Luxury Institute News

October 21, 2014

Luxury Institute Introduces Luxcelerate, an Empirically Proven Method to Drive High Performance in Building Client Relationships

October 21, 2014 80763_LuxcelerateLogo

NEW YORK, NY–(Marketwired – Oct 21, 2014) – Today, the New York-based Luxury Institute announced the launch of Luxcelerate, an enhanced version of its innovative successful 7-Step Customer Culture process. Luxcelerate is designed to accelerate sales performance via a proprietary methodology that focuses on empowering the customer-facing online and offline associates, helping brands to improve both client relationships and sales exponentially.

Presently, top brands are struggling to both expand and retain their client base. Top brands have a conversion rate of 10-15%, a data collection rate of 30-40% (approximately 25% of this data is unusable) and a first time buyer retention rate of 10%.

Luxcelerate encourages the individual sales associate to learn and execute the best practices in client relationship building. The process is designed to improve sales performance via an exclusive methodology that focuses on relationship building, while improving a brand’s conversion, data collection and retention rates.

Luxcelerate’s proprietary methodology is based on shared relationship values and standards that are designed by a brand’s front-line teams, and is therefore customized to fit the unique DNA and culture of each brand. Custom education programs use empirically proven learning principles to drive retention of critical knowledge. Measurement and reinforcement methodologies are then deployed individually to guarantee consistent daily execution. The outcome is humanistic, effective client relationship building that leads to sharp increases in sales.

Luxury Institute’s CEO Milton Pedraza developed Luxcelerate’s 7-step methodology. Mr. Pedraza established this innovative methodology after being inspired by best practices from education, medicine and aviation. Using this process, a number of top-tier luxury brands have doubled, or tripled, the accurate collection of critical client data, and have significantly increased client conversion and retention rates. Luxury Institute has worked with the top brands of major luxury groups, well-known brands owned by private equity firms, and small boutique brands, to drive sales at rates of 15-30% per annum.

“The Luxury Institute was invaluable in helping Malia Mills define and implement our clienteling process. The first quarter that we implemented our program we increased sales by a significant amount.” — Carol Mills, Co-Founder, Malia Mills

“Since embarking on this project, we have seen double digit increases in data collection, conversion and a significant acceleration in retail momentum.” — Claudia Poccia, President and CEO of Gurwitch, Owner of the Laura Mercier brand

References are available upon request. For more information please email or fill out a contact form at


October 21, 2013

Luxury Institute’s Wealth and Luxury Trends 2014 and Beyond: A New Model to Increase Profitability

(NEW YORK) October 21, 2013 – The luxury industry is closing out the final quarter of 2013 and preparing for another year of uncertainty ahead in 2014. Hyper-growth in the emerging markets since 2009 is showing signs of softening, while the year-over-year increases in U.S. sales are picking up steam. Europe, too, is on the upswing.

Looking ahead, brands are concentrating on existing stores, price increases, cost reductions, and emphasizing higher-profit products. Another area of focus enabling many of these initiatives is improving customer conversion and retention efforts.

Providing luxury goods and services to wealthy customers will remain a growth industry. Market share is the name of the game and competition is getting fierce in a slower-growth environment.

We work with dozens of top-tier global luxury brands each year. Based on recent experiences in New York, Milan, Paris, and London, here are seven trends that smart luxury brands need to address in 2014:

1.   U.S. Brands Ditch CRM Vendors Who Fail To Deliver Measurable Results

The honeymoon is over. After investing heavily in CRM systems and consultants, leading brands are now beginning to divorce their initial CRM vendors. Many top-tier luxury brands, particularly those based in the U.S., are terminating their current CRM contracts or confidentially seeking alternatives. They feel shortchanged by empty CRM promises at the database and analytics levels. They are also disappointed with CRM consultants unable to execute simple reporting requirements to support marketing and front line teams on a timely, error-free basis. As CRM vendors continuously fail to deliver, look for the Europeans to stage their own revolts from underperforming analysts and systems.

2.   Mystery Shopping Is No Way To Boost The Bottom Line

Luxury executives, mostly out of habit, have opted for mystery shopping as the preferred method for measuring sales team behaviors. It’s dawning on many brand leaders today that they are often getting reports that are clearly massaged by the vendors and/or the mystery shoppers, very much like fake online ratings and reviews. These are not real shoppers, nor are they even economically qualified to be luxury shoppers. Combine this with the fact that the number of data points does not equal a statistical sample, and you get a sense of the spurious conclusions that can be drawn from mystery shopping. The concept adds up to wasted resources and falls far short of the goal. Look for the leading edge brands to abandon mystery shopping as a relic of the last century that took years to wear thin. Customer experience surveys and customer metrics can take the mystery out of mystery shopping and be a better use of resources.

