Luxury Institute News

May 8, 2013

Neiman Marcus sale could build more customer-focused brand

Posted in Customer Culture,Customer Experience,Fashion,Finance,Luxury Brands,Retail
Tags: Amazon, Customer Experience, Michael Kors, Milton Pedraza, Neiman Marcus, Nordstrom, Private Equity, Randall Ray, Zappos —

By Danielle Abril
Dallas Business Journal
May 7, 2013

While private equity investors of Neiman Marcus Group Inc. consider their exit strategy, a luxury retail expert predicts a move that could result in an increased emphasis on customer relations.

Milton Pedraza, CEO of The Luxury Institute LLC, said he belives that the next logical step for Dallas-based Neiman Marcus is to go public. The move would allow Neiman Marcus the freedom to focus on building relationships with its consumers.

“Neiman will have a very solid structure if they go public,” Pedraza said. “It will be customer-centric rather than shareholder-centric.”

Bloomberg reported earlier this week that TPG Capital and Warburg Pincus LLC, Neiman Marcus’ private equity investors, were considering selling the company or taking it public. The firms held their investment for eight years, 60 percent longer than the norm, according to Bloomberg.

Neiman Marcus declined to comment.

Neiman Marcus could take four different directions, according to Randall Ray, partner with Munck Wilson Mandala LLP. Ray has spent almost 25 years dealing with corporate legal matters and said one thing is clear in this situation: TPG and Warburg will choose the path that ends with the highest profit for them in the least amount of time.

The four options, according to Ray, are: filing an initial public offering, selling to a private equity firm, selling to a strategic buyer and choosing a dividend recapitalization.

Pedraza said it was “less likely” that the firms would sell to another private equity firm.

“It would take a very special private equity firm to do the things Neiman Marcus needs,” he said. “You need patient money to rebuild the brand.”

Pedraza cites online retailers Amazon and Zappos as companies that have benefited from answering solely to the consumer. He also said that other retailers, such as Nordstrom and Michael Kors, have been successful in their transformations to becoming publicly owned.

Pedraza also said the recovering economic climate offers an opportunity for TPG and Warburg Pincus to sell to the general public.

“It’s a good time to go public,” he said, adding that a booming economy would offer the best conditions for the move. Whatever road Neiman Marcus chooses, there will be few clues as to its direction until the transaction is complete.

“Unless Neiman Marcus feels compelled to make this information public, there won’t be a lot of transparency in the process,” Pedraza said.

http://www.bizjournals.com/dallas/news/2013/05/07/sale-of-neiman-marcus-could-impact.html

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May 2, 2013

Pentamillionaire Investors Reveal Whether 34 Top Firms Are Worth What They’re Paid To Watch Their Portfolios

Posted in Finance,LBSI,Press Releases,Wealth Management
Tags: Brown Brothers Harriman, Milton Pedraza —

(NEW YORK) May 2, 2013 – Affluent U.S. investors with at least $5 million in assets and $200,000 minimum annual income rate 34 national financial services firms in the Luxury Institute’s 2013 Luxury Brand Status Index (LBSI) wealth management survey. Wealthy individuals share opinions on each firm’s quality, exclusivity, social status and overall client experience.

Only 30% of firms achieved an overall LBSI score of 5.0 out of a possible 10.0, suggesting significant dissatisfaction from high-net worth investors with their wealth management providers. Brown Brothers Harriman earned the highest LBSI of 5.87.

“Especially in wealthy management, client relationships and trust can take years to cultivate and a short period to deteriorate,” says Luxury Institute CEO Milton Pedraza. “Smart firms need to listen to what wealthy individuals are telling them to maintain brand reputation and client loyalty.”

Respondents ranked the following 34 wealth management firms, listed alphabetically:

Ameriprise Financial
Bank of America
Barclays Wealth Management
BB&T Wealth Management
Bernstein Global Wealth Management
Bessemer Trust
BMO Harris Private Banking
BNY Mellon Wealth Management
Boston Private Bank and Trust
Brown Brothers Harriman
Charles Schwab
Citi Private Bank
Credit Suisse Private Banking
Deutsche Asset & Wealth Management
Deutsche Bank Alex. Brown
Fidelity Investments
Fifth Third Private Bank
Goldman Sachs
HSBC Private Bank
J.P. Morgan Private Bank
J.P. Morgan Private Wealth Management
Merrill Lynch
Merrill Lynch Private Banking & Investment Group
Morgan Stanley Smith Barney Wealth Management
Neuberger Berman
Northern Trust
PNC Wealth Management
SunTrust Private Wealth Management
U.S. Bank Private Client Group
U.S. Trust
UBS Private Wealth Management
Vanguard Personal Investors
Wells Fargo Private Bank
Wilmington Trust Wealth Advisory Services

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.

