Luxury Institute News

April 16, 2018

Upscale, downscale: Target draws customers with collaborations with high-end brands

The Washington Post
By: Abha Bhattarai
Friday, April 13, 2018

 

Not long ago, Gracie Howard got a pair of bright red Hunter rain boots. She felt good about the purchase — at least until she heard Target would soon be selling almost identical Hunter boots for a fraction of the price.

“I just wanna know why I’ve been buying $150 Hunter boots but the Hunter collection at target is $40. . . . ,” the 18-year-old from Cuero, Tex., tweeted. “I feel scammed.”

The boots aren’t so special anymore, she said — “I feel like everybody’s going to be walking around wearing Hunter now” — but that wasn’t going to stop her from heading to Target this weekend to see if she can pick up a pair or two.

“They’re so discounted that I’ll go see what they have,” she said.

And that, shoppers and analysts say, sums up Target’s high-low collaborations: There are obvious downsides, but many shoppers find them irresistible.

The retailer’s newest designer partnership, with iconic British brand Hunter, is set to roll out this weekend (though store credit card holders got access to a few items a week earlier). It is the latest in a series of collaborations that over the past two decades have turned around the retailer’s image and helped establish it as a higher-end alternative to competitors such as Walmart. Target has rolled out limited-time collaborations with established luxury brands such as Missoni, Alexander McQueen and Jean Paul Gaultier, as well as up-and-coming designers including Jason Wu and Prabal Gurung.

But retail analysts say that while the big-box chain has­­ boosted its own cachet, the tie-ups are less fruitful for premium brands looking to attract aspirational shoppers. Sure, partnering with Target may boost brand recognition and awareness in some circles, but to what end? Once the items sell out, often in days or weeks, it’s unlikely, industry insiders say, that Target shoppers will suddenly begin buying Victoria Beckham trousers at Saks Fifth Avenue for 25 times the price. (A version of the designer’s flared trousers sold for $40 at Target last year. A similar item at Saks Fifth Avenue is marked $1,010.)

“I’ve never seen a collaboration between a truly luxury brand and a mass retailer have much of an impact,” said Milton Pedraza, chief executive of the Luxury Institute, a New York-based research firm and consultant to luxury brands. “The only benefit here long term is to the mass retailer, which gets a halo effect from having a top brand on its shelves. But long term, the democratization of a luxury brand rarely works.”

Target, which has rolled out more than 175 such partnerships since the debut of its Michael Graves Design Collection in 1999, has been successful in creating buzz around many of its collaborations. And once shoppers are in the retailer’s stores, or on its website, analysts say they’re likely to make additional purchases.

“These types of lines actually drive little in sales, but the real win is to drive people to stores and have them buy everything else they need,” said Sucharita Kodali, an analyst for the market research firm Forrester. “It’s perfect for Target.”

The partnerships have made high-end pieces more affordable to a mass market — if customers can snag them in time — and helped kick off a frenzy of high-low partnerships. Karl Lagerfeld and Stella McCartney have designed collections for H&M, as have Versace and Balmain. Vera Wang now sells clothing at Kohl’s. And “Project Runway” winner Christian Siriano, whose dresses typically sell for thousands, has a line at Payless ShoeSource, the discount retailer that filed for bankruptcy this month.

Target’s annual sales have more than doubled since 1999, from $33.7 billion to $71.9 billion.

“These collaborations give our guests the opportunity to get their hands on incredible design at an affordable price,” said Mark Tritton, Target’s chief merchandising officer. “With each partnership, whether it be with a designer or brand, we want it to feel unique and special.”

Not always easy to buy

By the time Catherine Donovan logged on to Target.com at 7:30 a.m. Saturday, the $35 Hunter backpack she’d been eyeing had sold out. The Target credit card-holder found it on eBay — for three times the price.

“That may be part of the plan — to create hysteria — but it’s become a complete bloodbath,” said the 34-year-old from Des Plaines, Ill. “I’m not going to turn my back on Target, but you have to wonder who they’re selling to.”

Longtime shoppers say scoring designer merchandise at Target can be a frustrating experience. Collections usually sell out on Target.com within days, if not hours, and the retailer offers few details on exactly when online sales will begin.

The Minneapolis-based company has also faced criticism for sloppy displays and an unstable website. And some shoppers say the marked-down designer wares are sometimes badly made.

“I feel like the quality really takes a hit in collaborations like these,” said Kate Concannon, 31, who runs the fashion blog Life Sucks in a Strapless Bra. “I mean, Hunter boots are an investment piece — I’ve had mine for 10 years — but the Target collaboration is making me scratch my head a little bit: Why are these boots $40 when they normally cost four times as much?”

Hunter boots are typically made of natural rubber and are handcrafted from 28 parts. But the Hunter for Target line is mass-produced in a factory, using a preformed mold. There are also a few obvious differences in design: Hunter for Target boots, for example, come with calf extenders, and the top of the tall rain boots are cut diagonally instead of straight across. But other than that, shoppers noted few visible differences between the $40 boots at Target and the $150 models sold elsewhere.

Hunter did not respond to requests for comment.

It is unusual, analysts said, for a designer to offer a lower-priced alternative that is virtually identical to their legacy product. But some said Hunter, a 162-year-old brand, was likely to reach a fresh audience at Target.

“The demand for the product is limited, and they could go lower end, but that could diminish the higher-end products,” said Kodali of Forrester. “This is a way for them to dip their toes into the lower end in a brand-appropriate way.”

Pedraza, though, was not persuaded. Sure, these luxury brands attract throngs of people, “but is it profitable? Is it sustainable?” he asked. “Very often, these partnerships are a sign of desperation, and we’re starting to see brands recognize that going mass-market isn’t the best idea.”

A number of department-store brands, such as Michael Kors, Kate Spade and Coach, are struggling to turn around their businesses after flooding outlet stores and off-price retailers with low-priced wares, Pedraza said. “Once you’ve gone mass-market, it’s almost impossible to go back up.”

‘Too much hype’

Amy Arbide has been scouring the Hunter for Target lookbook for weeks. On Friday, she stayed up late waiting for Target to update its website with Hunter backpacks, tote bags and fanny packs that it had promised its credit card holders.

“A couple of friends and I stayed up until midnight,” the 32-year-old said. “Nothing happened. I stayed up until 2:30 the next morning refreshing the site. Nothing.”

She finally decided to go to sleep. When she woke up at 7:30 a.m., three hours after the collection had gone live, everything was sold out.

“It made me so mad, and then my best friend calls me with the same story: ‘Oh my God, everything’s gone,’ ” said Arbide, a paralegal in Miami. “Was I supposed to pull an all-nighter for this so-called exclusive presale? It was just poorly executed — and with too much hype.” (A spokeswoman for Target said the sales typically roll out online “in the wee hours” because the company’s site is refreshed overnight.)

Back in 2012, Arbide bought a couple of items — a zip-up clutch and a water bottle — by Tory Burch as part of Target’s holiday partnership with Neiman Marcus. She’d never heard of the brand before, but all of her friends seemed impressed.

“At the moment, I hadn’t realized what I was getting,” she said. “I was fresh out of college. But then I got those products, and I thought, you know, this is a nice brand.”

Since then, she’s bought Tory Burch items at department stores, including four purses, five pairs of shoes and multiplepieces of jewelry.

“It’s a matter of brand recognition,” Arbide said. “Because of Target, you’re going to have a broader range of people wearing items with the name ‘Hunter’ on it. That’ll get people to notice and say, ‘Where did you get that? What is Hunter?’ ”

Case in point: herself. Even though she’d heard of Hunter’s rain boots before, she had never given them much thought or been to the company’s website.

“But once Target announced the collaboration,” she said, “I began going to HunterBoots.com.”

And Arbide is not giving up on the $40 boots yet — even if it stresses her out. On Saturday, when Target makes its Hunter products widely available, she says she’ll set her alarm for 3 a.m.

