Luxury Institute News

August 29, 2016

Bijan property on Rodeo Drive sells for $19,000 a square foot

Los Angeles Times
August 26, 2016
By: Andrew Khouri

The demand for $5,000 handbags and $25,000 suits is slipping amid global turmoil.

But enthusiasm for real estate on Rodeo Drive, where such high-end goods are sold, isn’t hurting. Instead it’s setting records.

The parent company of Louis Vuitton recently paid $122 million, or $19,405 a square foot, for the yellow House of Bijan building at 420 N. Rodeo, long home to a boutique known as “the most expensive store in the world.” The deal, revealed in public records, was the second time in seven months that a record fell on Rodeo.

Late last year, Chanel paid $13,217 a square foot for a store it was leasing nearby at 400 N. Rodeo, the high-water mark for California retail until last month’s Bijan sale.

The eye-popping amounts reflect how few properties there are on the Beverly Hills street, as well as how infrequently they go on sale. And in a struggling market for luxury goods, the deals underscore that high-profile streets such as Rodeo or Manhattan’s upper Fifth Avenue are far more than a place to sell a $10,000 timepiece.

“They are billboards in some places for the brand,” said Milton Pedraza, chief executive of consulting firm Luxury Institute. “The companies can demonstrate power, and their staying power, by buying up these properties.”

Indeed, Marc Schillinger, a director with commercial real estate company HFF who represented the seller Bijan Properties, said “everyone came out of the woodwork when we announced the opportunity to buy this asset.”

“There are only 2½ blocks on Rodeo Drive,” said Schillinger, who declined to confirm the price or buyer. uEvery luxury retailer wants to anchor their brand on Rodeo.”

That’s proving true even as the luxury retail market takes a breather. Sales of luxury goods in the U.S. have fallen around 10% on average over the last year, while traffic in luxury stores is down 20%, Pedraza said.

The downbeat numbers are due to several reasons — similar to ones that have softened ultra-high-end residential real estate markets in places such as Los Angeles, New York and London.

Slowing global economies and a strong U.S. dollar have sapped the buying power of foreigners and dampened tourism. Meanwhile, uncertainty over the economy in the U.S., along with the upcoming presidential election, has caused some wealthy Americans to hit pause on big purchases.

On Friday, Italian retailer Prada said its retail sales in the Americas fell 15% in the first half of the year, explaining that the U.S. market “remains tough.”

“So many factors have converged — unfortunately in a negative way,” Pedraza said.

LVMH Moët Hennessy Louis Vuitton has done better than many retailers though. The Paris-based luxury goods conglomerate reported that U.S. sales climbed 7% during the first half of the year.

A high-profile store, however, isn’t just about selling goods. Even in the age of e-commerce, high-end digs have worth as a place to hold flashy events and market a brand’s cachet across the globe.

Fashion houses are willing to pay a premium to buy such an opportunity. They’d rather do so than rent and risk losing the location if their lease is not renewed, said Robert Cohen, vice chairman of real estate firm RKF.

That’s especially true as fast-fashion companies with far lower prices increasingly compete for such locations, including an H&M that opened on a pricey stretch of Fifth Avenue in Manhattan in 2014.

The highest price per square foot for a U.S. retail space came two years ago when Chanel purchased a shop it was leasing in New York on Madison Avenue for $31,329 a square foot, according to Real Capital Analytics.

“They are protecting their position on the street and in the market,” Cohen said of such purchases.

It’s unclear what LVMH’s plans are for the Bijan building, where the iconic store has operated for 40 years.

The Paris retailer with 70 brands already has multiple stores on Rodeo including Louis Vuitton and Dior locations that it leases and a Celine store that it owns.

A spokesperson for LVMH declined to comment, as did a manager at Bijan.

Iranian American designer Bijan Pakzad opened his appointment-only boutique on Rodeo Drive in 1976. It became known for its ultra luxury goods such as $6,000 suits and $19,000 ostrich vests.

Through the years, House of Bijan counted many high-profile names among his clients, including Michael Eisner, King Juan Carlos of Spain and Presidents Carter, George H.W. Bush, Clinton, George W. Bush and Obama. Pakzad had success to match, with homes across the world he flew to on his own jet.

