Luxury Institute News

December 2, 2016

Most powerful luxury branding strategy? Customer-facing retail sales staff

Luxury Daily
By: Pam Danzinger
December 2, 2016

Given its diverse and discerning customer base, London department store Harrods hires sales associates from around the world who align with the brand’s core values 

“Pay no attention to that man behind the curtain,” says the Wizard in an iconic scene from the classic movie, “Wizard of Oz.” As Dorothy, Scarecrow, Tin Man and Cowardly Lion stand in awe of the wizard’s image projected on the big screen, complete with pyrotechnic special effects of flashing lights, booming thunder, fire and smoke, Toto pulls back the curtain to reveal the real man pulling the levers.

That reminds me of the current state of luxury marketing today.

New sense
Luxury brands are focused on high-tech smoke-and-mirrors to create even more dazzling and awe-inspiring impressions of their brands that flash up on the screen of consumers’ computers, tablets and mobile phones.

But while so many luxury brands are investing huge amounts of time and money to make those special effects, a few brands such as Intermix, Porsche, Bottega Veneta and Gucci are putting their efforts to where the real power of luxury branding resides: on the people side of the marketing equation.

Milton Pedraza, CEO of the Luxury Institute, and I recently sat down to discuss how our independent research has led us both to a similar conclusion: that person-to-person retail is the most powerful way to bring the luxury value of a brand to the attention of discerning, affluent customers with money to spend.


Milton Pedraza, CEO of The Luxury InstituteMilton Pedraza is CEO of the Luxury Institute

So we decided to share as we pull back the curtain of the most underused, yet most powerful marketing strategy available for luxury brands today: the personal relationships made by the customer-facing retail sales staff.

Mr. Pedraza asserts that in their marketing and advertising mix, luxury brands have been focused primarily on the spectacular, new and shiny opportunities offered by technology.

“Retail technology, social media and ecommerce are the hot topics,” he says. “And those are very important.”

But their infatuation with technology is distracting them from focusing on the human element.

Ironically, Mr. Pedraza points to how digitally native, non-luxury brands such as Bonobos and Warby Parker, which have mastered all the high-tech marketing techniques, are now opening stores and bringing their virtual experience into the real world.

“They’re beginning to understand that high-performance customer relationship building is, and will be, the true differentiator, especially as robots and artificial intelligence take over the mundane tasks that retail front-line people are forced to do today,” he says.


Effective retail management is essential to Harrods' customer focusEffective retail management is essential to Harrods’ customer focus

Floor customers
Like the Internet disruptors now establishing footholds in traditional retail, established retail brands are waking to the importance of developing their personal relationships with customers.

That too many retailers are underperforming on the shop floor is without question.

“The top 20 percent of sales associates account for 80 percent of the sales,” Mr. Pedraza said. “They are critical to the business. And yet, there is another 80 percent of sales associates who are under-trained, under-utilized and under-performing.

“The high turnover in associates leads to customer turnover and massive amounts of lost potential and revenues,” he said.

The value for brands to realize and develop the potential of their human capital is clear.

“By consistently delivering expertise, empathy, trustworthiness and generosity, sales associates who develop and demonstrate high emotional intelligence deliver extraordinary human experiences, make clients feel special, and create personal emotional connections that drive long-term loyalty,” Mr. Pedraza pointed out.

Indeed, he understands the difficulties for brands to select, train and retain the best sales staff, but knows the competitive advantage when they rise to the challenge.

“’Difficult’ is where you find true and sustainable competitive advantage because no one will follow you there,” Mr. Pedraza says.

The need to develop the person-to-person potential at retail is clear and both the brands as employer and the career sales professionals will benefit.

“Great retail brands in apparel, accessories, automotive and dozens of other retail categories are desperate to find qualified people where you can earn $60,000 to $120,000 in three to seven years as an associate, or manager,” Mr. Pedraza says.

“In specialty retail and luxury, the job of a high performance relationship builder will become far more important, and the individual will be far more skilled,” he says.

“Human relationship-based client conversion and retention will be recognized as the critical drivers of revenues and profits in retail.”


The Saks Downtown store in New York's Brookfield Place across from the World Trade CenterThe Saks Downtown store in New York’s Brookfield Place across from the World Trade Center

AS THE ADAGE goes, ‘What is old is new again,’ the heritage luxury brands and the great retailers reached their pinnacle by building extraordinary personal relationships with their customers, day-in, day-out, face-to-face and hand-to-hand. That never should have gone out of style, but unfortunately, too many brands and too many retailers have been seduced by the attractions that technology promises.

Mr. Pedraza and I call on those brands and retailers to get back to what made them great in the first place: the personal relationships built on the sales floor.

Pam DanzigerPam Danziger

 Pam Danziger is Stevens, PA-based president of Unity Marketing and a luxury marketing expert. Reach her at

Join Milton Pedraza and Pam Danziger at Luxury Daily’s Luxury FirstLook 2017: Time for Luxury 2.0 conference in New York on Jan. 18. Visit or please click here for more details


55pc of affluents deem luxury prices unjustified by product value

Luxury Daily
By: Staff Reports
December 2, 2016

Image courtesy of Printemps 

Quality tops attributes such as craftsmanship and service as the number one defining attribute affluent consumers use to discern a good’s luxury status, according to new research by the Luxury Institute.

Behind quality comes customer service, which more than half of consumers mentioned as a characteristic they associate with luxury. Despite global trends, residents of individual nations have varied priorities when it comes to luxury goods, with differing sentiments towards the value of products.