3.   Attribution Model Retribution

Brands are eager to pinpoint which marketing and sales channels are most effective so they can invest accordingly. It’s not an easy task, so data scientists have come up with a concept called attribution modeling.

Attribution modeling attempts to determine which communication channels get credit when a prospect uses several of them before converting into a buyer. Data scientists analyze data and try to trace the customer purchase journey across touch points. They then weight the channel results using their own judgment to come up with an answer.

There are several challenges involved, including how to account for unknown offline influences, multiple device usage, and various digital touch points that may be a combination of social, display, video, referral, email and search. The inaccuracies are almost insurmountable. The process is biased from the start due to the fact that the most readily available data comes from online sources.

Predictably, the brand channel owner fighting hardest to get the credit also influences results. Today, data scientists build expensive attribution models that are very precise but highly flawed. Look for senior brand executives to demand full accountability from their teams and stop wasting money on inaccurate models that drive ineffective spending in 2014.

4.   Not Big Data, Relevant Data

The Big Data hype became huge in 2013. Since most senior executives are new to data and analytics, they must act duly impressed by the promise of Big Data, or they will be accused of being out of touch.

The reality is that most collected customer data is simply exhaust and not relevant in making predictions about future spending behavior. The 20% of the data that gives us 80% of the predictability models gives us what we term “lift”, or a higher probability.  This higher probability that a customer will buy an item is simply that, increased probability, not certainty. Timing is everything and even a good predictive model of what a customer might buy next may send the offer at the wrong time. Demand that your analysts prove to you which massive data they collect and analyze is relevant and why. Ensure that the data scientists verify the conversion “lift” of their models. Make sure that Big Data has a big return on investment. Sometimes just skip the propensity models and build strong customer relationships by simply contacting clients and asking how you can best serve them.

5.    Online Personal Shoppers

Finally there is innovation in delivering a customer-worthy online buying experience, and it looks a lot like the offline experience. The human being is en vogue again. Online-only and multi-channel retailers are developing personal shopper teams aimed at supporting their most valuable customers (top 20%) who may require a guided or curated experience with a trusted expert. Masses of affluent tourists are a preferred segment since many can be retained online after the initial store purchase.

Brands are incentivizing their specially selected and trained personal shoppers to use digital channels to develop deep customer relationships based on expertise, trustworthiness and generosity. It is not cheap, but the low conversion and high attrition rates among key customers and wealthy tourists require innovation that yields high returns, even if it is boring, low-tech humanity.

6.     Luxury Outlet Saturation

Recessions have a way of inspiring luxury brands to explore new opportunities for development. Luxury outlets are a growth engine right now. Many luxury retailers are reaching the point where discount outlets may soon outnumber their full-price stores. Right now, this strategy has delivered results and outlets are a source of good profits for brands, but don’t dismiss the negative impact this can all have on a luxury brand. A great deal of the merchandise in luxury outlets allegedly has never seen a full-price store. It is made of a lower level of design, quality and craftsmanship, created specifically for the outlet, and carries faux full price tags that are then reduced.

Luxury has rules that can’t be violated for long without serious consequences. True luxury consumers are highly educated and connected, and allegations have spread across fashion blogs. When you take the high quality, craftsmanship, and design out of your products, and also eliminate personalized service, you slowly erode the brand’s heritage and loyal clients will begin to doubt your legitimacy. Many executives in headquarters are quietly beginning to worry. Outlets fever will have a corrosive brand effect. The problem is that short-term growth feels so good and the negatives creep in slowly. Wall Street will cheer you on. You won’t notice your luxury brand has been damaged until full price loyalists begin to flee in droves.

7.   Customer Culture is the New Profit Mode

Like CRM, Customer Culture is a holy grail everyone discusses with passion, and can even cite the great culture-driven brands such as Zappos, Nordstrom and The Ritz-Carlton. Although most brands know their stores and websites are more like vending machines than relationship building centers, embracing Customer Culture is scary for many. Some will simply pretend they are customer-centric, while others do piecemeal work in an effort to create a client-focused environment.