Pakzad died in 2011 but left a lasting imprint on Rodeo Drive, helping to make it a world-class destination. The store’s manager, who declined to give his name, said the store is now owned by Pakzad’s family.

“Long before Tom Ford and Karl Lagerfeld, Bijan had a keen understanding of the cult of personality in fashion, starring in his own ads and billboards, name-checking countless celebrities and parking exotic cars outside his store, all to stoke his fame,” former Times fashion critic Booth Moore said following Pakzad’s death.

But throughout the decades, as rents soared along with the cachet, Rodeo has lost many of its local boutiques, including Fred Hayman’s famed Giorgio Beverly Hills, with its distinctive white-and-yellow striped awning, which closed in 1998.

The Bijan store is operating under a lease; its expiration has not been disclosed.

Given the sky-high sale to LVMH, the pricey but small House of Bijan is likely to go as well, real estate broker Cohen said.

The French firm may want to bring in a deep-pocketed tenant who would pay more in rent, or give yet another of its brands a foothold on Rodeo.

“It’s one of the greatest luxury streets in the world,” he said. “It’s global branding and global domination.”

Source: http://www.latimes.com/business/la-fi-bijan-sale-20160825-snap-story.html

August 4, 2016

Kate Spade stock plunges 18% after lower outlook

USA Today
By: Nathan Bomey
August 3, 2016

Kate Spade’s stock (KATE) plunged Wednesday after the retailer lowered its financial outlook for the year amid a deteriorating environment for luxury goods.

Shares of the New York-based handbag, clothing and jewelry chain closed down 18.2% to $16.47 after the company warned that it would post lower revenue and profit than it expected this year.

Among the reasons CEO Craig Leavitt blamed for the poor performance were “the retail landscape and continuing tourist headwinds.”

That squares with a broader downturn that’s rattling international shoppers, such as terrorism concerns, the United Kingdom’s vote to leave the European Union and China’s economic slowdown.

The S&P Global Luxury Index, which tracks 80 publicly traded companies in luxury goods or services, has fallen nearly 15% over the last 12 months.

Kate Spade projected 2016 net sales of $1.37 billion to $1.4 billion, down from $1.385 billion to $1.41 billion. It projected adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $242 million to $260 million, down from $257 million to $282 million.

It predicted sales growth at stores open at least a year of “high single-digit to low double-digit,” down from “low to mid-teen.”

The company recorded second-quarter net sales of $320 million, up 13.7% from a year earlier, and net income of $26.8 million, more than triple the year-earlier quarter’s $8.5 million profit.

But the retailer got help from the opening of 17 new stores during the quarter. It now has 426.

“As we navigate these broader industry trends, we remain very confident in our long-term growth initiatives and have a number of strategies in place to drive our business in the second half of 2016,” Leavitt said in a statement. “We continue to focus on the factors we can control, executing our long-term strategy and continuing to grow as a global, multi-channel lifestyle brand.”

Source: http://www.usatoday.com/story/money/2016/08/03/kate-spade-earnings/87992450/ 

Chanel most reputable brand despite low sentiment: report

Luxury Daily
By: Forrest Cardamenis
August 3, 2016

French fashion label Chanel has edged out Louis Vuitton as the most reputable brand, according to a global analysis performed by Brandwatch Analytics.

Chanel scored 396 points out of a possible 500, edging out Louis Vuitton by a mere four points and Dior by 15. The brand’s extraordinary visibility and engagement on multiple platforms and the corresponding growth of its online following helped give it the narrow victory.

“A brand’s reputation will undoubtedly have an effect on revenue and growth,” said James Lovejoy, content and research manager at Brandwatch. “Yet drawing statistically significant relationships between online conversations and revenue is notoriously challenging because there are so many various elements at play. 

“That said, our Brandwatch Social Index clearly places some of the highest grossing companies at the top: Chanel, Louis Vuitton and Dior,” he said. “Companies should consider what role they want to play online and how their social brand will affect sales, but hardline statements indicating a causal relationship between social media and overall revenue are not yet a reality.”

Looking at data from Q2 2016, “Luxury Fashion Social Index” scored 34 brands in the categories of social visibility, general visibility, net sentiment, reach growth and engagement/content, summing the scores to determine overall brand reputation.