Luxury Institute’s survey was conducted in the United States, the United Kingdom, France, Germany, Italy, Japan and China, with respondents from about the top 10 percent of earners in their respective countries.

Divided priorities

Customers in the U.K. and the U.S. are more apt than respondents from Japan and China to mention superior customer service as a necessity for luxury. A superior design ranks third, but those in the U.K. and U.S. mention it more frequently than those from other countries.

While superior craftsmanship comes in fourth among global consumers, this attribute is mentioned by 59 percent of U.S. residents, compared to 33 percent across the other six nations.

Personalized offers, loyalty programs and value add-ons were mentioned by less than a quarter of consumers, but those who do define luxury by these points are inclined to say they are improving.

There is a disparity about the general quality of luxury goods. Those in China and Italy are more likely to report improvement in quality, while those in the U.S. are more apt to believe that luxury goods’ quality is declining.

When considering the ideal front line staff in a luxury boutique, courtesy and politeness are most important to affluent shoppers. Product expertise is a close second, with more than half saying they look for this knowledge in the associates they deal with.


Hugo Boss On Demand

Boss on Demand

The survey participants mentioned jewelry and hospitality brands as having the best customer service staff, while real estate and designer shoes got the least nods for their quality of service.

“From our numerous one-on-one discussions with luxury CEOs, we’ve often heard that a majority of success stems from superior products, but the rest depends on relationship-building expertise and execution of front-line teams,” says Milton Pedraza, CEO of the Luxury Institute. “Half of affluent consumers we just surveyed say that luxury sales associates deliver a personalized and relationship-oriented experience, which is encouraging, but it also suggests plenty of room for improvement when it comes to delivering a superior customer experience.

Even with the rise of digital channels, frontline sales staff are far from obsolete, according to results of a survey conducted by InMoment.

The bricks-and-mortar shopping experience no longer exists in a vacuum, with consumers arriving at a store armed with information from research conducted before or even during their trip. However, while shoppers spend about twice as much in-store when they navigate to a brand’s Web site while shopping, their expenditures grow to four times more if they interact with both an associate and the brand’s Web site while in-store (see story).



December 1, 2016

Pokémon Goes High Fashion For Up To $1,795 A Piece

By: Eustacia Huen
November 30, 2016

Of all the unlikely collaborations out there, the latest one that boggles my mind is the recently launched Prabal Gurung x Pokémon Capsule Collection at Jeffrey’s NYC Boutique.

Inspired by the vibrant colors, textures, silhouettes and spirit of five iconic Pokémon: Pikachu, Jigglypuff, Squirtle, Bulbasaur and Charmander, this exclusive nine-piece collection combines “the playfulness of the Pokémon brand [with] the style and sophistication of Prabal Gurung,” noted in the press release. For instance, there’s a blue knit and pencil skirt inspired by Squirtle (the water-type Pokemon), with the chiffon insert made to feel like a wave, and piping details made to look like Squirtle’s curved shape.

(Photo credit: Wendy Cassidy)

As someone raised in Nepal and grew up traveling across Asia, Gurung considers Pokémon a key part of his childhood, and the perpetually happy Jigglypuff his spirit animal. So when he was invited to design this capsule collection at Jeffrey’s, the designer thought that it was exciting to engage with the characters in this new way.

“The essence of the characters, not just their aesthetic, are captured and highlighted in the elevated details such as character-inspired zipper pulls and the Prabal Gurung signature draped back detail,” he said.

Much as this collaboration sounds interesting, but at $325 for a White Viscose Jigglypuff Printed T-Shirt to $1,795 for a Navy/Red Silk 4-Ply Crepe Short Sleeve Colorblocked Tunic Dress with Embroidered Cording, will die-hard Pokemon fans really think, “Gotta shop ’em all?” And like Karen Eggleston, Senior Manager of Licensing at The Pokémon Company International said, “The pieces are not necessarily “timeless” so it will require a woman who has a fashion passion and the wallet to afford to buy a product that may or may not fit into her wardrobe next year.”

(Photo credit: Wendy Cassidy)

The celebrated designer certainly thinks so. He believes his clientele has an appreciation for humor and sharp wit, qualities that are cleverly represented in this collection.

Milton Pedraza, CEO of Luxury Institute agrees. “Although this collection isn’t particularly affordable for all, it can certainly appeal to affluent women on the younger side (25 to 45 years old) who like playful clothes could find the products appealing,” he said.

While it seems like forever since the Pokémon Go craze, the luxury expert still considers this collaboration to be quite timely. In his perspective, Gurung has successfully reinvigorated the Pokémon excitement and makes it wearable “in this highly cohesive and coherent collection of playful, unique and high quality, everyday outfits,” noted Pedraza.

(Photo credit: Wendy Cassidy)

Clearly, this collaboration could help the designer reach out to a younger audience while The Pokémon Company build its fashion program. But insofar as the larger implications, the luxury expert believes we are in the middle of a fashion and retail revolution.

“Creativity and innovation is a must for designers and brands. Take the unique match up of BMW and Louis Vuitton in “The Art of Travel,” or Apple and Hermes in the iWatch, I foresee this Prabal Gurung x Pokémon Capsule Collection to have a reasonable chance of success,” said Pedraza.

Who knows, maybe this could inspire future crossovers between Star Wars and some young top fashion brand, or Minecraft x Abercrombie and Fitch?