“I really do want to snag those boots,” she said. “You’re talking about items that normally cost $200 selling for $40. Any time you have something like that available, why not?”

SOURCE: https://www.washingtonpost.com/business/economy/upscale-downscale-target-draws-customers-with-collaborations-with-high-end-brands/2018/04/13/5dd25888-3cd2-11e8-a7d1-e4efec6389f0_story.html?utm_term=.152794c1669a

Most of Trump’s merchandising empire has faded

The Washington Post
By: Zane Anthony, Kathryn Sanders and David A. Fahrenthold
Friday, April 13, 2018

 

Before he ran for office, Donald Trump made millions by selling his name to adorn other people’s products. There was Trump deodorant. Trump ties. Trump steaks. Trump underwear. Trump furniture. At one time, there was even a Trump-branded urine test.

Now, almost all of them are gone.

In 2015, Trump listed 19 companies that were paying him to produce or distribute Trump-branded consumer goods.

In recent weeks, only two said they are still selling Trump-branded goods. One is a Panamanian company selling Trump bed linens and home goods. The other is a Turkish company selling Trump furniture.

Of the rest, some Trump partners quit in reaction to campaign-trail rhetoric on immigrants and Muslims. Others said their licensing agreements had expired. Others said nothing beyond confirming that they’d stopped working with Trump. Their last Trump goods are now being sold off, often at a discount: One cologne is marked down from $42 to $9.99 for an ounce.

“Success by Trump,” the website says. And below that: “Clearance.”

The decline of the Trump merchandise empire is another sign of how politics has changed the president’s business. On one hand, it has allowed his Mar-a-Lago Club and his D.C. hotel to monetize his political alliances, raking in money from evangelical Christian groups and GOP campaigns.

But it has also driven away customers and partners who’d been drawn to the old Trump – a hustling icon of ostentatious wealth, who sold golf memberships to the truly rich and $42 cologne to those who merely wanted to be.

“Once the political campaign started, the wall went up,” said Marshal Cohen, who measures retail business trends for the NPD Group. “The wall that he [built] was more around his merchandise than it was around Mexico.”

The Trump Organization did not respond to questions about its licensed-merchandise business. Trump has said he has given up day-to-day management of his company while he’s in the White House. But he still owns it.

The Trump Organization sells its own name-branded merchandise. Last year, it opened an e-commerce site, www.TrumpStore.com, with an inventory of Trump T-shirts, teddy bears and key chains.

But the licensed-merchandise business was something different. It allowed Trump to make money off other people’s work, other people’s products, other people’s marketing.

All Trump had to do was sell something that he could never run out of.

His name.

Trump first pursued the idea in 2004. His emissaries contacted an executive at Phillips-Van Heusen, the menswear giant, with a proposition.

How would his company like to pay Trump for the right to put his name on their clothes?

The menswear executive wasn’t interested.

“He laughed,” Jeff Danzer, who was a marketer working for Trump, recalled later.

At that point, Trump was still emerging from the long, low years of the 1990s: huge debts, corporate bankruptcies, tabloid divorces. What customer wanted that on their shirt collar?

But then, “The Apprentice” took off – and rebranded Trump as a sharp-dressed boardroom titan.

After that, the idea of Trump shirts wasn’t laughable.

In fact, it wasn’t enough.

“Suits, dress shirts, ties, even down to shoes,” Danzer recalled. “Any- and everything that you would wear in the board room is what we were going out to license.”

By the end of 2004, Trump had a deal with Phillips-Van Heusen and a Donald J. Trump Signature Collection of clothes at Macy’s.

But that wasn’t enough, either.

Eventually, Trump was a smell – A “masculine combination of rich vetiver, tonka bean, birchwood and musk.” Trump was a chandelier. Trump was a mattress. Trump was a steak. “The meat category represents Mr. Trump’s power,” anunderling told the media when Trump Steaks launched.

Trump was a urine test.

“Take a snapshot of the most critical metabolic markers in your body’s natural waste fluids,” said the website for the Trump Network, a vitamin company that sent its customers urine-sample kits with the Trump logo on them. The tests would be used to determine what vitamins the customer needed, according to archived versions of the Trump Network website.

The rest of the marketing business shook its head. But, for a time, it worked.

“A caricature of what wealth is – as opposed to what real wealth is,” said Milton Pedraza, chief executive of the Luxury Institute, a consultant to luxury brands. Trump sold to those, he said, “who didn’t know the difference,” he said.

However, Pedraza said, Trump began to undermine his own success by “label-slapping” – sticking his name on anything he could, even the farfetched and ridiculous. Emeril Lagasse sold pots. Greg Norman sold golf shirts. Trump sold. . . everything.

“There was no strategy,” Pedraza said.

In 2009, Trump reported that his licensing partners had sold $215 million worth of Trump-licensed goods worldwide. That ranked him 80th on License Global magazine’s list of the top 125 merchandisers. In some years, Phillips-Van Heusen alone paid him more than $1 million.

For Trump, the benefit wasn’t just the money. The items brought his name into closets and kitchens around the country.

“It’s ties, shirts, cufflinks, everything sold at Macy’s. And they’re doing great,” Trump told David Letterman in 2012, during an interview in which he’d also complained that China was overtaking the United States as an economic power. “Number-one-selling tie anywhere in the world.”

“The ties are made in China,” Letterman said.

By 2015, when Trump entered the presidential race, some of his more far-out ideas – steaks, urine tests and vitamins – were already kaput. But, according to his financial disclosures, the 19 remaining licensees were still paying him a combined $2.4 million-plus per year, just to put the Trump name on their goods.

Then Trump ran for president.

Within a few weeks, the number was down to 14.

“We are disappointed and distressed by recent remarks about immigrants from Mexico,” said a corporate statement from Macy’s, after Trump called Mexican immigrants criminals and “rapists” at his first campaign event. “. . . We have decided to discontinue our business relationship with Mr. Trump.”

Losing Macy’s meant losing all the Trump merchandise that Macy’s had sold. Phillips-Van Heusen, his first big deal. Peerless, which made Trump suits. Parlux, which made his colognes. Another company made Trump belts. All gone.

Serta, which made Trump Home mattresses, had been one of Trump’s most lucrative partners. Trump lost it, too.

“They’ll all be back,” Trump told Forbes magazine.

A few months later, Trump called for a “total and complete shutdown” of Muslims entering the United States.

He lost another partner, a Dubai-based company that had a license to sell Trump furniture in the Middle East, Africa and India.

That left 13.

What happened to the rest?

To find out, The Washington Post and the Investigative Reporting Workshop at American University tried to contact all of the remaining companies that Trump had listed as licensing partners on his 2015 financial disclosure forms.

In one case, the company was mystified to have been listed at all.

“We haven’t done business [with him] for a long time,” said Jim Ehren, an executive at a sign-making company in the Los Angeles suburbs. His facility had once made inspirational posters, which paired Trump quotes with scenes of Wall Street or a golf course. But not recently.

Two other partnerships – one to sell Trump-branded shoes in Mexico, the other to sell Trump home organizational products – had apparently ended before any Trump-branded merchandise was sold.

That left 10.

Trump vodka also seems dead. It had survived in Israel, after the product had fizzled elsewhere. But Trump’s own financial disclosures don’t list it after 2015.

Trump coffee, also, is no more.

“It was a lack of sales,” said Sam Blaney at Two Rivers Coffee, which stopped making its Select by Trump coffee pods last year. “Not every idea was a good idea.”

At Downlite, which had sold Trump-branded pillows, the company said it had let the license expire in 2015.

“Purely a business decision,” said Josh Werthaiser, the company’s chief executive. “It had nothing to do with the election.”

That left seven.

Of them, five companies said that they weren’t making Trump products anymore – but gave little detail beyond that.

