Luxury Institute News

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
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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/

November 20, 2013

Are flash-sale sites a flash in the pan?

By AnnaMaria Andriotis
Wall Street Journal
November 19, 2013

When shares of Zulily (NASDAQ:ZU)  soared 71% Friday following its initial public offering, investors seemed to be betting that flash-sale sites are here to stay. Consumers, however, are having trouble sorting out whether the limited-time offers they peddle are really a good deal. Zulily, the first such startup to go public, is part of a growing industry of high-end flash-sale sites geared toward more affluent consumers. The business model is fairly simple: offer consumers a limited period of time—typically from as little as one hour to two days—to buy high-end inventory at a discount. But the process hasn’t worked out so smoothly for shoppers.

In a sign that consumers are growing wary of the industry, one study found shoppers’ complaints to be widespread: Forty-four percent of comments on flash-sale Facebook pages were negative earlier this year, according to findings released in May by Dotcom Distribution, which provides fulfillment services, including serving as a warehouse, for companies that sell products via e-commerce. Just 29% were positive. Meanwhile, a look at the unique desktop visitors of 10 popular flash sale sites (data supplied by comScore, an analytics firm that tracks consumer behavior) reveals that they declined for all but three of them in October compared with a year prior.

Part of the problem is that these sites grew popular as a response to the downturn—and those conditions are no longer in play. As store sales tanked, high-end manufacturers were stuck with excess inventory and looking for ways to unload it. That’s when many flash-sale sites popped up offering high-end luxury brands, along the lines of Gucci and Chanel, at discounts that consumers could not previously find elsewhere. Those market conditions created a new category of discount sites that have been marketing to relatively affluent consumers who are looking for a steal on what (even with a discount) is still a relatively pricey product.

But that high caliber of retail is harder to come by on these sites now, says Maria Haggerty, president of Dotcom Distribution. Manufacturers have since scaled back production so there are fewer grade-A products on these sites. While most items are still relatively high-end, they don’t inspire the same excitement and flurry of demand. “There isn’t enough inventory of the type of products these sites want to sell because it’s doing well in stores,” says Milton Pedraza, CEO of the Luxury Institute, a New York-based research and consulting firm for the luxury industry.

 Click the link to read the entire article including a quote from Luxury Institute’s CEO Milton Pedraza: http://www.marketwatch.com/story/are-flash-sale-sites-a-flash-in-the-pan-2013-11-19/print?guid=5A07C5D6-5086-11E3-AD6E-00212803FAD6

October 23, 2013

Neiman Marcus Outshines the Competition For Online And In-Store Experiences Among the Wealthy

(NEW YORK) October 23, 2013 – As part of its first installment of the Luxury Multichannel Engagement Index (LMEI) survey, the New York-based Luxury Institute asked consumers from households with minimum annual income of $150,000 to share opinions and rankings of online and in-store experiences at leading luxury retailers. Neiman Marcus earns the highest overall score and stands out for garnering top honors in nine out of ten customer criteria used to evaluate both the Web and brick-and-mortar shopping experience.

Wealthy shoppers say that Neiman Marcus stores rank first for attractive displays of exclusive products, easy navigation, accessibility of customer service, personalized shopping experiences, fair prices, and for carrying ample stock and styles. Customers also laud Neiman’s salespersons for making them feel special while serving as trusted fashion advisors.

The Neiman Marcus online experience draws equally extensive praise with the top overall ranking and the highest scores on the same measures of satisfaction.

“Smart retailers realize the value of leveraging data to deliver superior experiences that build lasting customer relationships, regardless of the channel,” says Luxury Institute CEO Milton Pedraza.

Neiman plans to invest $100 million over the next three to five years on technology that will closely align inventory management, logistics and human resources across multiple retail channels.

“Every aspect of our business is being transformed by technological advancements,” said Jim Gold, president of Neiman Marcus Group, at a retailing summit in Dallas. “The lines have completely blurred between brick-and-mortar and e-commerce. The great challenge is to make the experience seamless.”

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 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 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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