Luxury Institute News

July 7, 2014

Used Chanel bags are worth a lot, but Marc Jacobs? Not so much

By: Erin Griffith
Fortune
July 7, 2014

They’re all considered investments, but which luxury brands hold their value the best may surprise you.

There’s a reason they call them “investment pieces.” At $22,000 for a Proenza Schouler tote or $9,000 for a Ralph Lauren dress, luxury goods are meant to last a lifetime and hold their value. That’s why the market for used designer goods is the most attractive category for online consignment.

One such marketplace, a website called The RealReal, is on track to do $100 million in sales this year. (The company takes a cut of each sale.) The RealReal recently tapped its database of 500,000 luxury goods from 500 designer brands to find which brands have the highest resale value, and which ones hold their value the longest. The startup found that Chanel, Christian Louboutin, and Hermès hold their value the longest. Tod’s and Versace lose their value the fastest.

Perhaps more surprising is which brands carry the highest and lowest resale value. Items from Givenchy, Victoria Beckham, Charlotte Olympia and Alexander McQueen all sell for much closer to their original price than goods from Marni, Alexander Wang, 3.1 Philip Lim, and Marc Jacobs.

Resale values of fashion or luxury goods can fluctuate depending on buzz around a certain designer, particularly if a fashion houses hires a a new creative director or chief executive, according to Rati Levesque, Chief Merchant at The RealReal. “When Phoebe Philo joined Céline as the creative director, it added more resale value to the brand,” she says.

But more important than buzz is availability and discounting. If a luxury brand frequently discounts its goods at outlet stores or online via flash sales, consumers will perceive that they don’t have to pay full price for that brand, says Milton Pedraza, CEO of Luxury Institute, a luxury industry research group. While baby boomer shoppers tend to research something online and then buy it in the store, millennials do it the other way around. They “showroom,” the term for checking out an item in the store before finding the best deal for it online.

“These days you can find ways to arbitrage the brands, because you have so much information and the market is inefficient,” Pedraza says. “Brands have to be careful where they allow their product to be sold.”

For example: Chanel and Hermès do not hold sales in their stores and they have a limited number of outlet stores. Chanel doesn’t even sell its goods online, with the exception of beauty products. “In that sense, it creates a perception of purity,” Pedraza says.” The brands then “back it up with design quality and heritage,” he says. “If I buy something, I will think, ‘Wow it has long term investment value.’”

Below are some luxury brands that fall on both sides of the spectrum.

Click the link to read the entire article which includes quotes from Milton Pedraza, CEO of Luxury Institute:http://fortune.com/2014/07/07/which-luxury-brands-have-highest-resale-value/

July 4, 2014

America becomes absolutely fabulous

By: Laura Chesters
The Independent
July 4, 2014

Striding down Fifth Avenue clutching a monogrammed black Gucci leather satchel, François -Henri Pinault stands out among many of the trackpant-clad visitors to America’s most expensive shopping street.

Americans might still be better known for their casual fashions but Mr Pinault, the chief executive of Gucci’s owner, Kering, is betting that the millions of domestic and international tourists who descend on New York each year want to snap up European labels on their shopping sprees.

The Frenchman, who is married to the Mexican-American actress Salma Hayek  and whose family owns more than 40 per cent of the Paris-based luxury goods giant, says: “Over the last few years we have talked about the growth engine of luxury being in Asia – but it is important to remember the size and potential of America.”

According to market research from Bain/Alta­gamma on the luxury goods industry, the Americas actually passed China as the growth leader last year. The researchers estimate that the continent’s luxury goods market will grow 4 per cent, and the US alone is valued at €66bn (£52bn) this year.  Other European brands, including the UK’s Burberry and Mulberry, have also been steadily building up their presence across North America.

Mr Pinault is in the US to visit Kering’s American luxury division, which launched three years ago, and its flagship Gucci store in New York, the biggest in the world.

Kering, which owns 17 luxury brands including Saint Laurent and Christopher Kane, now plans to invest huge sums renovating some of its 180 US stores and expanding into new areas, as well as into Mexico and South America. Sales at it luxury division rose 8 per cent last year.

Mr Pinault is also betting that wealthy Americans are beginning to change their habits.  “The way of life here has been to not dress up, but the US shopper is becoming more sophisticated.”

Sarah Willlersdorf at ­Boston Consulting Group  agrees that the wealthy millionaires and billionaires in the States have traditionally spent their cash on cars and experiences rather than expensive clothes, but that now what BCG calls the “personal goods” sector is about to enter a boom period.