Wonu, which made Trump-branded bedding in Korea, said simply that its license had expired. Ditto for the makers of Donald J. Trump eyeglasses. A French company that once made Trump mattresses has been sold. Its new owner said it didn’t make them anymore.

At the company that once made Trump-branded throw blankets, executives did not call back. When The Post visited its office, a receptionist said she didn’t know of any Trump products being made there now.

At Elk Lighting, a staffer said the company has stopped making Trump-branded chandeliers and sconces. On its website, the company’s Trump Home Regency chandeliers are now sold as just “Regency.”

Since Trump began his campaign, the Trump Organization’s website has not added any listings of new manufacturers, to replace those it has lost. In Trump’s 2017 financial disclosure, he reported that his royalties from licensed merchandise had fallen from more than $2.4 million to just over $370,000. The forms do not give exact numbers, only a range of values that the figures fall between.

Only two companies are still paying to put Trump’s name on their products.

One is HomeStudio, which produces Trump-branded bed linens and housewares for the Latin American market. It declined to comment for this story, beyond confirming that it still makes Trump goods.

The other is Dorya, a Turkey-based manufacturer of Trump Home Collection furniture.

When a reporter visited the company’s Chicago showroom recently, there was a room full of sleek, modern, expensive chairs and tables. But the Trump name itself was hard to find, unless you knew where to look

On one $4,000 end table, for instance, the silver nameplate reading “Trump” – the name Dorya was paying to use – wasn’t on the outside of the piece at all.

To find it, customers had to look inside the drawer.

SOURCE: https://www.sfgate.com/news/article/Most-of-Trump-s-merchandising-empire-has-faded-12831555.php

April 12, 2018

When Marketing Luxury Vehicles, ‘Electric’ Is No Longer a Bad Word

Bloomberg Pursuits
By: Hannah Elliott
Thursday, April 11, 2018

Feeling good about your car is the new feeling cool about your car.


Inside the 2019 Bentley Bentayga Hybrid SUV at the Geneva Motor Show. By 2025, all Bentley cars will offer some version of an electric drivetrain, executives say. Photographer: Chris Ratcliffe/Bloomberg

Many Bentley customers believe they have obtained their wealth because of luck.

So says Bentley Motors Ltd.’s new chairman and chief executive officer, Adrian Hallmark, during an interview in Geneva.

“I have recognized that a lot of our customers follow a similar thing: They are super-successful. And a lot of them think it’s because they’re lucky,” he says. “That’s really important, because they don’t think they’re above human weakness and frailty.”

Such perceived (and believed) good fortune is spurring the world’s millionaires and billionaires to make luxury purchases, based on a system of values such as reduced carbon footprints and sustainability, he adds. According to Hallmark, hybrid and electric cars allow them to express in a novel way, he says.

“There is a new dimension long-term in the purchase decision—the ethical value,” Hallmark says, referring to gleanings from a 2008 internal study Bentley did of the world’s wealthiest people. “Electrification is part of it, and electrification isn’t going away.”

In fact, this new addition to the traditional considerations for buying a luxury car—performance, quality materials, and craftsmanship—is manifesting so strongly among the world’s top 1 percent that it is influencing Bentley’s product planning for the next two decades.

The company debuted its Bentayga Hybrid, a mid-six-figure SUV that can run 31 miles on purely electric power, last month at the Geneva Auto Show. (The 5,400-pound SUV isn’t exactly an econobox, but the hybrid badge certainly adds a feeling of green-tinged do-goodery—both for drivers and for onlookers who know what it means.) By 2025, all Bentley cars will offer some version of an electric drivetrain, Hallmark says. That includes its growling 12-cylinder Continental GT line, the latest generation of which is due out early next year.

It may take up to a decade to make an electric version of such a car, but the way Hallmark sees it, Bentley has no choice.

“We already know that the [next version] will be a battery electric vehicle,” he says. “It will have all of those moral and ethical benefits with it. By not going that way, even if we don’t have to, we would be massively under-performing in terms of customer potential.”

Successful—and Enlightened

Of course, the Crewe, England-based brand isn’t the only one to reckon that, in addition to being more efficient, electric power bestows a mark of honor upon its best clients. Top luxury automakers have been producing hybrid and electric vehicles for years, such as Bayerische Motoren Werke AG’s i8, Porsche AG’s 918 Spyder Hybrid, and Mercedes-Benz AG’s sold-out Project 1.

We take it for granted that a fair number of wealthy car buyers admire electric power, thanks to the cool cachet of Tesla Inc. But not long ago, electrics were viewed as anathema by serious car people, who favored traditional air-cooled engines with their guttural roars and grit. Then Toyota Motor Corp.’s Prius introduced the modern electric car to a broad audience. That one, with its awkward angles and gutless drive train, made electric cars feel like medicine we took with eyes closed and a quick swallow.

The few electrics that did get car fanatics excited were rather fragile, million-dollar hypercar one-offs that spent more time in the garage than on the road. These days, well-heeled buyers consider a hybrid or plug-in vehicle a crucial part of a well-rounded garage.

“It is definitely high-performance with sustainability that resonates on a values and ethics level … with affluent and wealthy automotive buyers,” says Milton Pedraza, founder of the Manhattan-based Luxury Institute, which studies trends of the world’s rich.

Witness Porsche’s upcoming Mission E, an electric-powered sedan that the automaker has hyped for years and plans to unveil on the eve of its also much-hyped 70th anniversary. It will probably cost more than the $90,000-plus Panamera, and while its driving range and battery power remains obscured, it will undoubtedly be a car to impress with next year. Among Porsche’s notoriously rabid fans, it will be the only new model that could divert attention from the usual adulation attending icons such as the brand’s GT3, 911R, or 930. More crucial on a broader scale, if Porsche delivers on its promise, it’ll be the first sedan to challenge Tesla’s Model S in terms of sales volume.

Or take Aston Martin Lagonda Ltd., which has announced it’s turning an entire heritage brand, Lagonda, into an electric powerhouse. The wedge-shaped Lagonda Vision Concept that debuted in Geneva is an all-electric sedan that marks how Aston expects the long-extinct brand to look when it returns.

Aston Martin hasn’t divulged many details about the new car, which, after all, is only a conceptual exercise, but Andy Palmer, president and chief executive officer of Aston Martin Lagonda Ltd., says it will get 400 miles on one charge—enough to drive from Los Angeles to San Francisco in one sitting, with self-driving capability and zero emissions.

“The Lagonda Vision Concept is our plan for the rebirth of a great brand,” he says. “It’s a new kind of luxury car.”

The New Future

Some of the most prestigious brands are holding off on electric for now. McLaren’s Global Head of Sales, Jolyon Nash, recently said no way, not ever (probably). Automobili Lamborghini SpA’s chief engineer, Maurizio Reggiani, says it would take quite a lot of persuasion—maybe an act of God—for the brand to make anything electric in the near future. Bugatti Automobiles SAS’s Stephan Winkelmann, who incidentally came from Lamborghini by way of Audi Sport, said “it’s too early to talk about” electrification at Bugatti, though he recognizes the potential.

“We are not influencing this discussion, but we take this very seriously,” he says. “It’s something to look into.”

Stephanie Brinley, senior analyst for IHS Markit, takes it all with a grain of salt. Some of the “ethical value” status symbol talk is hopeful thinking and marketing, she says. After all, car companies have invested billions in electrification; they have a lot riding on their ability to sell the story that a massive, expensive hybrid SUV is cool, not just “eco-friendly.” (Because, let’s be honest, if you wanted to really reduce your carbon footprint, the answer would be to buy a cheap, tiny electric car, or ride a motorcycle—or a bike.)

Still, the automakers are on to something real, she adds, that’s not going away. Young drivers are going to care about sustainable and ethical transportation in the next decade—more than any buying group ever has, especially when it comes to aspirational brands.

