Luxury Institute News

May 20, 2013

Richemont’s Asia focus drives full-year sales up 14pc

Posted in China,Europe,Fashion,Handbags,Japan,Jewelry,Luxury Brands,Retail,Watches,Wealthy Consumer
Tags: Asia, Cartier, Milton Pedraza, Richemont —

By Erin Shea
Luxury Daily
May 17, 2013

Richemont is attributing its full-year sales increase to demand in China and Asia-Pacific, contributions from currencies and exchange rates and the broad growth from its brands across all regions.

Luxury conglomerate Richemont reported a 14 percent increase in annual sales to approximately $13 billion in 2012, compared to last year’s sales of $11.4 billion.

Richemont also reported that its profits for the year are up 30 percent to $2.6 billion from $2 billion in the previous year, much of which can be attributed to the sales in Asia-Pacific. The conglomerate released its results May 16 for the fiscal year that ended March 31.

“The Chinese and the Asians have a very healthy appetite for jewelry,” said Milton Pedraza, CEO of The Luxury Institute, New York.

“I think that ready-to-wear products may be oversaturated [in Asia], and handbags may be oversaturated, so watches and jewelry tend to be valuable,” he said.

“There are some companies in luxury that continue to grow, despite the global economy.”

Mr. Pedraza is not affiliated with Richemont, but agreed to comment as an industry expert.

Richemont, which was not able to comment directly, owns a number of luxury brands including Vacheron Constantin, Jaeger-LeCoultre, Baume & Mercier, A. Lange & Söhne, Cartier, IWC, Piaget, Alfred Dunhill, Van Cleef & Arpels, Montblanc, Chloé and Roger Dubuis.

Asian expansion
Richemont attributes its sales results to an increased demand in China and Asia-Pacific, contributions from currencies and exchange rates and the broad growth from its brands across all regions.

The company said that it works on a long-term basis of benefiting from the prestige and heritage of its brands, which will continue in the future.

However in the short-term, Richemont said that economic troubles may impact consumer confidence in some markets. Overall, the conglomerate is cautiously optimistic about the future.

During this past fiscal year, Richemont reported that Asia-Pacific accounted for the majority of its sales, with 41 percent of the group’s total sales coming from that area. Hong Kong and mainland China are its two largest markets.

Europe, including the Middle East and Africa, was responsible for 36 percent of Richemont’s overall sales.The conglomerate says this area’s growth was a result of demands from tourists.The Americas region had a third consecutive year of double-digit growth. This year, it accounted for 15 percent of group sales.Compared to other regions, Asia-Pacific is the area that is leading Richemont’s growth.

“Asia-Pacific is still a vibrant part of the world and there are some companies that are doing well there,” Mr. Pedraza said.

“Some brands are doing a fantastic job in that area,” he said. “Richemont is doing a fantastic job.”

Retail v. wholesale
Another aspect responsible for Richemont’s growth is its individual brands’ focus on retail over wholesale.

Cartier boutique

For the Asia Pacific and Europe, Richemont reports that its brand’s own boutiques had the highest growth rates.

In Asia, the brand boutiques had higher sales growth than the company’s wholesale partners. This is in part due to the expansion of the boutiques in the region.

“Richemont has set out over the last few years to try to keep its own distribution,” Mr. Pedraza said.

“Retail is outselling wholesale, which can help a company grow faster,” he said. “You can have faster growth when you are de-emphasizing wholesale and emphasizing retail.

“Most luxury brands want to control their own distribution. Watch brands tend to be more retail-oriented.”

http://www.luxurydaily.com/richemont-sales-up-14pc-in-2012/

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November 29, 2012

Wealthy Shoppers Reveal Spending Plans, Attitudes On Global Luxury Industry

Posted in China,Europe,Japan,Luxury Brands,Luxury Market,Press Releases,WealthSurvey,Wealthy Consumer
Tags: France, Germany, Italy, Milton Pedraza, U.S., United Kingdom —

(NEW YORK) November 29, 2012 – Wealthy shoppers from seven global luxury markets share opinions and observations on issues confronting providers of high-end goods and services in the new 2012 State Of The Luxury Industry Global Trends survey from the independent and objective New York-based Luxury Institute. Respondents are among the top 10% of earners in the U.S., United Kingdom, France, Germany, Italy, China and Japan, with minimum income of $150,000 in the U.S.