(Photo credit: Wendy Cassidy)


November 16, 2016

Aston Martin Sets Its Eyes on Miami for Its First-Ever Luxury Condo

Architectural Digest
By: Brett Berk
November 15, 2016

Luxury automotive brands including MercedesPorsche, and Pininfarina (the Italian design house whose core client is Ferrari) have all announced or opened branded residential towers. Now bespoke British manufacturer Aston Martin has followed suit, announcing its participation, in partnership with G and G Business Developments and Revuelta Architecture, in a high-end high-rise tower—the Aston Martin Residences—on the last remaining waterfront site along Miami’s Biscayne Bay.

Aston Martin chief creative officer and design head Marek Reichman will be responsible for the public spaces, including two lobbies, a fitness center, and a spa, using finishes and sensibilities in line with the 104-year-old automaker’s exquisite, clubby vehicles. “And if some of the customers say, we would love for you to design our interior,” Reichman says, “we will be happy to do that, too.”

As an independent company that produces exclusive low-volume, high-reputation, high-cost cars for an international clientele, Aston Martin brings to the project a wealth of knowledge of what elite customers desire. Apparently, part of this is the striking and unconventional, like interior switch trim matched to an owner’s favorite platinum jewelry or a hood ornament made of lacquered beetle wings—both projects Aston has completed in its cars. “The materials we use are very exotic—we are living in an exotic world, even compared to a lot of luxury apartments,” Reichman says. “And you sometimes wouldn’t necessarily think about those materials in your home, but actually, they’re very applicable.”

Despite the building’s name, Reichman notes that the branding exercise is “everything but literal.” There will not be any automotive amenities such as drive-in elevators or car concierges. Neither will the apartments reflect the proportions or shape of car designs. Rather, the connection will be experiential. “What you will get is exactly what you will get sitting in an Aston Martin DB11 on a long journey, and that is a sense of involvement and comfort,” Reichman says. “The most amazing thing about the DB11 for me is that it’s an incredibly powerful sports car, but you can sit in that car for a long time and still remain motivated and enjoy your environment. Which is just how you want to feel at home.”

Why would a luxury automaker enter into a residential partnership like this? The answer is, in part, to foster a deeper connection to the brand, one that transcends the vehicular. To retain consumers long-term, brands such as Aston Martin feel they need to create a holistic lifestyle multiverse, one that brand ownership allows customers to access and inhabit fully, wherever they are.

This quest for ubiquity seems a bit at odds with the kind of exclusivity that luxury manufacturers attempt to instill, but brand extensions have become a big business for automakers. Jaguar, Bentley, Mercedes, and others offer branded leather goods, branded custom tour packages, branded yachts and cruises, and branded helicopters, allowing their customers to remain connected to their logo even while they’re away from their car. The goal is to make consumers feel like they’re part of a special club whose membership and amenities follow them everywhere.

In talking about the apartment project, Reichman reflects on this insider nature. “I think this building is for people who appreciate luxury, who love the feeling of something which is timeless, and especially those who love the fact that if you’re part of the world of Aston Martin, you get a great thumbs-up from the product you drive, and you walk away with a kind of pride in ownership and a sense that the car is beautiful, a kind of wow,” he says. “I think the customer is going to be wanting that same feeling when they come to look at an apartment.”


Whether the proximity of the residential projects will enhance or undermine the sense of exclusivity these automakers and developers desire remains to be seen. The Porsche, Pininfarina, and Aston Martin towers are all in Miami, a confluence that seems to approach oversaturation.

“While it is not a perfectly logical complement, luxury automotive branding on real-estate assets can create greater awareness for both brands and elevate the offerings of each,” says Milton Pedraza, CEO of lifestyle research and consulting firm the Luxury Institute. “As the luxury industry remains challenged, we will see more brand partnerships and experimentation,” he says. “Many of the experiments may not succeed, but that is the nature of innovation.” The sales office for the Aston Martin Residences is slated to open next spring, with groundbreaking expected in the summer.




November 3, 2016

Brands are the ultimate navigation device in a fragmented world

Luxury Daily
November 3, 2016
By: Sarah Jones

NEW YORK – The companies of the future are going to be consumer-obsessed, calling for marketing to meet their demands, according to the chief strategist of Publicis Groupe speaking at ad:tech New York 2016 on Nov. 2.

Rather than being a dying field, marketing is simply in need of evolution, requiring agencies to take on different roles and reinvent themselves to better serve the client. While enacting these changes can be a challenge, they will help companies remain relevant into the future.

Transitional time

Three major trends are driving change today, feeding off each other.

Globalization seems to be ebbing, as seen in nationalist mentalities such as Britain’s exit from the European Union and Donald Trump’s promises to build a wall at the United States border.

Mr. Tobaccowala argued that globalization is instead unstoppable and positive. Today, more technologies and services are available around the world, and more than a billion people are no longer in poverty.

Globalization will also be key to companies’ success, as competing on a global scale is required to be a competitor.

There are also demographic shifts happening. As an example, Mr. Tobaccowala pointed to India and China, two countries which appear to share a lot of similarities in population size and economic growth.

What separates China and India are the identities of their populations. China’s one child policy has created a relatively aging citizen profile with an average age of 40 to India’s 20, creating a population that is relatively budget conscious as grandparents outnumber their grandchildren and worry about who will take care of them.

Ola Cabs 400

Image courtesy of Ola

Other changes surround Africa’s expected population growth over the next 100 years to be the most populous area of the world and migration to countries including the U.S.