“If you look at millennials or the younger generation, there does seem to be more thoughtfulness about what kind of mark you leave on the planet—more so than a decade ago,” Brinley says. “As we move forward in the luxury landscape, for this type of buyer, having one in your garage will be crucial.”

For automakers, at least, it’ll take more than luck to get them there.

 

SOURCE: https://www.bloomberg.com/news/articles/2018-04-11/when-marketing-luxury-vehicles-electric-is-no-longer-a-bad-word

 

 

April 5, 2018

7 Complaints of Successful Luxury Salespeople

CEPro
By: Jason Knight
Wednesday, April 4, 2018

 

Change these seven problems, from spending too much energy on social media to altering product lines, and boost sales by 30%, according to the Luxury Institute.

 

7 Complaints of Successful Luxury Salespeople
New York’s Luxury Institute finds sales training to be a waste, and product discounts are ineffective on high-end clientele. 

 

Has any integrator playing in the high-end luxury market ever wondered why one of his or her previously top-performing salespeople suddenly seems to be demotivated and in a sales slump? According to information from the independent New York-based Luxury Institute, it could be something you are doing, not necessarily a problem with the salesperson.

The Luxury Institute recently held “intimate and confidential individual interviews” with top performing in-store sales associates across the spectrum of top-tier luxury and premium brands. The Institute also cross-checked the findings with store managers and retail heads to confirm the results. These top performing associates average more than 12 years of experience, and most perform supervisory roles. They are among the 20 percent of associates who deliver 80 percent of the dollars to top brands, comprising all genders and ethnicities.

The data reveals a “performance-numbing lack of communication” between top-tier luxury brand headquarters and their front-line associates. “The consequences continue to be a significant loss of sales, high employee turnover, poor morale, and most importantly, severed or damaged client relationships,” says the Institute. While the focus of the study was on retail luxury brands, many integrators may be able to relate to these same issues for their own sales teams.

According to the Luxury Institute, luxury employers who adopt these principles will boost their sales by 20 percent to 30 percent.  Here are the seven critical issues that top-performing salespeople say negatively affect their sales performance.

1. Sales Training Is a Waste

Top performers are unanimous on this point, according to the Institute. Successful salespeople learned how to build client relationships from parents and exemplary mentors who inspired in them a passion for living their life purposefully on a daily basis and helping others at work beyond the training tools provided by the brand. They see product and operational training as table stakes. According to these top performers, current sales training is coercive and dehumanizing.

The best associates tell Luxury Institute that they have honed their skills mostly through trial and error, learning to listen without judgment, asking relevant questions, earning trust, and finding creative ways to make individual clients feel cared for and special.

They acknowledge that it took far too long for them to achieve top performance. They want accelerated relationship-building skills for everyone on the sales team, especially for young associates. These young team members have grown up on social media, and the veterans observe that many can’t make eye contact, they lack empathy, and that they are unable to apologize without stating, “I am so sorry you feel that way,” when they make a mistake.

Some top sellers have hired personal coaches at their own expense.

2. Client Feedback Is Often Ignored: Inventory Is Mismanaged

Clients provide constant feedback to the sales associates about products, policies and trends. According to top sales associates, this critical intelligence is rarely collected systematically, or acted upon. One frequently cited example is the constant tweaking, or discontinuance, of timeless staple brands.

Another impediment is inventory mismanagement. VIP clients are often left wanting due to mismanagement of inventory. These destroy customer lifetime value and relationships. Many clients feel betrayed and don’t return.

Top associates say customer attitudes, desires, and behaviors change often. They recommend that these changes be monitored through periodic market research, or by aggregating customer feedback through the voice of the associate. Also, meet with the sales team prior to rolling out any new product offering.

3. Stop Spamming Clients With Emails

Top sales associates earn trust with top clients by committing to them that they will not be spammed by emails or contacted excessively. But salespeople complain their clients are sent waves of “irrelevant, impersonal emails and other communications,” even though the campaigns are often well-intentioned and well-executed.

Associates say they prefer to keep their frayed, outdated black books, and protect their relationships, rather than enter the information into the database and lose a great client. The result is a massive loss of a critical asset in the era of Big Data. Even more damaging, when a client loses trust, the impact on sales is negative and too often permanent.

The best sales associates suggest using a CRM specialist who understands that personal, measured, humanistic communication is required to build a long-lasting client relationship.

4. Stop Discounting Products/Services

One of the greatest annoyances for both clients and sales associates are inconsistencies regarding product pricing. When clients see products or services for which they paid full price available later for a lower price, they revolt and demand make-goods. The wealthiest clients are particularly vocal, based on principle.

Pricing inconsistencies makes clients hesitant to buy at full price. It also allows sales associates, who want to stay in the client’s good graces, to encourage clients to wait until the products go on sale. Those, according to the top performers, are the games they are forced to play, which adversely affect their credibility and their earnings.

They suggest offering more exclusive products for their own channels, and offering classic, heritage, and signature products that never go on sale. Providing early access to very limited-edition exclusives is not only a more profitable way to engage VIP clients than early access to promotions, it is also a more meaningful way to connect with them. Top associates are happy to let marketing communicate sales and promotions. They would prefer to have the inside scoop topics to talk about.

5. Keep Technology Up to Date

Top performers say it’s a big positive to have “wow factor” in a showroom, but it needs to be kept up to date. That same message goes for the back-end systems, such as inventory management. Even things like making sure the Wi-Fi in the showroom is fast and accessible are a plus. If your showroom Wi-Fi is slow, what do you think a customer will think about the system you can install in their home?

6. Social Media Hurts Local Marketing Initiatives

Top sales associates are active personally and professionally on social media. Many of them post to Instagram almost daily and appreciate that some of their clients stay in touch, albeit lightly, on Facebook and Twitter. However, they report, and the research bears out, that the wealthiest and highest potential clients are less active on social media than aspirational consumers, and are becoming even less so as they become more fearful of the potential damage to their identity, reputation, and privacy.

Wealthy clients have far more to lose in a social media environment where the evidence now shows that their data lacks any protection.

According to top associates, marketing has failed to get the message. They want more funds for customized gifting, rewarding special clients, and creating personalized and exclusive client events. They are happy to be held accountable for the return on investment required to fund those programs and invite marketing to be a part of the brainstorming, execution, and measurement.

7. Offer Flexible Schedules

Calling working schedules “dehumanizing” and “stuck in the Industrial Age,” the study says employers need to be flexible in both scheduling and compensation. Top sales associates who pay for themselves in multiples want flexible schedules and compensation to maximize productivity. For example, part-timers can be some of the most productive sales associates.

 

Source: https://www.cepro.com/article/7_complaints_of_successful_luxury_salespeople

February 28, 2018

5 Brands That Reveal The Future Of Luxury Online

Forbes
Pamela M. Danziger
February 26, 2018


Badgley Mischka New York Fashion Week runway app

 

Online is the next frontier for luxury brands. It’s where luxury brands can find their next path to growth, but for a variety of reasons they have been notoriously slow to follow it. As an industry steeped in heritage and tradition, change doesn’t come naturally to it, but in today’s dynamically changing consumer market, that is exactly what luxury brands must do.

While luxury brands have accepted that they must market online, they have been much slower to accept that they must sell there as well. That remains its stumbling block.

“A big part of luxury brands’ hesitance to embrace sales online has been how to keep that luxury aspect of the brand, if it is so easily available,” says Lori Mitchell-Keller, Global General Manager, Consumer Industries at SAP. “Keeping that perceived cache of luxury in the online world have made them slow to migrate there.”

But migrate sales online is what they have to do for assure a prosperous future. Bain & Company recently reported online luxury sales growth is phenomenal, increasing by 24% in 2017. Yet it still accounts for only 9% of the total personal luxury goods market worldwide.