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November 8, 2012

Industry experts project affluent spending habits based on election results

Posted in Finance,Luxury Leaders,Luxury Market,Politics,Wealthy Consumer
Tags: Barack Obama, Congress, Democrats, Fiscal Cliff, Milton Pedraza, Mitt Romney, Presidential Election, Republicans —

By Mathew Evins
Evins Communications
November 7, 2012

Do you think that Barack Obama’s re-election will have a major effect on affluent consumers’ day-to-day spending? Long-term spending?

I do not think the re-election of Obama will have a direct effect on the affluent consumer’s day-to-day spending in the near term.

If it causes a major downturn in the stock market, this will have a slightly negative impact on the spending of the affluent, especially for holiday gifts.
As for the general public, they are not likely to change their spending because of his re-election. The larger influence on spending will be the actions taken, or not taken, to avoid the “fiscal cliff”, i.e. the increase in taxes and the major reductions in government spending due to take effect in January.

Click the link to read the entire article which includes quotes from Milton Pedraza, CEO of Luxury Institute:
http://evins.com/aperture/?p=499

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October 17, 2012

High-Income Shoppers Talk Openly About Luxury Salespeople; Relationships With Wealthy Customers Blossom When Staff Shows Knowledge, Professionalism and Courtesy

Posted in Automobiles,Fashion,Finance,Handbags,Jewelry,Press Releases,Travel & Leisure,Watches,WealthSurvey,Wealthy Consumer
Tags: BMW, Hilton, Lexus, Marriott, Mercedes-Benz, Milton Pedraza, Ritz-Carlton —

(NEW YORK) October 17, 2012 – Wealthy shoppers with minimum annual income of $150,000 rank attributes they find important among people selling them high-end goods and services in the new Experiences With Luxury Salespeople WealthSurvey from the independent and objective New York-based Luxury Institute.

The most important attribute is knowledge, cited by 72% of respondents. Being professional (68%), and polite and courteous (65%), are also of high importance, followed by being honest (57%), helpful (56%), trustworthy (52%) and experienced (52%).

Relationships with individual salespersons are common, with 40% of shoppers reporting a primary point of contact for at least one luxury provider. Relationships are most prevalent in personal finance (11%) and jewelry (10%). Perhaps surprisingly, individual relationships are just as common in fashion (8%), as they are in autos, travel and beauty.

Respondents provided ratings of specific brands in ten categories with exceptional levels of sales service. Some of the standout performers are Lexus, Mercedes and BMW in automobiles, Marriott, Hilton and Ritz-Carlton in hospitality, Coach in handbags, Nordstrom in fashion apparel and Rolex in watches. Categories in which the highest proportions of wealthy customers cite exceptional service are jewelry and watches (31%), leisure travel (24%), and fashion apparel (24%).

“A strong Customer Culture has a halo effect on companies,” says Luxury Institute CEO Milton Pedraza. ”More than 75% of high-end shoppers recommend brands to family and friends based on outstanding experiences that they’ve had with a salesperson.”

Respondents reported average income of $310,000 and average net worth of $3.6 million.

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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October 3, 2012

Meet The Millennial 1%: Young, Rich, And Redefining Luxury

Posted in Finance,Luxury Brands,Luxury Market,Millennials,Uncategorized
Tags: American Express, Extreme International, Milton Pedraza —

By: Larissa Faw
Forbes
October 2, 2012

Two Millennials walk into a bar wearing denim jeans, Converse sneakers, and carrying iPhones. They are identical except for one factor: one makes more than six figures a year, while the other is unemployed and lives at home. Affluent Millennials may be hard to pick out of a crowd, but they are redefining the luxury industry.

There are currently 11.8 million Millennials age 18-30 living in U.S. households with annual incomes exceeding $100,000, according to the Ipsos Mendelsohn Affluent Survey. Plus, never before has such a large group of young people been raised by wealthy parents: 34% of today’s Millennials have been wealthy throughout their lifetime, say American Express and the Harrison Group.

“There are more out there than you expect,” says The Luxury Institute’s Milton Pedraza. “If you are a 28-year-old working as a creative executive, you are making $130,000 a year and are most likely are single. It’s not as if you have a lot of assets. You might have some debt, but there’s still a lot of disposable income to go to technology, travel, and entertainment.”