Despite an economic slowdown and a crackdown on conspicuous consumption, 43% of wealthy Chinese consumers still plan to spend more on luxury products in the coming year. This varies dramatically from the 10% of Japanese and 9% of American consumers who say they’ll boost luxury spending, while in Germany and Italy, where only 5% of wealthy shoppers plan to spend more.

Indicative of strength in U.S. luxury retail, wealthy Americans plan to increase spending in all surveyed luxury categories compared to last year. Notable areas where recoveries are underway: ready-to-wear , jewelry, and private jet travel. Yachting also has the wind at its back, with 22% of U.S. consumers planning to spend more on luxury boating in 2012.

Everywhere except for Japan, discounting has enhanced luxury goods’ appeal and stimulated spending. Wealthy Chinese (59%) and Italian (53%) shoppers are most likely to say that discounting has improved their view of luxury and prompted greater expenditures.

“Product differentiation and exceptional service are what keep luxury relevant,” says Luxury Institute CEO Milton Pedraza. “Especially in an uncertain economy, firms need to give wealthy shoppers reasons to buy more.”

About the Luxury Institute (www.LuxuryInstitute.com)
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 LuxuryBoard.com, 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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September 18, 2012

Luxury Institute CEO on Why You Must Empower, Educate & Mobilize Sales Forces

Posted in Customer Experience,Customer Service/CRM,Europe,Internet/Web,Luxury Brands,Mobile
Tags: Apple, Milton Pedraza —

By Kelly Hushon
The eTail Blog
September 17, 2012

Milton Pedraza, CEO at The Luxury Institute, says we should be providing just as much information to the sales professional as we do to the customer. Makes sense. Somehow many retailers still aren’t doing that.

At a presentation he gave at eTail Europe this past June, Pedraza used Apple as an example. The company empowered its sales force by arming them with mobile devices that allowed them to interact with customers more efficiently and personally. But that’s just the beginning.

When retail stores are less full, Pedraza says there is a great opportunity for sales professionals to work on relationship building with their customers, and they can do so if they are given mobile devices with minimal functionality that allows them to reach out to the clientele they already have through email and other forms of mobile communication. Sales professionals can reach out to customers and nurture relationships in a way that scientific algorithms and data mining can’t compete with because, quite simply, they’re not as good as human beings.

It might seem radical – you might be thinking, “So you’re asking me to give my sales person in my store a mobile device and let them openly and directly email customers? NO WAY!”

According to Pedraza, it doesn’t have to be so scary. The two keys to doing this successfully are:

1. Hire the right people. Hire people who share your customer centric values. If they are selfish, they should work elsewhere.
2. Educate, educate, educate. And add to that Empower; use incentives that will empower them to build relationships with their customer base.

So why haven’t more retail operations done this already? Pedraza says it’s because it’s easier to create a technology app than it is to face the idea of finding the absolute best people, training them and paying them properly. He’s convinced though, that if we do this, it will pay off.

Customers who have admitted having a good relationship with a company and/or its sales force have been proven to spend more wallet share with said company.