On the surface online’s less than 10% market share might not seem compelling, but the industry’s perception may not match the consumers’ reality. Compare that meager market share with luxury consumers’ preferences in where they like to shop and a totally different picture emerges.

In a global survey of affluent consumers with annual incomes of $150,000 per year, or equivalent, the Luxury Institute found that 21% of those surveyed prefer to shop luxury online, and another 27% had no preference between online or in-store shopping. Just shy of a majority of luxury consumers don’t shy away from doing so online, rather they actively embrace it.

“Luxury brands will lose share if they are not able to interact in the way the world is changing and the way customers want to interact with them,” Mitchell-Keller maintains .

While heritage luxury brands drag their feet, plenty of others are jumping in unburdened by fears of losing their luxe on the internet. “We are seeing a lot of luxury brands being created online, companies like Farfetch, Net-a-Porter, Bonobos, that have much more of an online than physical presence,” Mitchell-Keller says. “And other more traditional brands, like Badgley Mischka and Gucci, have figured out how to create, maintain, even enhance their luxe cache online. There is no secret or easy answer how they’ve been able to do that, but it can and is being done.”

Two of these born on the internet brands, she notes, have recently been acquired by other companies – Yoox Net-a-Porter by Richemont and Bonobos by Walmart – and Farfetch has just signed deals with Fendi, Burberry and Chanel in advance of an expected IPO in NYC this coming November.

Such deals are expected to pick up in the future, as Mitchell-Keller explains, “The main reason physical luxury brands are acquiring digital brands is because they haven’t figure out the online equation yet. They are looking for help to reach the digital customer.”

Putting our heads together, we think these 5 brands best exemplify the future of luxury online.

Farfetch goes further

Founded in 2008 as a online luxury fashion platform, Farfetch is seamlessly blending in-store access to fashions across the globe with internet convenience. With offices in 11 fashion hubs, from which it offers same-day express delivery, it lists products from over 700 boutiques and fashion brands. It carries a multitude of heritage and emerging designer brands, including Dolce & Gabbana, Givenchy and Chloé.

Having acquired the London-based Browns boutique in 2015, it used that platform to introduce its technology-enhanced “Store of the Future” concept that marries the digital and personal experience luxury shoppers desire.

Given its chops in digital luxury marketing, Farfetch also initiated a white label digital service called “Farfetch Black and White” for brands that want to use its platform to power their own branded online presence.

Numerous heritage brands are coming on board in one way or another, including Burberry to list all inventory in its marketplace, Fendi for customized handbags, Gucci for 90-minute delivery service, and most recently Chanel.

But tellingly, Chanel was quick to point out that its Farfetch partnership will not include selling fashion online, rather using its proprietary in-store technology for physical retail. “We are not starting to sell Chanel on the Farfetch marketplace – I want to be very clear on that,” said Chanel’s president of fashion Bruno Pavlovky in announcing the deal. To which Mitchell-Keller asks, “How much share will they lose while they are trying to figure online out?”

Such reluctance to embrace full-on digital access for customers is indicative of an industry attitude that has to change to ensure a vibrant future. It is ridiculous for a brand like Chanel to force its 21st customers to shop like they did back in the 80s.

Net-a-Porter brings it

Just acquired by Richemont following a merger with YOOX in 2015, Net-a-Porter founded in 2000 takes a more heavily content-driven strategy than its closest competitor, Farfetch. But like Farfetch it offers white label digital support to designer brands through its YNAP platform which Richemont says will continue to operate as a separate entity. Nonetheless, it will make strange bedfellows, since YNAP operates flagship online stores for many competitive Kering brands, including Bottega Veneta, Balenciaga, and YSL.

While Mitchell-Keller admires Net-a-Porter, she thinks its Outnet website that offers discounted fashions in flash-sale format is especially in tune with how the next generation wants to shop. “My son, who is totally a millennial, had me logon to order a pair of gold Nike shoes, which I understand are status items for the college crowd. So here we are logged in at midnight for the countdown and find out we are #500 in line to order. It is such a different experience than I am used to where luxury brands pamper you in the store, but millennials don’t necessarily want that. They want this,” she says.

Outnet makes it fun for millennials. It is fast, it’s limited, it’s accessible and it’s cheaper.

Bonobos shows men how to wear it

Bonobos is one of those born on the internet luxury brands, or near-luxury for those who want to quibble, that have captured the loyalty of affluent men shoppers, a hard demographic to attract into the store. It’s achieved that by not just selling clothes, but showing men how to dress fashionably. It is also helped by offering casual-luxe styles that modern men favor.

“I’m intrigued by the way Bonobos shows their clothes,” says Mitchell-Keller. “It’s not just a guy standing there like on most websites. You can see the movement and men interacting with each other. It is a much different experience than just going online and seeing picture after picture of clothes. It’s engaging.”

As a result, Bonobos caught the eye of a big company suitor, Walmart, which acquired the company last year, and with it a thought-leader in the next generation of retail fashion, Andy Dunn who joins another ecommerce powerhouse, Marc Lore, at Walmart to give it a leg up into new internet markets.

While Walmart just announced that its recent quarterly online sales growth slowed, up only 23% compared to a year ago vs. the 50% growth enjoyed throughout the first nine months of the year, it continues to project a 40% uptick through the rest of the year, with Bonobos and a recently announced online partnership with Lord & Taylor showing that this low-end leader aspires to reach higher.

Badgley Mischka dress its models with tech

While the Badgley Mischka brand has long maintained a vibrant online ecommerce presence, co-owner and co-designer James Mischka is described by Mitchell-Keller as a “technology geek.” Being as attuned to tech as fashion, he partnered with SAP to create a runway app for the recent New York Fashion Week where those in the audience could vote on each look as it walked down the runway. “In 9 minutes they got feedback that usually takes them 6 months to get,” she says.

The results were eye opening for the company which discovered that a dress they hadn’t thought would make much of a splash turned out to be the #2 most popular look, allowing the company to place sufficient orders to get it into the stores in record time.

The audience in turn loved the ability to get all the fashion details on their phones instantaneously. The models loved it, who were back stage reading the results and competing to see whose look scored highest. And the other designers at show were envious and lined up afterwards to get an app for their next runway show.

Thinking about new ways consumers can interact and engage with a luxury brand is what makes Badgley Mischka an important luxury brand for the future. “Too many luxury brands aren’t thinking about the technology. They are thinking about product, which is important, but they have to understand how their brand is being consumed differently than it used to be consumed,” Mitchell-Keller notes.

Gucci breaks out of the luxury culture

And we can’t finish our look at luxury online without mentioning Gucci. In an interview on CNBC,  Kering’s chairman and CEO Francois-Henri Pinault said its Gucci brand is doing about 50% of its sales with millennials. In recognition of its online success, L2 Research, which specializes in data-driven analysis, gave its top spot for best performing digital fashion brand to Gucci in 2016 and 2017.

I’ve written extensively about Gucci here, but suffice to say that Gucci’s success online is thanks to Gucci’s CEO Marco Bizzarri giving free reign to its young creative director Alessandro Michele, who understands how to connect with this digitally-native generation. Thus Gucci has broken out of the inbred, digitally-adverse culture that plagues so many other luxury brands.

In conclusion, Mitchell-Keller and I see a whole digital transformation that is going to happen in luxury, just as it has happened in other markets. While we recognize that the experience of in-store shopping, and the pampering luxury consumers can find there, isn’t going to be replaced by digital engagement, customers today value the luxury of convenience that online delivers too.

“The time issue is a huge one,” Mitchell-Keller concludes. “It’s not just that everyone is now on social media. Everybody also has huge demands on their time. It’s a very different world than 20 years ago when these brands started to become popular. Luxury brands have to adapt to the way that consumers want to interact with their product now, and that increasingly is going to be online.”