Click the link to read the entire article which includes quote(s) from Milton Pedraza, CEO of Luxury Institute:
http://www.forbes.com/sites/larissafaw/2012/10/02/meet-the-millennial-1-young-rich-and-redefining-luxury/

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September 8, 2012

Accepting Chinese debit cards pays dividends

Posted in China,Customer Service/CRM,Finance,Luxury Brands,Travel & Leisure,Wealthy Consumer
Tags: China Union Pay Co., LVMH, Macy's, Milton Pedraza, Neiman Marcus, Saks Fifth Avenue —

Upmarket US retailers cash in on influx of tourists from the far east
By Yu Wei
China Daily
September 7, 2012

Hoping to attract the business of Chinese travelers, luxury retail chains Saks and Neiman Marcus will soon start accepting debit cards issued by China UnionPay Co at select US stores.

Saks Inc is installing point-of-sale keypads that accept UnionPay cards’ personal identification numbers at its Saks Fifth Avenue flagship store in New York. The company plans to add other stores over the next few months, spokeswoman Julia Bentley said.

China UnionPay is China’s only provider of domestic bank-services cards, credit and debit. Both Saks and Neiman Marcus already accept China UnionPay credit cards.

Efforts to capture the lucrative market of Chinese tourists are not new. The French jewelers Van Cleef & Arpels and Cartier, the Swiss watch makers Piaget and Omega and the duty-free chain DFS Galleria, owned by LVMH Moet Hennessy Louis Vuitton SA, have been taking China UnionPay cards for some time, as have mid-range retailers such as Macy’s, Apple and Best Buy.

“Macy’s has accepted (China UnionPay’s debit) card since 2004,” says Jim Sluzew-ski, a spokesman for the department-store operator based in Cincinnati, Ohio.

“The card is accepted in all Macy’s stores and is popular among our customers who visit from China.”

China UnionPay says its debit card is the most popular mode of payment among China’s richest consumers because purchases are linked to a bank account rather than a limited credit line.

Other benefits: No fees are applied to purchases and the buyer has the option of getting cash back at the store checkout.

“Our goal is to make it easier for our Chinese customers to pay however they wish to pay,” Bentley says.

Like Saks, Neiman Marcus of Dallas will begin accepting China UnionPay debit cards at some stores beginning this month. These include the Neiman Marcus store in Honolulu and the Bergdorf Goodman department store in New York.

The company plans to follow suit at Neiman Marcus stores in Los Angeles, Las Vegas, San Francisco and Boston.

“We like to accommodate as many Chinese customers as we can, and most of them prefer debit cards to credit cards,” says Ginger Reeder, a spokeswoman for the privately held Neiman Marcus Group.

“We have seen more Chinese customers in our stores over the years, and the most popular items among Chinese travelers are handbags and other accessories.”

To enhance its service to shoppers from China, the company has begun hiring Mandarin-speaking sales assistants.

“Every store has at least two or three and we’ll continue to hire more,” Reeder says.

Not so long ago the upmarket retailer only accepted its store credit card, cash and American Express.

“The funny thing is, two years ago Neiman Marcus didn’t accept Visa, MasterCard or checks at its stores,” says Milton Pedraza, CEO of the market-research firm Luxury Institute LLC.

“Now they allow all kinds of payment because they realized they were losing sales by their card policy. When I was in Miami I had to go to a cash machine before buying something in Neiman Marcus because I didn’t have a Neiman Marcus credit card, which was very inconvenient.”

Pedraza considers Neiman Marcus’ revised card policy a “must decision” that proves that retailers need to adapt to customers’ changing preferences. “Smart companies will do it because they’re customer-centric,” he says.

US retailers still have work to do in better serving Chinese shoppers, consumers, Pedraza says.

“We are not friendly enough to Chinese customers compared to Europeans (visiting the US). That’s a lot of opportunities because today the Chinese consumer is a very important global consumer and will be more important in the future.”

A record 1.1 million Chinese visited the US last year, up 36 percent from the previous year, the US Commerce Department’s International Trade Administration says.

The country’s economic growth has boosted the buying power of Chinese who travel abroad, and some savvy US businesses have taken steps to draw in these shoppers.

An example is the prominent placement of UnionPay’s logo at the checkout counters of some upmarket retailers, along with the installation of the PIN-enabled keypads.

Wu Miaoqing, visiting New York from Hangzhou, a coastal city in eastern China’s Zhejiang province, applauded the decision by Saks and Neiman Marcus to start taking China UnionPay debit cards.