Click on the link below to view the brief video of Luxury Institute CEO, Milton Pedraza, and hear more about why this idea works – and why, if you’re not already – you should be doing it:
http://www.theetailblog.com/featured/ceo-the-luxury-institute-on-why-you-must-empower-educate-mobilize-sales-forces-now/

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November 2, 2011

Wealthy European Consumers Rank Luxury Hotel, Handbag and Fashion Brands; Loro Piana Loved By Women And Men, Hermès Earns Highest Handbag Score

Posted in Europe,Fashion,Handbags,Hotel/Resort,LBSI,Press Releases
Tags: France, Germany, Handbags, Hotels, Italy, LBSI, Men's Fashion, Milton Pedraza, U.K., Wealthy Consumers, Women's Fashion —

(NEW YORK) November 2, 2011 – A new series of Luxury Brand Status Index (LBSI) surveys from the independent and objective New York City-based Luxury Institute reveals firsthand impressions and rankings of dozens of luxury brands by high net-worth consumers from the United Kingdom, France, Germany and Italy.

Wealthy European shoppers evaluated each brand on quality, exclusivity, social status and overall ownership experience to tabulate an overall LBSI score. Also considered were price worthiness, willingness to recommend the brand and likelihood of purchase.

Based on overall LBSI scores, the top three luxury brands in each category rank as follows:

Hotels (26 brands): Taj Hotels Resorts and Palaces; Mandarin Oriental; Ritz-Carlton

Handbags (39 brands): Hermès; Tod’s; Chanel

Women’s Fashion (44 brands): Loro Piana; Brunello Cucinelli; Hermès

Men’s Fashion (35 brands): Loro Piana; Michael Kors; Brioni

Several country-specific preferences are apparent. In Women’s Fashion, Italians rank Valentino highest, Germans prefer Louis Vuitton, and Alexander McQueen earns top ranking in the U.K. In hotels, Ritz-Carlton ranks first in France and second in the U.K. behind Mandarin Oriental.

“There is certainly a diversity of taste and preference among wealthy consumers in Europe,” says Milton Pedraza, CEO of the Luxury Institute. “Several brands have succeeded in transcending national boundaries and enjoy wide appeal among the continent’s wealthy.”

Respondents come from households with minimum annual income of €50,000, or £60,000 in the U.K. For greater details on brand rankings in each category and other purchase considerations of wealthy European consumers, visit LuxuryInstitute.com.

About Luxury Institute (www.LuxuryInstitute.com)
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 LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

For Further Information, Please Contact:

The Luxury Institute, LLC
Martin Swanson
Vice President
(914) 909-6350
mswanson@luxuryinstitute.com

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October 17, 2011

China Leads World in Luxury Spending

Posted in China,Europe,Luxury Market,Retail,Travel & Leisure,WealthSurvey
Tags: China, France, Germany, Italy, Japan, Luxury Market, Travel, U.K., U.S., WealthSurvey, Wealthy Consumers —

By Anthony DeMarco
Forbes
October 14, 2011

Affluent consumers in the U.S. and much of the world are pulling back on their spending and attitude toward luxury. However, in China, affluent consumers are choosing luxury in every aspect of the lives, according to a seven-country survey of households earning at least $150,000.

About 57 percent of wealthy Chinese shoppers say that the economic environment has prompted them to spend more on luxury in the past year, and 50 percent plan to boost spending in the next 12 months, according to the survey by the Luxury Institute, a New York-based consulting firm. Restraint is more evident in the U.S., where 10 percent of the wealthy stepped up luxury spending in the past year and 6 percent plan to spend more in the next 12 months. U.S. consumers are twice as likely as those in China (32% vs. 16%) to have trimmed luxury spending last year.

Meanwhile, in Europe the currency crisis did not stop 14 percent of wealthy shoppers in France and 17 percent of those in Italy from boosting luxury spending this year, according to the survey, which represents the top 10 percent in household income. However, 38 percent of high-income shoppers in both countries plan to cut back in the coming year.

In Japan, the March earthquake and tsunami dampened enthusiasm for luxury shopping, with 7 percent of wealthy Japanese consumers reporting higher levels of spending and 34 percent cutting back.

The most widespread retrenchment comes in the U.K., where 38 percent of wealthy shoppers have pared back luxury spending, and 41 percent plan reductions in coming months. Germany shows more stability compared to other rich nations: Only 17 percent of wealthy German consumers say that they are spending less on luxury now and 29 percent plan to trim luxuries in the coming year.