Reputable source
In both general visibility and reach growth, Chanel scored a perfect 100, with Gucci following in general visibility at 93 and Burberry scoring an impressive 99 on reach growth. Chanel’s 91 in social visibility was good for third, behind Dior’s 97 and Louis Vuitton’s perfect score.

While social visibility measured a brand’s presence across social media channels, general visibility referred to conversation generated in news outlets, blogs and forums.

Chanel campaigns often appeal to consumers to engage or participate with the brand in more interactive ways.

Chanel Allure Homme Sport landing
Chanel Allure Homme Sport

For example, in June the atelier encouraged adventurous and active males to dive, glide and slide in a push for its Allure Homme Sport fragrances.

The fragrance campaign encourages men to “own the experience” through the use of 360-degree videos housed on its Web site as well as its branded YouTube channel. With limited product offerings for male consumers, Chanel must capture the spirit of its intended consumers in a relatable way, playing to interests rather than its brand infamy (see story).

Interestingly, Chanel scored only 31 points in net sentiment, which measured the ratio of positive to negative statements made online about the brand. Gucci also scored a 31, and only Rolex, with 30 points, was lower.

One possibility is that these brands’ historic standing and name recognition makes them a lightning rod for irate customers to air their grievances.

Gucci cruise campaign 465
Gucci cruise campaign

Gucci did come under criticism from Britain’s Advertising Standards Authority in April for an ad that was determined to depict and unhealthily thin model (see story) and also drew up controversy in Hong Kong for a misunderstanding related to local funeral rituals (see story).

On the other hand controversy from the first quarter related to animal cruelty (see story) did not appear to impact Prada and Hermès, who were in the middle of the pack.

Similarly, Rolex, Chanel and other low scorers such as Breitling, Givenchy and Burberry were not embroidered in major controversies but scored low.

On the flip side, Cartier’s 100 blew away second place Versace, which scored 70. It is further worth noting that 25 of the 34 brands had scores of 40 or lower, and only five scored more than 50, suggesting that the transparency the Internet provides also can create negative discourse around a brand.

Cartier Snakewood Amulette Instagram post

Additionally, a low score does not necessarily mean overwhelmingly negative response online.

Tying sentiment or mood to a single metric or numerical value is notoriously difficult,” Mr. Lovejoy said. “To really understand what’s happening, businesses will need to parse and measure individual topics that drive negative and positive conversations. 

“Ignoring neutral conversations, positive conversations surrounding Cartier outweighed negative ones 99.3 to 0.7 on Twitter,” he said. “Meanwhile, the Twitter conversation around Chanel was 93.2 percent positive and 6.8 percent negative. While this study looked at sentiment beyond Twitter, it’s clear that the difference isn’t actually that significant.”

“People who discuss these brands are generally positive, so when a handful of customers do have something negative to say the effect is greater. In a brief survey of Chanel, there are some complaints regarding customer service and price. While Chanel may be able to work on its customer service experience, its iconic name and exclusive price tag may always draw some level of criticism.”

Engagement and content was also a blowout, with Chanel’s second place score, a 74, trailing Ted Baker’s 100. Louis Vuitton and Dior followed with 68, and Rolex was fifth with a 65.

Rounding out the top 10 after Chanel, Louis Vuitton and Dior were Cartier, Tiffany & Co., Versace, Christian Louboutin, Prada and Michael Kors and Ted Baker. The lowest scorers – Lanvin, Dsquared2, Bottega Veneta, Kenzo and Salvatore Ferragamo – were sunk primarily by extremely low engagement scores.

Social engagement
While Brandwatch’s index helps to gauge overall market reputation, the popularity of a widely bought brand does not always sync with consumers’ perception of its value and luxury credentials, according to a survey by the Luxury Institute from earlier this year.

For its Luxury Brand Status Index series, Luxury Institute surveyed affluent women from seven of the world’s wealthiest nations to gain insights on which brands hold the most clout in terms of quality, exclusivity, social status and overall ownership. Consumer opinion is tied to whether one feels the asking price of a premium product is worth it, and it correlates directly to the brand’s perceived value among frequent and aspiring shoppers.