Also a notable trend is digitization, as technology gives its owners greater power and connectivity. Mr. Tobaccowala compared technology in the hands of individuals to David’s slingshot that took down Goliath, allowing the holder to challenge existing business models and mindsets.

As technology becomes more ubiquitous and affordable, it is less of a differentiator for companies. The same goes for data, which is not powerful in itself but rather depends on how it is refined and used.

However, rather than advances in technology removing the human element, Mr. Tobaccowala suggested that the future will be analog rather than digital. People will make judgment calls based on their intuition and then justify it with numbers, rather than letting machines call the shots.

Technology in the hands of consumers has similarly empowered them. This greater control in the hands of consumers creates a challenge for brands to interact with these now more powerful individuals.

Michael Kors mobile phone 400

Image courtesy of Michael Kors

Companies’ competitive sets have also been modified. For instance, automakers are facing pressure from Uber, as its model aims to remove the need for car ownership.

Uber may be looking to disrupt other categories as well. The ridesharing app filed for a new patented feature, called Uber Travel, that could have serious implications for the future of booking applications as well as ride-sharing services (see story).

Advertising shift

The media landscape is also shifting, as traditional segmentation used for television or print becomes out-of-date for digital channels. Media buying costs for display advertising, for instance, operate as if there is a mass audience at a given time on a Web site, while at any given time there is only one person visiting.

Mr. Tobaccowala suggests that marketers move away from segmentation to reaggregation. The more targeted the message, the more apt it is to annoy them if the marketing is not relevant or if the brand does not have something special to say to this individual based on their preferences.

Marketing also has to recognize that consumers are complex and cannot be pared down to a profile.

Rebuking the idea that marketing is a dying field, Mr. Tobaccowala said that marketing instead will be a key differentiator in meeting customers’ demands. Today, consumers choose when their campaign begins and ends, as they research a products and seek feedback from others before a purchase.

Chief marketing officers therefore become chief facilitation officers, helping consumers as they form their buying journey. Mr. Tobaccowala pointed out that the importance of these executives’ client relationship building functions deserves a seat on companies’ executive boards.

The human element is going to be the top differentiator among luxury brands going forward, according to the CEO of Luxury Institute at Luxury Interactive Europe 2015.

As consumers increasingly experience the world through screens, they will come to crave the now-rare human connection. Here is where luxury brands can help themselves stand apart by outperforming their peers at relationship building and delivering a worthwhile personal touch (see story).

“Are we willing to face the reality that in this transformational world, the problem is not a technology problem—the problem is us,” Mr. Tobaccowala said. “But more interestingly, the opportunity is not a technology opportunity—the opportunity is us.”


Can VistaJet Become The Uber Of Private Aviation?

Fast Company
November 3, 2016
By: Rina Raphael

For some heavy hitters in Silicon Valley, any old private jet just won’t do. Leather seats? Basic. A Bloody Mary after launch? Boring. But one luxury air-travel company is introducing more personalized, high-end amenities, with everything from cashmere eye masks to mixologist-approved cocktail menus.

The Swiss company VistaJet offers amenities that go beyond the luxury norm: The cabin crew is decked out in designer Moncler uniforms and trained by the British Butler Institute. Passengers can browse a library curated by the London-based bookstore Heywood Hill, and there’s even a custom aircraft fragrance, designed by perfumier Le Labo.


Food and drink options include VistaJet’s own branded caviar, a Nobu menu, and renowned mixologist Simone Caporale’s global-inspired cocktail collection. When customers order a classic gin and tonic, it comes “with an essence of Indian spice.”

Then there’s the sleep preparation program, where clients receive special pajamas and relaxing herbal teas prior to resting on Egyptian cotton linens, feather duvets, and cashmere blankets.

As VistaJet Creative Director Nina Flohr says, the company is trying to distinguish itself by being “simple yet out of the ordinary.” While other private aviation providers might only offer the standard Bloody Mary out of a premixed can, VistaJet believes it’s the details that make all the difference: Nobu sake, for instance, complemented with organic black cherries or whatever the passenger prefers. The cabin crew is trained to discreetly keep tabs on each customer and update their files with details of their preferences. VistaJet wants to personalize the experience of flying private.

“They’re busy people, they’re always on the go, so what we’re trying to capture with our cabin experience is that home away from home,” Flohr says. For example, if the crew notices that a customer prefers Moroccan mint tea, they will ensure that there is mint tea available on the passenger’s next flight. The crew will even note how the passenger likes it served: with sugar or without? “These are little things that are not spoken about, but are noticed and used to build that customer’s profile.”

VistaJet, which flies to 182 countries, claims to be the fastest-growing worldwide jet company. Its global flight traffic grew 20% year over year for the last three years, with over 400% growth since it entered the U.S. market in 2013. It currently has over 70 super-mid to ultra-long-range business jets, but plans to expand to 100 aircraft in the coming years to further compete with more established companies like NetJets.

VistaJet is popular with startup founders and VCs who can book flights with the company’s app within 24 hours of the desired departure. It’s already embedded in the industry’s culture: It was the first business aviation provider to use Facebook At Work, the social network’s new internal communications platform.
VistaJet’s success is partially due to its unique structuring. The company only charges clients for the leg they fly (roughly $15,000 an hour), versus traditional charter companies, which bill for the return leg, landing costs, or base resting. That means you only pay one way for the actual hours in the air—an attractive offer for those accustomed to the sharing economy.