Across all seven markets, luxury travel is the category in which most wealthy consumers anticipate stepping up spending, with China far and away showing the strongest appetite, according to the survey.

In China, 58 percent of the wealthy plan to spend more on leisure travel, followed by 28 percent in Italy and 22 percent in Germany who say the same. A total of 16 percent of wealthy consumers in the U.K., and 18 percent in the U.S., Japan, France and Italy, plan to spend more on travel.

Spending plans across the board in each of the 26 luxury categories were substantially higher in China than in Europe and the U.S., with some of the biggest disparities showing in apparel, watches, jewelry and gifts where Chinese consumers were six to seven times more likely to boost spending, according to the survey. Also strong in China are luxury auto sales, with 43 percent of the wealthy planning to spend more on cars, compared to 11 percent in the U.S., U.K. and Japan.

Attitudes towards luxury are far more positive in China than they are in other rich nations, with 78 percent of those surveyed saying that luxury goods and services are more important in today’s economy. The reverse is true in the U.S. where 80 percent of wealthy shoppers say that luxury has become less important.

More than 75 percent of Chinese say that luxury expenditures are prudent purchases, while 78 percent of wealthy consumers in the U.S., U.K., and Germany find them to be an extravagance. Similarly, 78 percent of China’s wealthy shoppers say that luxury goods and services are an important part of their lifestyle in today’s economy, compared to 25 percent in U.S. and Germany and 20 percent in France who agree that luxury remains central in their lives.

Wealthy Chinese consumers are also highly inclined to place a premium on exclusivity and quality, and discounting turns them off. More than half of wealthy Chinese and 49 percent of Japanese say that brands that discount their merchandise are not truly luxury brands. In the U.S. and Germany, one-third of wealthy consumers share the same dim view of discounting, as do 40 percent of wealthy shoppers in the U.K, Italy and France. Despite the dour attitude towards discounting, 56 percent of wealthy Chinese say that discounting has increased their overall spending on luxury and 50 percent plan to spend more on discounted luxury items in the coming months.

http://www.forbes.com/sites/anthonydemarco/2011/10/14/china-leads-world-in-luxury-spending/

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September 28, 2011

Luxury Spending Surge Continues in China Even as Wealthy Throttle Back on Purchases in Europe, Japan and U.S.; Half of Wealthy Chinese Plan to Spend More on Luxury This Year, Compared to Just 6% in the U.S., Japan and Germany

Posted in China,Europe,Luxury Market,Press Releases,WealthSurvey
Tags: China, Economy, France, Germany, Italy, Japan, Luxury Market, Milton Pedraza, U.K., U.S., WealthSurvey, Wealthy Consumers —

(NEW YORK) Sep 28, 2011- Wealthy shoppers from seven countries around the globe earning at least $150,000 (in local currency) reveal candid attitudes on luxury brands and personal spending plans in the “2011 State of the Luxury Industry: A Global Comparison of Consumers in Top Markets.” The just-completed survey conducted by the independent and objective New York City-based Luxury Institute shows strong increases in luxury spending continuing to come from China, while restraint is more widespread in the U.S., U.K., France, Germany, Italy and Japan.

More than half (57%) of wealthy Chinese shoppers say that the current economic environment has prompted them to spend more on luxury in the past year; 50% plan to boost spending in the next 12 months. This compares to just 10% of the wealthy in the U.S. who have stepped up spending recently and 6% who plan to spend more this year. In the U.S., consumers are twice as likely as they are in China (32% vs. 16%) to have trimmed luxury spending last year.

More than half of wealthy Chinese expect to boost spending on luxury travel, apparel, fitness, jewelry and shoes.

“China is clearly driving growth in global luxury brands,” says Luxury Institute CEO Milton Pedraza. “Exclusivity and prestige continue to be highly prized by wealthy Chinese consumers, even more than in the U.S. or Europe.”