 

Source: https://www.forbes.com/sites/pamdanziger/2018/02/26/5-brands-that-reveal-the-future-of-luxury-online/#32f21d5c3c7e

 

Americans are finally coming back to Macy’s to shop for clothes

The Washington Post
By: Abha Bhattarai
February 27, 2018


A Macy’s department store in New York on Feb. 13.  (Victor J. Blue/Bloomberg)

 

Americans are buying more clothing, shoes and jewelry at Macy’s, helping turn around the retailer’s fortunes.

The department store chain on Tuesday said a renewed emphasis on apparel helped bring in more shoppers and persuaded them to spend more. Sales at stores open at least one year rose 1.4 percent in the most recent quarter, marking the first period of sales growth in more than three years.

“Our customers have responded well to the increased focus on fashion and enhanced quality of the merchandise,” Jeffrey Gennette, chief executive of Macy’s, said in a Tuesday call with analysts. “The consumer was out spending, and that was great.”

Macy’s has for years been dogged by many of the same issues facing its peers: changing shopping habits, excess inventory and a culture of deep discounts and promotions. It also faces increasing competition from Amazon, which is projected to surpass Macy’s this year as the country’s largest apparel seller. (Jeffrey P. Bezos, founder and chief executive of Amazon, owns The Washington Post.)

But on Tuesday there were signs that the retailer’s turnaround efforts were working. Sales of women’s dresses, tailored men’s clothing, winter coats and fragrances all rose during the critical holiday season, helping lift fourth-quarter sales 1.8 percent to $8.67 billion. Profits nearly tripled, to $1.3 billion, or $4.31 per share, from $472 million, or $1.54 per share, a year earlier. Shares of Macy’s stock rose nearly 12 percent Tuesday morning after the news, before closing at 3.5 percent.

“Consumers had the ability to spend,” Dana Telsey, chief executive of Telsey Advisory Group, told CNBC on Tuesday. “Retailers and brands were able to come out with products people wanted. We have a little bit of an apparel cycle: Whether it was fragrances, dresses, active or men’s tailored, it all seemed to work.”

Macy’s said it boosted sales by dialing back discounts, adding exclusive products and investing in its private-label brands. Customers on average spent 3 percent more on each item they purchased during the quarter, according to Gennette.

The company is also adding more exclusive products, which make up about a third of its inventory. Last month, it began selling a line of “modest” clothing, including maxi dresses, jumpsuits and hand-dyed hijabs. Other exclusive brands include lines by Tommy Hilfiger and Martha Stewart.

“Macy’s has realized it needs to focus on its sweet spot: clothing for adults and kids,” said Milton Pedraza, chief executive of the New York-based Luxury Institute. “This is a company that has always been about mainstream apparel, and I think they’ve found a way to make that work for them again.” (That appeal, he added, didn’t necessarily translate to teenage consumers. Indeed, Macy’s executives said sales of junior apparel slipped during the most recent quarter.)

Macy’s has made a number of sweeping changes in recent months. The Cincinnati-based retailer has closed dozens of stores, invested in new businesses and revamped its loyalty rewards program. It is also increasingly looking beyond the mall for expansion. The company opened 36 Bluemercury beauty stores last year, as well as 30 off-price Backstage locations. It plans to add another 100 Backstage stores this year to compete with rivals such as Nordstrom Rack and Saks Off Fifth.

“Macy’s is hot on the heels of a good fourth quarter,” said Stephen Beck, managing partner at New York consultancy cg42. “But there’s still a long way to go before we see a truly healthy turnaround.”

 

Source: https://www.washingtonpost.com/news/business/wp/2018/02/27/americans-are-finally-coming-back-to-macys-to-shop-for-clothes/?utm_term=.659edcbf22b8

November 28, 2017

Luxury Brands Yield to Discounts Despite Push to Stay Exclusive

Apparel and handbag makers’ efforts to wean customers from discounts are off to a rocky start this holiday season.

Bloomberg Pursuits
By: Lisa Wolfson and Stephanie Hoi-Nga Wong
With Assistance by: Lindsey Rupp and Kim Bhasin
November 27, 2017

 

Take Michael Kors’s Jet Set Leather shoulder bag, selling at a 57 percent discount on the company’s website Monday for $149, or a black silk Prada blouse priced 40 percent lower at $809 at Barneys New York. Those items aren’t outliers, according to researcher Edited, which said luxury labels and retailers saw the industry’s highest volume of markdowns over the Black Friday weekend, followed by premium brands.

The lower prices couldn’t come at a more inopportune time for fashion houses like Michael Kors and Ralph Lauren Corp., which are trying to restore their cachet by clamping down on discounting. Both companies posted better-than-expected earnings last quarter and an increase in profit margins — signs that those efforts are working.

Though heavy promotions and specials are a hallmark of the holiday season, the data from Edited suggests that the labels still have a way to go before getting customers to shell out top dollar. Prices on more than a quarter of luxury items in stock were cut between 26 percent and 50 percent, according to the firm, which tracks real-time data for brands and retailers. The discount volume was 24 percent for premium brands and 20 percent for mass-market goods sold online.

“There are too many luxury and premium brands selling very similar products,” said Milton Pedraza, a New York-based luxury consultant. “Some of them reduced their prices without announcing it because it’s embarrassing and devalues their brand.”

Michael Kors’s website, while touting deals of as much as 50 percent off, offered some handbags and shoes that were marked down even more. Its Aileen leather boot cost $109 on the site, down 63 percent from $295.

For the online apparel market as a whole, Edited found that almost half of all items were discounted an average of 46 percent so far during the holiday season. The price cuts began weeks before Thanksgiving, and led product sellouts to double from this time last year, according to the research firm, which analyzed data from more than 11,000 clothing, footwear and accessory brands.

“While the retail industry has banked on aggressive discounts weeks before Black Friday and Cyber Monday to boost consumer spending, they need to make sure that this does not sacrifice margins in the long-term,” said Katie Smith, Edited’s director of retail analysis and Insights.

Almost a quarter of luxury handbags for sale online have been marked down between 40 percent and 50 percent so far, up from as much as 40 percent last year, Edited said. It named Fendi, Balenciaga, Tom Ford and Prada as some of top discounted brands.

While some high-end boutiques, like Chanel and Louis Vuitton, didn’t hold Black Friday sales events, they did stay open longer to take advantage of traffic. Others, such as Italian leather goods company Fendi, have offered 30 percent off on some products. One model of the company’s double micro baguette bag, originally priced at $1,800, was marked down to $1,260 on Monday at its Manhattan store on tony Madison Avenue. A salesman at the boutique said a lot more items have been discounted this year compared to only about five last year.

At Barneys New York, a blue cashmere coat with mink trim was selling for $2,889, a 40 percent discount off the original $4,820 price.

“I have seen so much discounted so early,” said Terie Bray, 45, who was shopping at Barneys on Monday, her second visit in two days to the upscale Madison Avenue store. Bray bought designer boots and a pair of Maison Margiela pants yesterday, both at 40 percent off. “If they are giving a 40 percent discount now, how much are they going to give for Christmas — 60 percent, 70 percent?”

While more people are shopping online each year, internet sales still represent less than 12 percent of total holiday retail purchases, according to EMarketer estimates. That means there is still plenty of opportunity for physical stores, including the struggling department-store industry.

Researcher ShopperTrak found that consumer visits to brick-and-mortar retailers on the day after Thanksgiving — considered one of the busiest shopping days of the year — slipped less than a percent from last year.

Brick-and-Mortar

“There has been a significant amount of debate surrounding the shifting importance of brick-and-mortar retail, and the fact that shopper visits remained intact on Black Friday illustrates that physical retail is still highly relevant,” said Brian Field, senior director of advisory services for ShopperTrak.

More retailers opted to close on Thanksgiving Day this year, Field said. Based on years of traffic data, shopping on the holiday was only pulling visits from Black Friday, rather than creating an additional buying opportunity, he said, and that closing on Thanksgiving contributes to lower overhead and increased goodwill.