Results from a 2013 Deloitte survey on culture and values show that companies with a purpose beyond selling widgets have much higher rates of profitability as well as customer and employee satisfaction. Luxury Institute’s own case studies reveal that data collection rates can triple and retention can double, especially for the top 20% of customers who drive 70% of sales. One automotive client recently won an award for CRM activities such as a 400%+ increase in lead follow-up.

Brand leaders finally understand that technology, big data, and analytics are rendered useless without empowered and inspired human beings that engage the customer daily. We predict an increased focus on Customer Culture in 2014 as brand executives are forced by fierce competition and slower growth to innovate.

Dramatic progress can be seen when brands think beyond products and channels and focus on customer relationship building. Even Apple has recognized the potential of further engaging the customer, bringing Burberry CEO, Angela Ahrendts, on board in a new role to oversee both retail and online stores. Customer Culture is the new profit driver in a commoditized and fiercely competitive luxury world. Only the enlightened will thrive.

To hear Luxury Institute CEO, Milton Pedraza, speak more about the importance of relationship building with top clients, watch excerpts from “Bold Customer Culture: The New Profit Model” presented at the 2013 Luxury Interactive conference.

About the Luxury Institute (
The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers globally about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Customer Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.


September 26, 2013

Strategy emerges from customer culture: Luxury Institute CEO

By Joe McCarthy
Luxury Daily
September 25, 2013

NEW YORK – The CEO of The Luxury Institute at the Luxury Interactive 2013 conference said that luxury brands should focus on building a culture of relationship building and sales will follow.

The executive said that many conventional paradigms of behavior should be flipped to create an environment steeped in meaningful purpose. In his “7 Paradoxes of Luxury Marketing” talk he verified the profitability of such strategy suggestions with hard evidence.

“If you want to create a great customer culture, you have to think in terms of paradox,” said Milton Pedraza, CEO of The Luxury Institute, New York.

“Some people say culture trumps strategy, but I don’t believe that’s true,” he said. “Strategy emerges from culture.”

Internal paradigms
Mr. Pedraza discussed several remedies for poor strategies that have become entrenched in business culture.

The first paradox dealt with shifting a brand’s focus from commodities to meaningful purpose. This objective reaches beyond revising product development to facilitating a better society.

Mr. Pedraza at the Luxury Interactive 2013 conference

Next, companies should switch the tone of their command style from hierarchical and militant to empowering and creative.

Mr. Pedraza said that employees are more responsive and more likely to create innovative ideas when given liberty to act without constraints. An example of this would be giving in-store employees technology to pursue friendly relationships with customers post-purchase.

Third, Mr. Pedraza said that decision-making should incorporate employees from all levels of operation as well as consumers. When decisions are cloistered among high-level executives, simple or uncanny solutions can be overlooked.

Looking out
Educating employees should not resemble a classroom. Rather, Mr. Pedraza insisted that employees will quickly adopt brand values when trained in a gradual, interactive and personal manner.

A skill-based hiring process should be tempered with value-based merits. A candidate selected after an assessment of values will likely assimilate into brand culture with more ease.

Mr. Pedraza urged brands to incentivize the right behavior. Employees will likely be more proactive if they know their behavior is recognized.

Finally, a meaningful brand culture should be reinforced daily to ensure its fortitude. Lexus and The Ritz-Carlton were two luxury brands that Mr. Pedraza acknowledged as pioneers of meaningful brand culture.

For instance, Toyota Corp.’s Lexus is promoting the 2014 IS vehicle with a collaboratively created, stop-motion Instagram film that draws on the perspectives of 212 fans to show the vehicle in a range of angles and tones.

Under the orchestration of a directorial team during Instagram’s #WorldwideInstameet, car enthusiasts and Instagram users from a variety of background blended their personalities in a film that colorfully animates the IS. By leveraging Instagram in this unifying fashion, Lexus will likely grab the attention of a younger demographic and potentially trigger more collaborative, stop-motion films (see story).

Ultimately, if employees are infused with a sense of purpose, they will likely be more effective sales agents.

“Employees that believe companies have strong sense of purpose versus companies without purpose perform much better,” Mr. Pedraza said.

September 23, 2013

Small Business Learns To Build Customer Loyalty Like Luxury Brands

Luxury Institute founder applies lessons learned in high-end retail to small and medium sized businesses.