For more details in the complete survey, visit LuxuryInstitute.com.

For Further Information, Please Contact:

The Luxury Institute, LLC
Martin Swanson
Vice President
(914) 909-6350
mswanson@luxuryinstitute.com

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August 10, 2011

Will the European debt crises affect American luxury spending?

Posted in Europe,Jewelry,Luxury Market,Marketing,Travel & Leisure,Watches
Tags: Luxury Market, Milton Pedraza —

By Rachel Lamb
Luxury Daily
August 9, 2011

All luxury marketers will be hit by the debt crises plaguing European countries such as Italy and Spain, but diversified brands that practice customer retention have the best shot of surviving.

Since many luxury brands are headquartered in Italy and Spain, there is a chance that the productivity will be hindered if the countries are not bailed out. Furthermore, affluent consumers in Europe, as well as around the world, could take this as a sign to slow down luxury spending.

“I have one term: customer retention,” said Milton Pedraza, CEO of the Luxury Institute, New York. “The luxury industry loses customers who will not purchase again in the next 10 months.

“Brands need to gear up for a dramatic effort to make sure customers who buy continue to buy,” he said. “Marketers have been negligent in terms of customer retention and they need to get more serious because it may help them thrive in recessions.

“The debts will definitely have some impact, because there is not a question that there will be some economic repercussion not only for Italy and Spain directly, but for the marketers in the European Union.

“Everyone will have to contribute to make sure that not only Spain and Italy, but Ireland, Portugal and Eastern Europe stabilize.”

Shock market
The current economic status of European countries, most notably Italy and Spain, have consumers worldwide worried about their stock portfolios.

This weekend, the European Central Bank indicated that it would intervene more aggressively in bond marketers to protect the two countries and hoped to suppress some of the mounting stress that this is causing consumers.

Even though the affluent likely will not be as affected as mainstream consumers, the lack of money in luxury product-manufacturing companies in Italy and Spain could have a great impact on productivity as well as consumer spend.

“The affluent that are heavily invested in the stock market are likely to take an immediate hit to their personal wealth, which is likely to impact how they spend through the next quarter or so,” said Pam Danziger, president of Unity Marketing, Stephens, PA.

“The hit to wealth is going to have a powerful psychological effect, and that in turn is tied to their spending and indulging on luxury,” she said.

To twist the knife, stocks in the United States continue to slip, adding more worry as rumors of a double-dip recession are getting louder.

Overly-cautious consumers may stop spending to prepare for the hit, leaving luxury marketers with over-stocked stores and empty cash registers.

“The fact that nobody needs luxury means that it is the first place people can cut back,” Ms. Danziger said.

“Based upon our read of the luxury consumers’ confidence, which took a really strong dip in the third quarter, we expect spending on luxury to be off over the next months,” she said.

Haves and have lots
Since it is likely that the fickle economy will scare customers into safe spending, luxury brands need to work extra hard on holding on to the customers they already have.

“It will affect the luxury market somewhat, but what is important to note is whether or not it is fair, the world has bifurcated into two sections – one that is more affluent and one that is mainstream,” Luxury Institute’s Mr. Pedraza said.

“The very wealthy world is having a pretty good run,” he said. “The luxury market is not immune, but it is resilient and its customers will still demand luxury at a very fast pace.”

While all sectors will be affected, some will be more than others.

For instance, jewelry and watches may suffer more than apparel and handbags because they are less necessary. Travel will most likely remain resilient and gadgets will continue to boom through the entire process, per Mr. Pedraza.

However, experts believe that the damage will be minimal compared to what it could be.

“The brands that have the best chances are those with diversified lines,” Mr. Pedraza said. “If you sell fragrances, jewelry, apparel, skincare and makeup, you shouldn’t have any problem holding onto consumers.

“With the full range of products, you can cross- and upsell customers into all categories,” he said.

http://www.luxurydaily.com/will-the-european-debt-crises-affect-american-spending/

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