“We are finding that most in the tech industry would prefer to have access to a fleet of aircraft, rather than own one or two planes,” says Thomas Frye, VistaJet’s marketing director. “Our business model of an asset-free flight solution is very appealing.”

Starting with the 2008 recession, more and more American businesses sought to offload company jets—often a $50 million responsibility. “A lot of boards and stockholders no longer like to see a private jet on the books,” VistaJet President Ronald M. Silverman says.

With VistaJet, executives can receive virtually identical perks for substantially less money and without the burden of maintaining and storing an expensive asset. It’s an alternative to the fractional market—in which you essentially own a piece of a private plane, somewhat like the timeshare market—which is increasingly hurt by the residual value of owning a private plane. Depreciation can go down by as much as 40% in five years.

A VistaJet cabin

VistaJet owns its entire fleet. Ten planes are based in the U.S. and 70 worldwide; their average age is 18 months. After five years, they are replaced with newer models. “We are truly the only company that can offer consistent new aircrafts,” Silverman says.

This is crucial, since today’s business leaders are more demanding than ever before. Since the hotel and restaurant industry raised the level of premium service, customers expect the same of every market. Silverman likens VistaJet to the Four Seasons: No matter which location a guest checks into, they will receive excellent treatment.

“The general public who flies in private airplanes these days are much more educated and aviation savvy than they were 10 years ago,” Silverman says. “They want to fly in the newest, most sophisticated airplanes, and they want to receive the highest level of service.”

Sheree Ladove Funsch is a founder of both established and up-and-coming beauty brands, including Bed Head and Rikoko. She prefers VistaJet for her globetrotting business trips because of the flexibility and cabin experience.

“With businesses around the world, my husband and I need a global solution that accommodates many different types of trips, so owning one aircraft or a fraction of one doesn’t work for us,” she says via email. “We pay for occupied hours only, give very little notice when we are ready to depart, and everything is included, from a cabin hostess to catering from the best restaurants and hotels in the world.”

In recent years, the industry has seen an influx of startups aiming to disrupt the private aviation industry, which is worth $14 billion. JetBlue just invested in JetSuite, which currently flies to seven U.S. destinations. There’s also the on-demand jet-hire company Victor, which boasts a popular booking app.

But innovating in the private jet space is much more difficult than disrupting the taxi industry. As Milton Pedraza, CEO of the Luxury Institute says, this is a market with rather flat growth and a laundry list of complexities. “Everyone is trying to be the Uber of the private aviation industry, and it’s not that simple,” he says. “This industry is extremely hard to quantify between charter and all the different players that exist.”

Unpredictable weather, pilot unions, airport regulations, and jet maintenance are just a few of the costly obstacles plaguing private aviation. Generally, charter planes are not owned by their management company, which means brokers must check with the owners for any new changes or modifications. With numerous variables, the market still depends on the traditional travel agent to piece together all the moving parts: The client might want to stop off in a random city, or bring a few friends, or cancel last minute.

“The complexity of the business demands relationships and exceptions and all kinds of requirements,” Pedraza says. “Because [clients’] lives are far more complex, they’re demanding more exceptions.”

Gollan points to the last century, in which entrepreneurs were keen to start commercial airlines, until they realized how difficult a market it can be. “Now the hot, trendy thing to do is get some investment money and start a private jet company,” he laughs.

Gollan points to many of the startups attempting to simplify and lower the cost of the charter experience: JetSuiteX converts non-brand-new regional jets into charter planes, then operates them out of private jet terminals, while “ride-share” startups such as JetSmarter connect passengers to chartered flights on various planes for membership fees. Both models tie the client to additional guests’ schedules. That means you can’t depart whenever you want. And in that case, some travelers might still prefer to pay an agent to find a schedule that matches their specific needs. That suggests some degree of professional security for travel agents, as long as they can adapt to industry changes and startups cultivate relationships with them.

“This is one of the toughest industries, and because it’s one of the toughest, a lot of the pretenders go out of business quickly,” says Pedraza, noting that charter agents aren’t going anywhere anytime soon. “The innovation is the relationships.”

A company such as VistaJet, which Gollan calls the “Tiffany of private jet providers,” has crafted a unique position in the market: Targeting luxury consumers and Silicon Valley executives who crave dependability and personalization. That in itself might be the new way of building lasting relationships. “You know what you’re getting each time,” he says. Not every CEO values a Nobu menu or designer slippers, he admits, but a good many do.

Flohr, however, sees the personalization trend only growing stronger within the luxury sector. “You can relate this to any industry: People want to have a voice and they want to be someone,” she says. “They don’t just want to be a number.”

Unless, of course, that number corresponds to how many organic sugar cubes you take in your tea.


November 1, 2016

Affluent consumers to decrease luxury market spend, says Luxury Institute

Luxury Daily
November 1, 2016
By: Brielle Jaekel

The drastic shift in consumer behavior from the rapid evolution of technology has resulted in a 20 percent drop in customer spend with luxury brands, according to the Luxury Institute.

 Luxury Institute’s “2016 State of the Luxury Industry” report shows that consumers are spending much less in the luxury market compared to two years ago, but luxury marketers will have an uphill battle to determine how to combat this. While digital and mobile avenues are vital to success for any retailer or brand, it seems that affluent consumers are interested more in shopping with luxury brands at bricks-and-mortar locations.