(NEW YORK) September 23, 2013 – There are more than 27 million small businesses in the United States, according to the Small Business Administration, but 50% of them will fail within five years. While lack of capital is a major factor, also significant is the lack of a customer-centric culture.

“Many entrepreneurs launch businesses with a great product or service idea, and then proceed to focus on daily transactions rather than building long-term customer relationships,” says Milton Pedraza, CEO of the Customer Culture Institute. “Focusing on transactions over relationships does not breed customer loyalty.”

Successful smaller companies, says Pedraza, are organized at an early stage to deliver extraordinary experiences to every customer on a daily basis. The problem for most small businesses is a lack of expertise and a proven process.

To provide these companies with access to state-of-the-art methodologies and metrics to measure and boost customer satisfaction and loyalty, the Customer Culture Institute is launching a do-it-yourself, online software platform to help small businesses to create their own customer culture. Pedraza, who is also CEO of the highly-respected New York-based Luxury Institute, says the Customer Culture Navigator software enables business owners to communicate with and provide needed support and training for their employees in real-time.

Small business teams will use their creativity to custom design a cultural foundation with clear definitions of relationship values and standards. The software helps to train, measure and reinforce the culture daily, a process that has a track record of dramatically improved customer loyalty at large luxury and premium brands that Pedraza has previously coached.

“We help move companies away from a soulless transaction mentality to profitable long-term customer relationship building,” says Pedraza. “In essence, we teach them that outbehaving the competition leads to outperformance.”

One innovative approach Pedraza and his team have taken, is to use crowdfunding site Indiegogo to raise funds from investors in the project. The campaign can be viewed at

“Online crowdfunding is an elegant win-win-win opportunity,” says Pedraza. “We have an opportunity to provide valuable resources to our funding contributors, while building a project that can transform small business culture and dramatically increase the success rate of small business.”

September 17, 2013

Regional Banks And Wells Fargo Deliver Winning Customer Experiences

(NEW YORK) September 17, 2013 – The Luxury Institute’s new survey asked wealthy U.S. clients with a minimum household income of $250,000 to rate multiple aspects of their primary bank from a list of national and regional banks.

Evaluations of convenience, staff, company principles, and products and services yield a composite Banking Customer Experience Index of 1-10. Wells Fargo stands out with the highest composite score and also leads in each of the four sub-indices.

Smaller banks beat out Bank of America and Chase for having knowledgeable, trustworthy and respectful staff. Bank of America earns the lowest overall score but still holds the biggest market share of high-income clients. Chase consistently ranks between Bank of America and Wells Fargo and has the second largest market share of all rated consumer banks.

Despite shortcomings of bigger banks, Bank of America, Chase, Wells Fargo and Citi Bank customers are far more likely (45% vs. 27%) to open a new account with their existing bank as compared to current customers of smaller banks.

“There is an opportunity for big banks to bridge the customer experience gap between themselves and their smaller competitors by focusing on developing a unique Customer Culture to deliver value for all segments of customers, and especially the top customers who deliver most of the profits,” says Luxury Institute CEO Milton Pedraza.

About Luxury Institute (
The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

September 11, 2013

Will new owners bring Neiman Marcus and Saks into the future of retail?

By Erin Shea
September 10, 2013
Luxury Daily

The Neiman Marcus Group Inc. was purchased for $6 billion by investment firm Ares Management and the Canada Pension Plan Investment Board Sept. 9, which makes this the second United States-based department store after Saks Fifth Avenue that has new Canadian owners.

Neiman Marcus’ new owners now have the opportunity to further expand the brand and revamp it into a retailer that is ready to take on the next generation of consumers. With the recent purchases of both Neiman Marcus and Saks, both retailers are looking to expand their global presence while creating a loyal customer base.

“On behalf of the entire management team, we are delighted to be joining with Ares and CPPIB to continue enhancing our strong brands by offering our customers the best edited merchandise assortments as well as delivering a superlative omnichannel shopping experience,” said Karen Katz, president and CEO of Neiman Marcus Group, Dallas.

Next step
Neiman Marcus’ former owners, Warburg Pincus and TPG Capital, purchased the retailer in 2005 for $5.1 billion.

The companies sold the retailer on Sept. 9 for $6 billion, after ending a long struggle to sell it, according to Reuters.

With its new owners, Neiman Marcus is looking to expand while keeping its consumer’s satisfied with its omnichannel offers, which is similar to what Saks is aiming to do.