She says: “The aspirational masses here do want to spend on luxury – they want to spend on brands, and it is growing. There is a huge change in the desire to buy brands.”

BCG expects that by 2020 the US will have more than a third of the luxury market and  will still be bigger than China’s high-end sector. Japan will account for 7 per cent and the rest of Asia about 23 per cent of the global luxury market. Milton Pedraza, chief executive of the Luxury Institute, a consultancy, agrees: “There are big opportunities for European luxury brands in the US.”

America already makes up 18 per cent of Kering’s group sales, and Mr Pinault is keen to make sure its brands have the best stores in the best locations across the US – not just in New York, which has always had Sex and the City-style fans of European labels.

Ms Willlersdorf adds: “It is not just about East and West coast. The middle and south are very wealthy. European brands are under-represen-ted, particularly in second-tier cities.”

Click the link to view the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://www.independent.co.uk/news/business/analysis-and-features/america-becomes-absolutely-fabulous-9585525.html

March 17, 2014

Wall Street Shares Wealth, for Better or Worse

By: Martha C. White
NBC News
March 15, 2014

The $26.7 billion in bonuses that Wall Street hauled in last year will help fill city and state tax coffers, and certainly boost retailers when bankers sport Patek Phillipe wristwatches and slip into Maseratis. But all that green is a double-edged sword for New York City.

Wall Street bonuses grew by 15 percent in 2013, to an average of $164,530, according to the New York State Comptroller’s office. Milton Pedraza, CEO of research firm the Luxury Institute, estimated that Wall Streeters spend between half and three-quarters of their bonuses, then save or invest the rest, and about half the amount they spend is funneled into the local economy.

Because they spend an incredible amount of money in their jobs, “I think that spills over in their personal life,” said David Friedman, president of research and consulting company Wealth-X.

Click the link to read the entire article: http://www.nbcnews.com/business/economy/wall-street-shares-wealth-better-or-worse-n53071

March 6, 2014

Would You Pay 70 Per Cent More For Chanel?

By: Lauren Milligan
Vogue.com
March 5, 2014

IT’S not just the recession and higher property and living costs that’s making you think it, the price of luxury goods is actually rising. The Wall Street Journal reports that the price of a quilted Chanel bag has on average risen by 70 per cent in the past five years, while Louis Vuitton’s classic Speedy bag is 32 per cent more expensive in America than it was in 2009.

There are several theories behind the increases – which represent a general trend across the luxury goods industry, including watches and jewellery. Some say the prices are intended to help customers differentiate between the high-end brands and their increasingly popular mid-market competitors.

“The more Tory Burches and Michael Kors there are, the more the Chanels and Louis Vuittons will try to price up,” said Milton Pedraza, chief executive of the Luxury Institute, told the WSJ. Others explained that the price increases, although far outpacing inflation, were unavoidable in order to maintain quality – thanks to rising production costs.

Click the link to read the entire article: http://www.vogue.co.uk/news/2014/03/05/price-increases-for-luxury-items—chanel-louis-vuitton-bags

March 3, 2014

Soaring Luxury-Goods Prices Test Wealthy’s Will to Pay

Sales Growth Slows as Competition Heats Up; ‘Prices Have Gotten Really Crazy’

By Suzanne Kapner and Christina Passariello
Wall Street Journal
March 2, 2014

Despite expanding into new markets, the luxury-retail business has been relying on price increases to drive sales. Now, even the very wealthy are nearing the limits of what they are willing to spend.

In the past five years, the price of a Chanel quilted handbag has increased 70% to $4,900. Cartier’s Trinity gold bracelet now sells for $16,300, 48% more than in 2009. And the price of Piaget’s ultrathin Altiplano watch is now $19,000, up $6,000 from 2011.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://online.wsj.com/news/articles/SB10001424052702304585004579415110604829016?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304585004579415110604829016.html

 

February 24, 2014

Oscars red carpet: a runway of sharp elbows and high fashion stakes

By Piya Sinha-Roy
Reuters
February 23, 2014

When Jennifer Lawrence tripped on her way to accept her best actress Oscar last year, her blush pink princess-like Dior Haute Couture gown was captured in all its glory as the unscripted moment made ripples around the world.

That bonus air-time for a single dress at one of the world’s premier global events is priceless for the likes of Dior, one of the strongest fashion houses in the cutthroat marketplace that the Oscars red carpet is today.