“Being able to use the card abroad not only makes my purchase convenient, it also makes me feel good. It shows the businesses care about us.”

http://usa.chinadaily.com.cn/weekly/2012-09/07/content_15741171.htm

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September 5, 2012

Wealth Management Boutiques Beat Big Banks In Luxury Institute Brand Status Survey Of Pentamillionaires

Posted in Customer Experience,Finance,LBSI,Press Releases,Wealth Management,Wealthy Consumer
Tags: Bessemer Trust, Boston Private Bank and Trust, Brown Brothers Harriman, Fidelity, Glenmede Trust, Goldman Sachs, Luxury Institute, Milton Pedraza, Neuberger Berman Private Asset Management, Pentamillionaires, Rockefeller Wealth Management, Wealth Management —

(NEW YORK) September 5, 2012 – Investors with at least $5 million in assets and minimum annual income of $200,000 prefer smaller boutiques instead of larger Wall Street firms in the latest Wealth Management Luxury Brand Status Index (LBSI) survey from the independent and objective New York-based Luxury Institute. LBSI scores comprise respondents’ evaluations (1-10) of each brand’s quality, exclusivity, social status and ability to deliver special client experiences.

Brown Brothers Harriman earns top honors with the highest LBSI score of 7.01, and ranks first on each of the four sub-categories. Brown Brothers’ closest competition comes from Boston Private Bank and Trust (6.37), Neuberger Berman Private Asset Management (6.3) and Bessemer Trust (6.27).

Wealthy investors also show a strong streak of independence with the largest share (8.7%) saying that they would use Fidelity for future wealth management services. Fidelity is also the most recommended brand, with 61% of pentamillionaires saying they would refer friends and family to Fidelity. Only 32% would recommend Goldman Sachs.

“Reputations for honesty and superior client service are what make the smaller firms standouts in this survey,” said Luxury Institute CEO Milton Pedraza. “This is demonstrated by revered brands Rockefeller and Glenmede, which barely missed the mark in attaining a statistical sample, but would have been in the top range otherwise.”

Respondents reported $15 million average net worth and average income of $720,000.

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August 7, 2012

10 Things Apple Won’t Tell You

From customer service to app safety and even how its devices affect our relationships, here are 10 things Apple won’t likely tell you about its products and its business.

By Quentin Fottrell
SmartMoney
August 6, 2012

1.”Our customers are worn out.”

All that initial excitement over the first iPhone or iPad has quickly given way to what analysts are dubbing “upgrade fatigue” — with even Apple’s most loyal customers upset about the steady stream of newer models. In fact, when people buy Apple’s latest product, the company is usually already preparing its replacement, says technology consultant Patchen Barrs, who has owned 25 Apple products over the last 20 years. “Everything we buy from them is already out of date,” he says. Take a count: Since 2001, there have been six iPods, two iPod minis, six iPod Nanos, four iPod Shuffles and four editions of the iPod Touch. Apple has released five iPhone models since 2007 and has had three iPads since 2010.

Of course, newer models have their upsides: They’re usually slimmer, faster and have additional features like better cameras and improved screen quality. And Apple, which declined to comment for this story, has said that such improvements more than justify the fast pace of their new additions. (In March, for example, Apple spokeswoman Trudy Muller said the latest iPad delivered a “stunning” screen display.) But that argument isn’t enough to appease some cash-strapped consumers. Almost 50% of consumers say they’re increasingly unwilling to buy new products for fear that they will be rendered outdated by even newer versions, according to a recent survey of 2,000 people by Marketing Magazine in the U.K.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://www.marketwatch.com/Story/Story/?guid={61E63842-DFED-11E1-961B-002128049AD6}

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May 21, 2012

Why Millennials Are Spending More Than They Earn, And Parents Are Footing The Bill

Posted in Finance,Luxury Brands,Luxury Market,Millennials
Tags: Luxury Institute, Luxury Market, Millennials, Wealthy Consumers —

By Larissa Faw
Forbes
May 18, 2012

There’s a striking disconnect with today’s Millennials that can be best described through Steve Jobs’ infamous reality distortion field: Millennial lifestyles and spending habits do not reflect their financial realities.

The majority of the 79 million U.S. Millennials are either unemployed, underpaid, or weighed down with student loans. One in four Millennials, for instance, has more debt than savings, according to Bankrate.com. Some 94% of college students currently graduate with debt. The current unemployment rate among workers ages 20-24 is 13%, compared to 8% for older workers, according to the most recent economic data.