Saks’s new owner Hudson’s Bay Company will help boost its omnichannel experience as part of its portfolio of retailers.

Saks’ new Look campaign

Hudson’s Bay Co. purchased Saks July 29 for $16 per share in an all-cash transaction that is valued at $2.9 billion, which includes debt. This purchase is likely to help Saks reach its goal of becoming an omnichannel retailer and provide its customers with an enhanced shopping experience.

Both Saks and Neiman Marcus are likely to benefit rom new ownership so that they can focus on building up consumer relations.

“There has been a lot of capital accumulated in Canada in the last couple of years,” said Milton Pedraza, CEO of The Luxury Institute, New York. “I think that when the Canadians look around the world, they see the U.S. as a growth opportunity and they especially see luxury as a growth opportunity.

“The Canadians tend to be brand builders and there is a tremendous opportunity to build up customer culture since Neiman Marucs is lacking in this area,” he said.

“Neiman Marcus needs loyal customers and Saks does too.”

In addition, these new owners could help the brands reach other goals by expanding their presence in Canada.

“Neiman Marcus and Saks are great retailers and great brands that can easily extend to Canada, especially in ecommerce,” said Marie Driscoll, CEO and chief consultant at Driscoll Advisors, New York.

Just a coincidence
However, the purchases of Neiman Marcus and Saks could be looked at as just a coincidence happening around the same time.

Although, both of the sales do seem to indicate that the new owners have faith in the retailers to remain strong in the future.

“Investment companies are global,” said Chris Ramey, president of Affluent Insights, Miami, FL. “It’s serendipity that both Saks and Neiman Marcus will be owned by companies based in Canada.

“Saks and Neiman Marcus are the heart of American luxury,” he said. “The two brands escaped the recession unscathed.

“There is a continuum between when you’re purchased by a private equity group and when you’re sold by a private equity group that commences with optimism and a willingness to invest.”

July 2, 2013

Highest Net Worth Consumers to Reign in Luxury Spending

What are the luxury spending preferences of the highest net worth consumer

By Donald Liebenson
Spectrem’s Millionaire Corner
July 1, 2013

Despite an improving economy, the highest net worth consumer is reigning in spending on luxury items, and plan to use discretion with their discretionary income. according to a recent Luxury Institute survey.

Of the more than 500 millionaires with a net worth of at least $5 million surveyed, more than 80 percent aid that such purchasing luxury items as jewelry, watches and handbags is not as high a priority. Among these highest net worth consumers, noted Luxury Institute CEO Milton Pedraza in a statement, “luxury goods and services are considered less important in today’s economy.”

Just 6 percent said they expect to spend more on handbags through the end of the year and 4 percent said they will increase their spending on watches and jewelry.

Respondents said that their non-luxury spending has increased by almost half. The trend of “less is more,” the survey found, applies not just to luxury goods but also household items and clothing. The highest net worth consumers, Pedraza said, are not as resistant to shopping at big box or chain retailers.

What is of increasing value to the highest net worth consumers is creating experiences and lasting memories. One-third of respondents said they plan to spend more on travel.

In a fourth quarter survey conducted by Spectrem’s Millionaire Corner of investors with a net worth of at least $25 million, the highest percentage of these highest net worth consumers were more likely to spend up to $10,000 annually on entertainment ranging from cultural events (56 percent) to sporting events (52 percent), with less than half spending that amount on clothing (48 percent) and jewelry (46 percent).

Not that these consumers are less loyal to their cherished brands. Another Luxury Institute surveyed highest net worth consumers about the luxury brands they do buy and with whose salespeople they have developed the closest relationships. When it comes to jewelry, Tiffany & Co. is the brand ultra-wealthy women buy most, followed by David Yurman and Cartier. Tellingly, these are the three top jewelers where ultra-wealthy women have a preferred salesperson.

In women’s fashion and accessories, the preferred brands are Michael Kors (36 percent), Prada, Burberry, Louis Vuitton, Chanel, Gucci, and Mark Jacobs.

Among men, Ralph Lauren and Brooks Brothers are the men’s fashion and accessories brands of choice.

The highest net worth consumers most appreciate from their sales people a comfortable environment, honest communication, trust, being personally recognized and handwritten thank you notes.

