friedman says when targeting Super Rich/UHNW consumers, marketers need to turn it around and focus on what the customer is interested in, be it fishing, football, collecting stamps or the opera. Shamin Abas, who owns a PR company that works with jet and yacht companies told the audience to think small. For a client that makes $3.5 million submarines, an event meant bringing an Ultra High Net Worth prospect and his family to the Bahamas for a test dive. For another client that manages private jets, but was worried about what will happen as fathers grew older and turned over operations of their empires to their children, she helped orchestrate a father/son event so the jet company could get to know the next generation.

6. Traditional advertising no longer works. Pam Danziger, president of Unity Marketing, said the average consumer gets 362 ad messages a day, but few of them resonate or stand out because they are in the wrong platforms. Greg Licciardi, chief revenue officer of Elite Traveler (Disclaimer: I co-founded the magazine in 2001 before selling my interest in 2014) said niche media is the key. For companies that want to reach the Super Rich, the publication is distributed on private jets and terminals. Shullman says digital media such as e-mail is effective in driving recall with luxury buyers. Tracy Doyle, creative director for fashion and luxury at The New York Times T Studio says more and more marketers want customized “native content” messages. Licciardi noted that with over 80% of UHNWs having made their money in the past 15 years, luxury marketers can’t assume you know about their heritage or what uniquely sets them apart. “Luxury marketers need to tell the story and educate,” he says.

Doug Gollan is Founder and Editor-in-Chief of DG Amazing Experiences, an e-newsletter for private jet owners.

Source: http://www.forbes.com/sites/douggollan/2017/01/18/luxury-executives-talk-about-how-to-get-more-of-your-money/#66f92d6c4549

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