Success on the red carpet can buy cachet that no advertising can – both for designers and stars – and profits for luxury brands for years to come. With stakes that high, the more established houses are raising their game and leaving little room for newcomers to make a splash, like they might have a decade ago.

Click the link to read the entire article which includes quotes from Milton Pedraza, CEO of Luxury Institute: http://www.reuters.com/article/2014/02/23/oscars-fashion-idUSL2N0LQ0IY20140223

February 6, 2014

Making His Name His Own

Reed Krakoff Will Show His First Collection Since Leaving Coach

By Ruth La Ferla
New York Times
February 5, 2014

Dana Taylor, a model, stood straight as a maypole as Reed Krakoff circled, paused, then peered intently at his handiwork. Ms. Taylor was wearing Mr. Krakoff’s cobalt-blue sleeveless officer’s coat, a sample from the fall collection he will show on Wednesday, a piece stripped to its essentials: welted seams, slant pockets and a pair of outsize lapels its only embellishment.

Was it too much? Too little? Mr. Krakoff considered before snatching up a swatch of matching blue leather, attaching it briefly to a lapel, then rejecting that notion, slipping it beneath the coat like a T-shirt. He toyed with the neckline, gathering it in his fingers. Then something clicked. “I like the ruched effect,” he said. “And we might finish it with a little black tape on the top.”

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://www.nytimes.com/2014/02/06/fashion/Reed-Krakoff-first-collection-since-leaving-coach-fashion.html?hpw&rref=fashion

January 11, 2014

Tiffany results signal caution among luxury shoppers

By Jonathan Berr
CBS News
January 10, 2014

Shares of Tiffany & Co., whose name has been synonymous with luxury since before the Civil War, fell Friday after the second-largest luxury retailer said its earnings would be less than analysts had expected.

The New York-based company expects to earn $3.65 to $3.75 per share in the fiscal year ended January 31. While that forecast is unchanged from a previous forecast, it was below the $3.79 that analysts surveyed by Bloomberg News had forecast.

This is the latest sign of the uneven performance of many retailers during the holiday season despite the improving performance of the U.S. consumers. Wealthy consumers appear to be less enthused about buying goods and services than many experts predicted.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://www.cbsnews.com/news/tiffany-results-signal-caution-among-luxury-shoppers/

Spread the wealth, share!

December 25, 2013

Post-Twitter IPO: “Suddenly everyone thinks you’re Santa Claus”

By Mark Garrisson
Marketplace
December 24, 2013

Twitter may be the most famous company to go public this year, but 2013 was a monster year for IPOs in general.

And initial public offerings can bring big money to employees, on paper at least. Things can get a little awkward this time of year for the newly-rich, as certain friends and family members raise their holiday gift expectations. Strike it rich with an IPO, and suddenly everyone thinks you’re Santa Claus.

“You find you have relatives and friends you never knew you had,” says Doug Wolford, president and COO of Convergent Wealth Advisors. “I’ve known people whose friends have, you know, asked them to pay off their cars, take them on trips to the Super Bowl, you name it.”

Pressure to spend big is intense and not all external.

“The individuals themselves begin to feel guilty, feel like they do have to step in and solve a lot of the problems for the people they love. So it’s kind of a two-sided issue” says Luxury Institute CEO Milton Pedraza.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://www.marketplace.org/topics/tech/post-twitter-ipo-suddenly-everyone-thinks-you%E2%80%99re-santa-claus

December 5, 2013

Strong sales may result in weak profits for retailers this holiday season

Posted in E-Commerce,Fashion
Tags:

By Jonathan Berr
CBS News
December 4, 2013

So far this holiday season, it seems like economic pundits have been too pessimistic about the holiday shopping season. They worried that stagnant wages and high unemployment would dampen sales. They struggled over how consumers could pack in the same amount of shopping when there are six fewer shopping days between Thanksgiving and Christmas this year.

Yet consumers, whose confidence unexpectedly fell by one measure to seven-month low in November, showed a familiar propensity to buy as the holiday shopping season kicked off in earnest over what’s newly known as”Black Weekend” — the bonanza of discounting during and after Thanksgiving.

For example, in the hot game console category, they snapped up more than 2 million Sony PlayStation 4s in the three weeks since it debuted. Rival Microsoft sold more  than 1 million of its Xbox One units, which retail for about $100 more than the PlayStation 4.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://www.cbsnews.com/news/a-holiday-season-of-consumer-unease/

Older Posts »