Tiffany Leads Purchases for Ultra-Wealthy Women

By Danielle Max
International Diamond Exchange (IDEX)
July 1, 2013

(IDEX Online News) – Forget Breakfast at Tiffany’s, ultra-wealthy women are ordering lunch, dinner and a midnight snack at the luxury jeweler. According to the latest survey by the Luxury Institute, Tiffany & Co. is the go-to jewelry brand for individuals with a minimum net worth of $5 million.

David Yurman and Cartier follow Tiffany in the spending stakes. And it’s not just because of product offering. The survey found that the three market leaders are also the top three jewelers where ultra-wealthy women have a preferred salesperson.

“Relationship selling is not something exclusive to markets like high-end automobiles, real estate and wealth management services,” said Luxury Institute CEO Milton Pedraza. “Even in luxury jewelry and fashion, relationships cultivated by trust and an understanding of customer preferences can help boost both the frequency and size of sales.”

The survey also found that ultra-wealthy men are less likely than women to build relationships with salespeople.

Pentamillionaire men and women both agree that the top ways salespeople build lasting relationships are by making them feel comfortable, communicating honestly, earning their trust and recognizing them on store visits.

More than half of ultra-wealthy women who purchase from both jewelry and fashion brands say they appreciate handwritten thank you notes.

June 20, 2013

Ultra-Wealthy Shoppers Flock To Nordstrom But Barneys, Bergdorf And Neiman Cultivate Relationship Business

(NEW YORK) June 20, 2013 – The Luxury Institute surveyed consumers with minimum net worth of $5 million about top luxury retailers they purchase from, and the relationships they maintain with luxury sales professionals.

Nordstrom boasts the largest share of pentamillionaire purchasers, with a majority of ultra-wealthy consumers buying something from the Seattle-based luxury retailer in the last year.  Rounding out the top three in terms of popularity are Bloomingdale’s and Neiman Marcus.

Marquee names selling higher-ticket luxury items make up for a lack of widespread appeal with deeper customer relationships. Sales professionals at both Barneys New York and Neiman Marcus rise above the competition in building relationships with pentamillionaire clients.  Similarly, Bergdorf Goodman’s market share among ultra-wealthy shoppers is just one-fourth the size of Nordstrom’s, but the prevalence of customer-salesperson relationships at Bergdorf is triple the rate at Nordstrom.

Sales professionals at more mainstream retailers like Nordstrom and Bloomingdale’s are far less likely to have cultivated exclusive relationships.  Relationships are more prevalent among women than men, and those under the age of 65 compared to those who are older.

“Technology may make it easier for sales professionals to maintain relationships,” says Luxury Institute CEO Milton Pedraza. “But simple and personalized approaches like follow-up phone calls or handwritten thank you notes still prove tremendously effective.”

Respondents also ranked the comparative importance of the qualities they seek in sales professionals from luxury retailers, such as recognizing them when they visit the store, receiving calls and emails with special product offers, and making them feel comfortable.

About Luxury Institute (
The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

May 16, 2013

Wealthy Shoppers Focus On Quality And Price As Brands Blur Lines Between Luxury And Mainstream

(NEW YORK) May 16, 2013 – What specific factors differentiate luxury brands from mainstream brands? What would happen if one type of brand expands into the other’s market? These are among the questions answered by wealthy shoppers with minimum household incomes of $150,000 surveyed by the Luxury Institute.

For 60% of wealthy consumers, particularly those with higher levels of wealth, quality is the overriding differentiator between luxury and mainstream goods and services. Price (55%) is cited as the second biggest point of differentiation. Craftsmanship (48%), prestige (47%) and design (38%) are also critical.  Older wealthy shoppers are notably more selective (51% vs. 43%) on craftsmanship than their younger peers.

Launching an extension into mainstream retail does not appear to be the kiss of death for luxury brands because there is little brand prejudice on the part of wealthy shoppers. If a luxury name branches out into mass-market, 84% of wealthy women and 78% of men would continue shopping with that company. In the case of a mainstream brand migrating up-market, 88% of wealthy women and 79% of men would remain customers.

Of the challenges facing the mainstream offshoot of a luxury brand, 24% of wealthy shoppers say the biggest risk is damage to the luxury brand’s image or reputation; 17% cited perceptions of inferior quality at the lower-priced stores.

“Luxury brands can leverage their edge in quality and craftsmanship with current offerings by communicating these attributes clearly with consumers,” says Luxury Institute CEO Milton Pedraza.  “This enhances perceived value and alleviates price sensitivity.”

About Luxury Institute (
The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

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