The report surveyed 3,900 affluent consumers from the U.S., U.K., Europe, Japan and China, all of which made higher than $150,000 USD, £60,000, EUR50,000, 1 million CNY and Japan ¥150 million.

 Consumer habits

Luxury spending in the United States is ahead of many other countries, but the United Kingdom and Italy are leading the pack. The average spend within the luxury market in Italy is expected to be $17,660, $16,715 in the U.K. and $16,360 in the U.S.

Brands must now focus on how to properly balance ecommerce initiatives and in-store strategy to appeal to the modern affluent U.S. consumer. Bricks-and-mortar are making a slight comeback with 54 percent of high-net-worth individuals preferring to shop in store for luxury brands, compared to only 49 percent two years ago.

Hugo Boss New York Fifth Ave store 400

Social media is now the main avenue luxury fashion brands are using to communicate with consumers for customer service, with 58 percent leveraging Facebook Messenger, according to another report from L2.

Traditional customer service communication platforms are tired and outdated, and consumers now expect a more modern method for reaching out to brands and retailers. Many brands are taking note and launching communication methods on mobile messaging platforms such as Facebook Messenger, with 71 percent of watch and jewelry brands following suit (see more).

The growth of the luxury market is slowing, with only 19 percent of high-income individuals planning to spend more within the next year, compared to the 30 percent from two years ago.

While growth will slow, many U.S. consumers are still planning to spend on luxury goods and services. For instance, 92 percent of affluent consumers in the U.S. plan to spend money on luxury brands within the next 12 months.

The average anticipated spend per consumer is estimated to be $16,360, dropping almost $4,000 from $20,085 in 2014.

Luxury sectors

Watches, fine art, handbags, home appliances and jewelry are likely to be the areas hurt the most from the cut back. About 33 percent of consumers claiming to cutback on spend with watches, 28 percent on art, 24 percent on handbags and home appliances and 23 percent on jewelry.

Michael Kors Access smartwatch

However, travel remains as the dominating sector in which U.S. consumers with high incomes will be spending with luxury brands.

Hilton-owned Waldorf Astoria Hotels & Resorts climbed the ranks in terms of international brand awareness, despite consumers spending less time traveling, according to another report from Luxury Institute.

JW Marriott, InterContinental, Four Seasons, Grand Hyatt and The Ritz-Carlton maintained their places as the most visited hotel brands, reported last year and this year in the LBSI Global Hotel study. However, affluent consumers are cutting down on hotel stays with modest decrease in number of nights stayed (see more).

“The biggest surprise is that while ecommerce is critical to success in luxury, slightly more consumers still prefer the store experience,” Mr. Pedraza said. “Additionally luxury consumers are following less, not more, luxury brands on social media.

“As millennials mature they are recognizing that they have to focus on careers and relationships, not just social media,” he said.


October 26, 2016

96pc of Consumers Seek Others’ Opinions Before Making A Purchase

Luxury Daily
October 26, 2016
By: Sarah Jones

Word-of-mouth recommendations from trusted sources have more sway over consumers’ buying choices than any form of marketing, according to a survey by Influence Central.

Consumers are increasingly relying on reviews and social media to inform their purchase decisions, with 74 percent of shoppers saying they are more likely to ask their social network for opinions before buying than they were three years ago. With more information readily at their fingertips than before thanks to the Internet and smartphones, consumers are digging deeper than traditional media or the brand’s own channels.

“Our findings demonstrate that online reviews and recommendations play a powerful role in shaping the consumer purchasing journey, with 96 percent of women consumers saying they’re likely to seek out opinions and recommendations from others before they buy or try, and 91 percent looking beyond in-person family and friends to tap social networks when looking for a recommendation,” said Stacy DeBroff, founder and CEO of Influence Central. “Seeking out trusted opinions has become step one for consumers in today’s path to purchase.”

Influence Central’s Consumer Insights Study is based on a survey of 400 American women in late summer 2016 conducted using an online questionnaire.

Social Networking

Nearly all consumers say they are apt to look for recommendations from others before buying a service or product. Slightly less, 91 percent, go beyond their immediate circle, expanding their search for opinions to social networks.

For 72 percent, this prevalence toward consulting social connections goes beyond considered purchases to everyday buying decisions.

About three-quarters say that they are more apt to turn to social media for advice than they would have been just three years ago. Reasons for this rise in use of social media for this purpose include being more active on social media with more connections and being able to better identify whose opinion to trust.

The most popular identities of social influencers for respondents included friends or friends of friends, extended family and family friends and former schoolmates.

Beyond merely consuming others’ opinions, 72 percent of women say they share their own recommendations on social networks.

Consumers are confident in their ability to determine the credibility of a review, with 93 percent self-identifying as skilled at picking which information to trust.

When trying to figure out whose word to trust, consumers look for reviews with lots of detail and turn to sources they have already deemed trustworthy.

In the rankings of trusted sources, traditional media comes in last, trailing close friends and family, other moms, Web searches and the consumer’s social network.

With more information at their disposal via search engines and social media, 56 percent say they collect more content. Only 17 percent say they take in less material.

However, 93 percent of women say they search for more types of information, with 88 percent seeking out more global influencers than they did just three to five years ago.

All of the sources at a consumers’ disposal can simultaneously be a help and a hindrance, as it means more to wade through and the prevalence of untrustworthy information.

When asked to describe what makes a review useful, 65 percent of consumers noted both an objective point of view and honesty. Another sign that a reviewer can be trusted is their status as a verified purchaser of a particular item.