The National Retail Federation estimates U.S. holiday spending will increase as much as 4 percent this year. The industry’s biggest trade ground will provide its survey of Black Friday weekend shopping on Tuesday.

 

Sourcehttps://www.bloomberg.com/news/articles/2017-11-27/holiday-markdowns-deepen-despite-brands-push-for-higher-prices

November 27, 2017

Multichannel and Millennial Tastes will Shape Luxury in 2018

The Luxury Institute’s annual list of the “Top 10 Luxury Trends for 2018″ found that millennials are opting for high-end services which provide experiences over purchasing luxury goods.

Luxury Society by Digital Luxury Group
By: Danny Parisi
November 14, 2017

While luxury goods are likely to see a bit of a slump in 2018, high-end services will witness solid growth at the behest of millennials who value experiences over things.

This trend is one of the 10 collected in the Luxury Institute‘s “Top 10 Luxury Trends for 2018,” an annual list of the biggest trends, challenges and predictions for the upcoming year. In addition to the primacy of experiences over goods, luxury brands are focusing more on the emotional benefits their products can have for customers over the material benefits.

Luxury trends

In the coming year the luxury world will be facing some major challenges as well as some major opportunities.

According to Luxury Institute’s Top 10 Trends, growth has been uneven for luxury goods but luxury services are faring much better.

This can be attributed to the growing presence of millennials in the luxury consumer base, who are more prone to purchase services and ephemeral experiences over objects and goods.

Millennials make up a much larger segment of consumers than baby boomers, 92 million to 77 million to be exact, but it will still be a while before millennials fully come into their spending power. For now, they do not have quite as much impact on the market as boomers.

Along those lines, Luxury Institute notes that the impending transfer of wealth from boomers to millennials may still be a ways off, and that when it happens it may not be the windfall many are expecting it to be.

One of the more surprising trends is that shopping centers are becoming more important to the luxury industry.

Shopping malls are not usually considered centers of luxury retail, but recent research shows that mall owners are pouring money into redesigns and renovations to be more accommodating to different types of consumers and communities.

Over the last three years, malls in the United States have poured more than $8 billion into renovations with an eye on turning the mall experience into something more upscale with options beyond the usual shopping mall fare. This research comes from real estate management and investment firm JLL in a report outlining the future of the new U.S. mall.

Relying on data

Other trends on the list focus on the ways the luxury industry is connecting online to offline.

While ecommerce accounted for almost 12 percent of all retail last year, there are signs that a plateau may be on the horizon. In response to this, luxury brands will begin to focus on the in-store experience as well as the online experience, bringing those two together for good.

This theme is continued in another trend where brands will begin to seamlessly integrate the various channels that make up their business in order to allow customers to navigate and complete transactions in whatever way they choose.

While digital is a vital aspect of retail, in-store associates are not useless and are proving to be an essential part of the customer experience, according to consumers.

A report from Astound Commerce shows that 52 percent of consumers think it is vital for store associates to be able to place an order and 46 percent believe they should have access to inventory information. However, online shoppers are having extremely positive experiences as well, with 86 percent claim their customer service interactions were great, and 42 percent saying excellent.

Finally, the next year will likely see new developments in the way brands collect and use data, bringing in new tech such as artificial intelligence to help intelligently sort through and make the best use of valuable data that will help brands market and sell better.

 

Article originally posted on Luxury Daily.

Sourcehttps://www.luxurysociety.com/en/articles/2017/11/multichannel-and-millennial-tastes-will-shape-luxury-2018-luxury-institute/?utm_source=Luxury+Society+Newsletter&utm_campaign=6fa6d0ff3c-EMAIL_CAMPAIGN_2017_11_20&utm_medium=email&utm_term=0_d63682bcfa-6fa6d0ff3c-61061965

Top 10 Luxury Brands in the World

Stock Talk Review
By: Maria Mancic
November 22, 2017

Photo Source: Pixabay/Public Domain

When someone mentions top 10 luxury brands in the world, what is the first name that crosses your mind?

There is something very appealing about luxury brand items. It might be the fact that they are unreachable for some people or, for some others, the fact that, unlike other mortals, they can afford them. The problem with the most luxury brand items is that the price doesn’t always match the quality, which means that a person is giving a fortune for something that can be bought for, in some cases, less than $200 and it lasts shorter than the one that they would buy for the more reasonable price. But the one thing is certain: as long as there are people who would give that kind of money, the prices will be that high.

Just in one year, in 2016, the global luxury market grew by 3% to extraordinary $240.47 billion. Do you still breathe? Great, let’s continue. Luxury Institute CEO suggests that this growth is caused by an economic slowdown in China, but you will read about that a bit later.

The majority of these top 10 luxury brands in the world are located in Europe. At the beginning of 2017, experts suggested that the luxury market will grow by 4%-6% more by the end of the year and reach incredible $268 billion value. But there are several factors that might slow down this process. One of them is the increasing market awareness and changing conditions that will force luxury brands to open low-cost stores in Asia and it is predicted that, in the next 5 to 10 years, the prominent luxury customer base will come from Africa. The other thing that will affect the luxury market is Trump’s new rules, especially the one regarding making all luxury brand owners to pull their offices from other parts of the world and concentrate on the US only. This will bring the prices up in no time and decrease the owner’s monthly income. Next, it will lead to closing down many stores and firing a lot of people. But, that’s the politics, and people were the ones who chose Trump as their leader.

To clear it up more and find out which luxury brands are on the list, click on top 10 luxury brands in the world.

 

Sourcehttps://www.stocktalkreview.com/top-10-luxury-brands-in-the-world/23357/

November 2, 2017

Millennial Debt, Data-Driven Relationships, And Survival Of The Store Among Luxury Institute’s Top Ten Luxury Trends For 2018

NEW YORK, NY–(November 01, 2017) - Changes in the luxury market in the coming year are driven by factors from the financial challenges of millennials to the increasingly omnichannel nature of the customer experience and the ascendancy of data and artificial intelligence in building relationships. At the October meeting of the Luxury Client Experience Board, Luxury Institute CEO, Milton Pedraza analyzed the current state of the high-end market and presented the Luxury Institute’s “Ten Luxury Trends For 2018″ focused on the importance of services within the luxury industry and the distribution of wealth among luxury consumers.

Top executives in attendance from major luxury brands, including fashion retail, watches & jewelry, textiles, hotels and resorts, entertainment and media, as well as representatives from data-driven marketing agencies and innovative technology firms, broke into smaller groups to identify ways in which brands can complement their product offerings with a service component.

Luxury Institute’s 10 Luxury Trends For 2018

1. Growth remains uneven for luxury goods, but solid growth continues in luxury services, particularly health & wellness, beauty, travel, and technology. Sales growth will be sluggish in categories like apparel, accessories, and jewelry. Apparel is an example of a commodity category that is only becoming cheaper. The ability to produce original product that commands premium pricing is limited when fast fashion brands like Zara and H&M can quickly produce a low-cost imitation of an expensive item from a luxury house; an appealing alternative for many cash-strapped millennials and others facing constrained consumption. Offerings like these may not have the same quality of items from more prestigious brands, but they have the look and they are widely accessible. While there will be a few apparel and accessories brands that are major exceptions to this trend, most brands in these categories will feel the effects. Jewelry is another commodity category with a low opportunity to differentiate. Watches are in lower demand, because people simply don’t wear them frequently, especially younger people. Millennials are three times as likely as consumers 55-years and older not to own a watch. Growth looks to be robust by comparison on the services side, with consumers of all ages preferring to consume experiences more than they want more products. Boomers are downsizing and decluttering, while millennials face the need to prioritize purchases. Consumers will continue to find money in the budget for services provided by health and wellness companies like SoulCycle, Equinox, and Ulta Beauty, as well as for upgraded health care services, high-end travel, and massage therapy. Technology is another area where consumers continue to boost spending to upgrade into the latest devices and to take advantage of lifestyle enhancements available in every room of the connected home.