At the same time, Millennial college students (without full-time jobs) spend $784 a month on discretionary expenses, especially food and entertainment, according to the Mooslyvania marketing agency. Millennials are the largest demographic purchasing new technological gadgets and fashion apparel. And their spending on jewelry increased 27% in 2011, according to American Express Business Insights. They even start riots at outside retail malls over $200 limited-edition Air Jordan sneakers.

Click the link to read the entire article: http://www.forbes.com/sites/larissafaw/2012/05/18/why-millennials-are-spending-more-than-they-earn/

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March 8, 2012

Atlantic Trust Recognized as Industry Leader for Private Client Investment Platform

Posted in Finance,Wealth Management,Wealthy Consumer
Tags: Atlantic Trust, Invesco —

(ATLANTA) March 7, 2012 — Atlantic Trust, the private wealth management division of Invesco Ltd. (NYSE: IVZ), has been recognized by Private Asset Management (PAM), a financial services industry trade publication, as having the Best Private Client Investment Platform–Performance among firms with more than $5 billion in assets under management (AUM). The 2012 PAM Awards were announced on February 7 at a ceremony in New York.

“This award is a significant accomplishment and reflects Atlantic Trust’s unwavering commitment to investment excellence,” saidJack Markwalter, chairman and CEO of Atlantic Trust. “We manage strategies on a proprietary basis where we have a competitive track record, and we also search globally for institutional-quality, external portfolio managers with strong, risk-adjusted returns.”

“Our investment philosophy is centered on the idea that the best way to help families preserve and grow their wealth is through global diversification among asset classes and investment strategies,” said David Donabedian, CFA, chief investment officer of Atlantic Trust. “To achieve these results, we have designed a disciplined asset allocation process and hybrid investment model that combines proprietary and external investment offerings. Because we’ve used this approach for decades, we have an experience edge that gives our clients outstanding access to leading investment managers in all asset classes.”

PAM annually invites firms to compete for awards in several categories, and then a panel of independent industry experts selects the nominees and winners. PAM says that it considers the following criteria when selecting the winners of these awards:

Financial progress: candidates must be able to demonstrate performance track-records over the course of the last twelve months
Growth: client numbers, internal hires and geographic expansion
Client satisfaction: provide evidence of client satisfaction, including anecdotes and direct client statements
Product innovation: details of new services and products launched over the course of 2011

This recognition builds on the strong momentum Atlantic Trust brings into 2012, following a year of national recognition, including the firm’s 2011 PAM win as Best Private Wealth Manager in Overall Client Service and recognition as the Top U.S. Wealth Management Firm by The Luxury Institute.

Any reference to a ranking, a rating or an award provides no guarantee of future performance results, and is not necessarily indicative of any particular client’s experience and is not constant over time. In 2012, Atlantic Trust was selected by PAM for the award of “Best Private Client Investment Platform – Performance” based on information provided by Atlantic Trust. 10 firms entered the category for this award and 4 firms were shortlisted, of which Atlantic Trust was the only firm selected for the award. The specific criteria PAM used to determine the award is considered proprietary and could not be obtained. In response to PAM’s question about “how [we] have developed our [investment] offering in 2011″ regarding “product innovation, performance and how [we] dealt with the challenges of the last year,” Atlantic Trust provided an overview of our investment approach and recent asset allocation recommendations, as well as highlights of proprietary performance. Atlantic Trust provided detailed performance information for the Atlantic Trust Disciplined Equity Strategy. Atlantic Trust did not provide detailed performance information with respect to the more than 50 other proprietary and externally managed strategies available on our platform. Thus, the reference to “investment platform – performance” in the award should not be misconstrued as suggesting that PAM conducted a comprehensive review and analysis of the performance of all of the strategies on our platform.

In 2011, of the five firms shortlisted by PAM for the “Best Private Wealth Manager in Overall Client Service” rating, Atlantic Trust was the only firm selected for the award. For more information, visit www.pammagazine.com. In 2011, The Luxury Institute, aNew York-based research firm, conducted research among 500 pentamillionaires (defined as wealthy consumers with a minimum annual income of $200,000 along with a minimum net worth of $5 million) about their opinions of luxury brands

The Luxury Institute ranked Atlantic Trust No. 1 among 35 private wealth management firms based on quality, exclusivity, social status and self-enhancement with an LBSI score of 6.96 out of a maximum possible 10. Sample base: Wealthy Consumers familiar with each firm. . For more information, visit www.luxuryinstitute.com.

http://www.prnewswire.com/news-releases/atlantic-trust-recognized-as-industry-leader-for-private-client-investment-platform-141758083.html

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