Consumers trust peers over experts when looking for objective views of a product, with 80 percent seeking out consumers’ opinions compared to 59 percent looking for experts’ thoughts. When evaluating others’ recommendations, women look at a reviewer’s experience with the product and their identity, looking for those who have similar lifestyles.

“Luxury brands know their products typically don’t prove to be impulse purchases but instead they’re seen as investments where consumers do their homework upfront,” Ms. DeBroff said. “In fact, more than 85 percent of consumers use Web sites and social media to access recommendations they use to make purchasing decisions.

“By listening – and engaging – with consumers on these platforms, luxury brands can gain valuable insights on potential brand affinity and lifestyle aspirations, as well as learn what drives purchase.”

Ratings and Reviews

Social media content has implications beyond retail brands.

The Ritz-Carlton Hotel Company leads online conversation among hospitality brands in the United States, according to a new report by Engagement Labs.

While word of mouth is still important among high-end goods and services, online conversation, hashed out on social media platforms such as Facebook and Twitter, is steadily becoming a strategy for brands aiming for consumer retention. In Engagement Labs’ first “Total Social” ranking, Ritz-Carlton ranked the highest on social media, but fell when it came to recommendations made by offline word of mouth, presenting an opportunity for the hospitality brand (see story).

Being popular does not always lead to strong word of mouth, according to a recent survey of affluent men conducted by the Luxury Institute.

The top five brands listed in the men’s consideration sets were not the same as the five they would be most keen to endorse to family and friends. With luxury consumers, particularly those in emerging markets, becoming more sophisticated shoppers, smaller boutique labels have the opportunity to expand awareness by leveraging the recommendations of existing clientele (see story).

“Producing a great high-quality product always will be a strong first step, and luxury brands also need to understand that what really resonates with today’s savvy consumers proves to be authenticity,” Ms. DeBroff said. “Moreover, 93 percent of women consumers describe themselves as skilled at determining which information to trust, and as they look at online recommendations, ‘speaks from firsthand experience’ and ‘verified user/purchaser’ appear as the top two signals that the recommendation can be trusted.”


October 7, 2016

India’s Oberoi Values Personalization With New Amenity Push

Luxury Daily
October 7, 2016
By: Brielle Jaekel

Oberoi Hotels & Resorts is treating guests who stay in top-tier suites to the celebrity treatment with a series of amenities representative of experiences only VIPs receive.

The Indian hospitality brand is launching a series of initiatives to make its top-tier customers feel as though they are celebrities, with programs such as a 24-hour butler service, luxury transportation to and from the airport and unique amenities at its various locations. Oberoi is hoping to see more suite reservations by creating an enticing vacation and travel experience.

“We want every guest at Oberoi Hotels & Resorts to feel like a VIP, and we’re excited to unveil these special amenities for those who stay in our top suites,” said Abhishek Panshikhar, General Manager, The Oberoi Amarvilas, Agra.

An Oberoi property in Rajvilas, Jaipur, India

An Oberoi property in Rajvilas, Jaipur, India

Celebrity treatment

Oberi locations are now equipped with various amenities fit for celebrities, but available to anyone who books their top-tier suites. The Oberoi Rajvilas, Jaipur is providing guests with to-and-from airport transportation that emphasizes luxury in an Audi Q5/Q7.

When guests arrive at the hotel, custom cocktails and beverages are provided along with a fresh flower garland. Special meals cooked by a resort chef, fruit baskets, nut boxes and flower arrangements are all available within the suites, as is Oberi’s 24-hour butler service.

Guests of the Oberoi Amarvilas, Agra are all greeted by the general manager and a warm towel, in addition to custom cocktail and garland. While personalized chef-cooked meals are not available in-room, the nut boxes, fruit bowls and cookies still are, as well as the 24-hour butler service.

The Oberoi, Mumbai provides individuals staying in its Presidential Suite with a special escort from the airport including transportation in a Mercedes S Class fitted with sparkling water and cold towels. Passengers will also be able to view the room service menu during their trip to the hotel for speedy food delivery.

Guests staying at Mumbai will also receive Oberoi’s garland, welcome beverage, warm towels and butler service upon arrival. However, the Mumbai location will offer monogrammed pillows, hand towels and bath robes for the Presidential Suite.

The Oberoi Udaivilas, Udaipur also provides a chauffeur service to and from the airport, but offers a private boat ride across Lake Pichola to the resort, equipped with chai tea, as well. Udaipur’s Oberoi resort features amenities similar to its other locations, but puts a local spin on the program for a more personal touch.

For instance, when guests arrive they will receive a traditional native welcome, which includes a rose petal shower Aartu and Tikka ceremony. The ceremony is meant to ensure good health, well-being and happiness during their stay.

Guests will also receive orchids, turndown service, prepared baths with rose petals and candles and a personalized note from the general manager to say goodbye.

Travel industry insights

Personalization and amenities similar to what Oberoi has added are important in appealing to the affluent consumer of today.

The luxury travel industry still yields high results with affluent consumes going on more than triple the number of trips average households take, according to a report prepared by Resonance.

General consumers in the United States take only an average of 4.8 trips a year, compared to the wealthiest 5 percent who take more than 14.3 trips per year. The luxury travel sector alone pulls in roughly $390 billion each year, with each trip costing $3,115 per family member (see more).

Hilton-owned Waldorf Astoria Hotels & Resorts climbed the ranks in terms of international brand awareness, despite consumers spending less time traveling, according to the Luxury Institute.