2. Millennials are much more numerous than boomers (92 million vs. 77 million) but their spending power will be subdued for years to come. The younger generation wrestles with staggering levels of student debt, low-paying jobs, and postponement of family formation. Millennials are not spurning luxury goods as much by choice as they are out of economic necessity. Student debt has more than doubled in the past decade to more than $1.5 trillion in outstanding higher education loans. Loan repayment consumes a considerable share of disposable income for graduates who last year left school with an average debt of $37,172. Many holders of college degrees take on the debt and then find themselves involuntarily underemployed as baristas or otherwise working at jobs that pay far lower than what would be necessary to make them comfortable. Marrying later in life also correlates with lower levels of wealth accumulation through home ownership, investing, and more moderate spending habits.

3. An over-hyped generational wealth transfer will begin slowly, and may well disappointthose who are banking on it. Wall Street has long been anticipating a massive transfer of $30 trillion in assets from baby boomers to their heirs over the next several decades. Millennials seem to be anticipating it, too, with 59-years being the average age at which people under 35 plan to retire; six years earlier than age 65, the average age boomers plan on retiring. Millennials may not want to make too many plans for spending the money. A recent survey by Natixis shows 70% of millennials expect to receive a large inheritance from their family, but only 40% of baby boomer parents plan to leave an inheritance to their children. Some of that wealth may be lost to future market returns, and rising costs of health care in old age, like the nationwide median monthly cost of $7,698 for a private room in a nursing home. Current economic headwinds hitting millennials, along with uncertainty over whether mom and dad will bail them out, imperils the future net worth of a large percentage of the millennial generation.

4. Tax cuts may be coming, but don’t expect a big boost to luxury spending. Most taxpayers would get at least some tax relief next year if the U.S. House of Representatives and Senate pass tax cuts this fall, but the biggest benefits would accrue to the top 1% of earners. An analysis of President Trump’s proposals by the Tax Policy Center showed that the tax burden on taxpayers with incomes of $150,000 to $300,000 could actually increase due to the elimination of popular itemized deductions like those for state and local taxes. After-tax income would jump 10.2% for the top 0.1% who earn $3,439,000 and up, but rise just 0.8% on average for those earning between $149,400 and $216,800. Whatever tax savings these consumers achieve will likely be consumed by credit card and automobile debt, with little left over for additional luxury spending. In the luxury goods market, the top 5% of your customers generate 40% of sales, with the middle 15% generating 30%, and the bottom 80% accounting for another 30%. With little net benefit accruing to most of these groups, lackluster gains in overall luxury spending should come as no surprise next year.

5. Luxury firms place greater emphasis on emotional benefits for the consumer and focus less on product functionality. Through reverse engineering and nimble manufacturing, mainstream goods have largely incorporated the features of luxury goods. There will be less focus on the functionality of items that consumers are purchasing, and a greater effort on the part of luxury brands to generate emotional benefits. There is no universal roadmap for producing emotional connections with customers. Doing so successfully incorporates elements of authentic storytelling and communication of brand identity, with rigorous empirical testing to see what really resonates with the clientele.

6. The appeal of the surrounding shopping center or village is rivaling the importance of the individual store in attracting traffic drawn to a retail destination for the quality of the overall experience. The entire shopping center, or the mall, have to create a great experience, and those on the leading edge of luxury offer shoppers spas, art exhibitions, music and other entertainment to enhance the shopping experience. Staff at these shopping centers, from the valets to the shop clerks, provide gracious, helpful, and expert service to create a positive emotional experience. Potential clients may visit an individual store, but they are more likely to be drawn to retail destinations that make them feel special throughout the entire customer experience.

7. The in-store experience finally gets the focus it deserves in terms of training people, redesigning the customer experience, and upgrading technology and systems for inventory management and merchandising. E-commerce accounted for 11.7% of total retail sales last year, and drove 41.6% of all retail sales growth in 2016, according to the U.S. Commerce Department. There are signs of a plateau in online sales growth rates for companies not named Amazon. The 14.3% growth rate in web commerce in the final quarter of 2016 was the smallest year-over-year increase since the fourth quarter of 2014. Amazon’s revenue grew 31.3% to $147 billion, accounting for 37% of total sales on the web of $395 billion in 2016. As online growth rates slow further, luxury brands will turn attention back to the store, in many cases totally redesigning the space, while investing in people and technology to optimize the in-store customer experience.

8. Companies will increasingly adopt seamless channel integration between online and in-store experiences. There is a digital transformation that’s required across all channels as companies realize that the consumer experience is non-linear. They may research products in one place, obtain pricing information at another, and then choose to make the final purchase either in-store or online. They may purchase online, and bring returns to the store. Brands must optimize technology to be agile enough to provide their back-office and front-line people with what they need. A seamless channel goes beyond having access to products either in-store or online. Consumers should be able to transact in any way they choose via any channel that the brand offers and 2018 is a critical year for this objective to be met.

9. Data collection and data quality become urgent in order to feed artificial intelligence initiatives. Highly-publicized breaches of sensitive personal data, like the hack at Equifax, have consumers on edge about protecting personal information, but adaptive organizations must continue to collect and analyze customer data to produce more productive relationships with analytics and artificial intelligence. The front-line sales team must be equipped with more than just a ‘black book’ to write down customer information. What matters most is not the algorithm, but the data to feed it. Data is critical if you are a luxury brand, but if you don’t have data to mine, you will be at a major disadvantage that will become an existential threat.

10. Selecting, developing, and retaining talent become even more critical skills. Recruiting and selecting employees capable of growing the business is not a matter of luck. It is a high performance skill. Most innovative firms are using artificial intelligence to help identify desirable candidates, and to provide on-the-job training and coaching. Instead of providing only sporadic education for employees, successful firms are transforming themselves into universities that teach life skills to their employees, like emotional intelligence, which results in higher client performance metrics and productivity. The idea is to create an atmosphere in which people feel cared for and an environment in which they have the right tools so they can prosper. Front-line professionals will need to combine technology advances with their own emotional intelligence skills to be true brand ambassadors, far beyond most current sales associate job descriptions. The front line of the future will need to have the skills to creatively demonstrate expertise, deep empathy, trustworthiness and generosity to engage productively with clients.

Building Relationships Based On Data

Luxury Client Experience Board event partner, Epsilon, a global marketing company, explained the importance of understanding and analyzing data to gain insights into building relationships and creating superior customer experiences. Epsilon presented a case study of their client, iPic Theaters, the innovative disrupter in the theater and cinema industry. In the case of iPic, there is more of an emphasis on the service of providing a customized dining and viewing experience, and less of an emphasis on the product of the actual film showing on the screen.

Epsilon’s perspective on taking the guess-work out of creating a holistic focus on service and experience through the collection of accurate, qualitative data resonated with the group. Ultimately, insights derived from data, paired with an emotionally intelligent workforce, will be the keys to creating customer experiences that excel.

For more information on best practices in luxury and client experience, visit www.LuxuryInstitute.com, or contact CEO Milton Pedraza with questions and information about becoming a member of the Luxury Client Experience Board. 

About the LCEB: The Luxury Client Experience Board (LCEB) is a membership association of luxury industry practitioners, co-founded by Luxury Institute and The Ritz-Carlton to enhance the education and development of leading luxury brands. LCEB members receive ongoing education opportunities in industry best practices through original research and interactive events. Members come from diverse industries, united in their goal to build long-term, high-performance relationships with clients by delivering exceptional, seamless, and measurable omni-channel client experiences daily.

Source: http://www.marketwired.com/press-release/millennial-debt-data-driven-relationships-and-survival-of-the-store-among-luxury-institutes-2239087.htm

Older Posts »