JW Marriott, InterContinental, Four Seasons, Grand Hyatt and The Ritz-Carlton have maintained their places as the most visited hotel brands, reported last year and this year in the LBSI Global Hotel study. However, affluent consumers are cutting down on hotel stays with modest decrease in number of nights stayed (see more).

“From the moment our guests arrive, we aim to provide the most attentive, personalized service possible so that everyone feels at ease and at home while staying with us.”


August 30, 2016

Lamborghini Pivots to Target Women and Families
By: Hannah Elliott
August 30, 2016

Forget what you know about raging bulls.

Lamborghini wants to show you a softer side of Italian supercars.

So says Chief Executive Officer Stefano Domenicali, who moved to the company’s top spot in March. Since then, he’s been calling for a change in tone at the Volkswagen Group-owned house. Where the sharp-edged V12 and V10 aggression of the Murcielago, Gallardo, and Aventador reigned supreme for years, Domenicali said, buyers can expect to see something different in the next few years.

“A bull is always aggressive, but I would like to give us a new philosophy toward the future: A bull can be gentle,” he said.

Urus Is Key

Domenicali’s image efforts hinge on the new Urus SUV, due out by late 2018. He said the vehicle will double the company’s annual global output but will remain on limited production at Lamborghini’s new Sant’Agata factory. The brand sold a purposefully few 3,245 units worldwide in 2015.

“The SUV will be a game changer,” he said. “It will make Lamborghini different.”

The goal will be to make Urus immediately identifiable as a Lamborghini, both in how it looks and in how it drives, and to make it immensely “personalizeable” for a young (30-45) target audience whose members view themselves as the “protagonists” of their own lives, Domenicali said. The engine is anticipated to be a 600-horsepower, turbocharged V8 engine, rather than Lamborghini’s signature V12.

What Women Want

Even more notable, Domenicali is hoping that a big share of the SUV’s buyers will be women. This will be no small feat, considering that only 5 percent of the company’s global buyers last year were female. That’s roughly the same percentage it held even a decade ago, according to a Lamborghini spokesman. What’s more, most of those vehicles were sold to women in the U.S. and Europe; the first woman to buy a Lamborghini in India did so just three months ago.

“I don’t think anybody has captured the heart and soul of the female luxury buyer” in the supercar arena, said Milton Pedraza, CEO of the Luxury Institute, a Manhattan-based research firm. “It’s not a question of money for women in that segment. The money is not going to be the issue. It’s going to be: ‘Show me you know me.’”

There is plenty of space for Lamborghini to claim. Nationwide, women buy 53 percent of all small SUVs and 48 percent of small premium SUVs, according to J.D. Power & Associates, compared to roughly 40 percent of all new cars.

The Power of Singles

Single women in particular are coveted potential buyers: From 2010 to 2015, premium small SUVs saw a 177-percent jump in sales to single women, according to MaritzCX, a customer-experience research company. More than two-thirds of female buyers reported their 2015 vehicle purchase decision as “entirely up to me,” according to the report. Additional storage and passenger space, a high ride height, and improved fuel economy in new premium SUVs have fed their growing appeal to women buyers.

“Lamborghini is going in the right direction here,” Pedraza said, noting the success of Porsche and its wildly popular Cayenne SUV. “Anybody can be convinced, as long as there is substance to the argument. If Lamborghini puts out a product that is female-friendly, women will definitely flock to it and will change their minds.”

The key to success in this new segment for Lamborghini, Pedraza said, will be to produce a product that women can use comfortably and often. (“If you are going to do an SUV, you better understand that there will likely be children in the back; women transport kids, whether they are working mothers or not.”) The brand will have to get women into the showroom and then communicate the quality of the product: “When women get to the showroom, the people who are ambassadors to the brand and the experience have to be impeccable,” he said. “It all has to be seamless and honest and relevant—and by the way, human. If it can do that, I believe Lamborghini has a great shot.”

Hiring and promoting more women to lead the drive will be essential. Representatives from Lamborghini said on Tuesday that they were unaware of how many, if any, women the company employs in top leadership positions; a quick survey of head executives on the company’s press website offered no female names apart from that of the new American public relations executive.

This will entail revolutionary thinking at the 53-year-old brand, which started out making tractors in an industrial center in rural Italy. Domenicali said he’s more than up to the challenge.

“We have a small company, but we know we can do a good job,” he said. “And we are humble—it’s a different customer, a different car, a different network. We are top with regard to the super sports car, but this will be a different business.”

Keep the Good Stuff

Lamborghini does have some non-negotiable stipulations, even with the new, softer-side efforts. It will always make its signature V12 engine, Domenicali said. And while it will eventually introduce a hybrid Urus, it will never move toward producing vehicles that run on diesel. A totally electric Urus is a “maybe,” Domeniali said, depending on how technology and regulations develop over the coming years.

After all, a bull is still a bull, even if it’s a gentle one.

“Our customers want to feel the car, they want to hear it, they want to feel the vibration of the engine,” Domenicali said. “They are expecting from us to be current with our cars and yes, to invest in technology, but at the right moment—not before and not after.”

Success at Lamborghini will have much to do with having the flexibility to change and grow, he added: “A bull can recognize people with a glimpse of the eye and be smart. He is not always aggressive in a negative way. He’s aggressive because he is very strong animal, but the Lamborghini of the future is an animal that can recognize the beauty of people, can recognize the fact that we are going to a family-oriented business with an SUV.”


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