Despite the differences, Chanel, Louis Vuitton and Dior rank highly by either measure. Affluent women ranked Chanel and French leather goods maker Hermès as the two fashion houses most worth their premium asking prices, followed by Christian Dior, Louis Vuitton and Prada (see story).

louis vuitton.cruise 2016
Louis Vuitton Cruise 2016

By contrast, Hermès ranked 18th in Brandwatch’s index, owing to low social visibility and accompanying low engagement.

Online conversation around brands is driven almost entirely by consumers. Many brands, however, still keep a barrier between themselves and consumers, forgoing social media’s natural tendencies in favor of staying visible without compromising aspiration.

A Brandwatch report from last year shows that despite boasting immense followings, a large percentage of luxury fashion brands are surprisingly inactive on social media.

Brandwatch’s “Social Insights on the Luxury Fashion Industry” report has discovered that although a brand may place well by adopting social media, they are only scratching the surface of the opportunities available by mining social intelligence data. Luxury brands are often seen as latecomers in terms of embracing social and digital channels, but by fully taking into account the insights available from social media interactions, these labels can craft high-touch service in an online setting (see story).

Amongst the top five, Louis Vuitton overtook Dior for the number two spot largely by raising its visibility scores,” Mr. Lovejoy said. “Cartier jumped from 8th to 4th due to its improved net sentiment and reach growth scores. Tiffany & Co. jumped from 7th to 5th with an increase in reach growth and a slight development in its social visibility. 

“Prada had one of the strongest improvements, moving from 18th to 8th, in large part due to strong reach growth and modest growth in social visibility and engagement and content,” he said. “This is a competitive industry; reputation is a vital part of business for luxury fashion retailers.

“It may be difficult to take some of the leaders off their top positions, but at the same brands like Prada, which jumped up 10 spots, indicate that there is still room for movement and growth,” he said.

Source: https://www.luxurydaily.com/chanel-most-reputable-brand-despite-low-sentiment-report/

July 18, 2016

Why luxury retailers are losing their luster

USA Today
Hadley Malcolm and Chris Woodyard
July 18, 2016

NEW YORK — Bling appears to not be as much of a thing.

Luxury retailers, which were flying high as the wealthy thrived, are starting to look more like diamonds in a pretty rough spot.

Threats to global stability — including terrorism, the United Kingdom’s withdrawal from the European Union and China’s slowdown — are rattling international shoppers of high-end goods. At the same time, luxury retailers are losing share to online sellers, an issue bedeviling mainstream chains. They’re also suffering at the hands of discounters and fast-fashion luxury lookalikes.

Investors are taking note. The S&P Global Luxury Index, which tracks the value of the stock of dozens of companies that deal in luxury goods including automakers, has lost 15.06% in the past year, compared to a 2.58% rise in the S&P 500, an index of the 500 largest publicly traded companies.

“If you’re tied to international consumers, you really have not had any sense of relief in the past several quarters,” says Simeon Siegel, equity research analyst with Nomura Securities.

As second-quarter earnings reports unfold, purveyors of luxury goods who noted some stress, such as jeweler Tiffany and apparel sellers Ralph Lauren and Burberry, will be watched to see if the trouble they reported in the first quarter is continuing or worsening.

Brexit creates a whole new level of uncertainty for some of the world’s wealthier spenders. It’s another shock that, combined with terror attacks in France, the U.S., Bangladesh and elsewhere, adds up to trouble for luxury firms because it scares off tourists — and tourists are some of the best customers for luxury companies.

“A few years ago, tourists would come buy empty luggage and fill it up and send it back home,” says Arnold Aronson, partner and managing director of retail strategies at consultancy Kurt Salmon. That’s not necessarily happening anymore

The drop in tourism is the biggest reason luxury retail traffic is down 20% from a year ago, says Milton Pedraza, CEO of The Luxury Institute, a consulting firm.

It’s a strange turn for luxury, which looked unstoppable when the world’s wealthy were riding high. Globally, the luxury market is growing. Personal luxury goods purchases have tripled in the past 20 years to more than $270 billion, according to a 2015 report from Bain & Co. North and South America combined have become the largest market for personal luxury goods purchases.

But that growth has slowed in recent years. Last year, sales in the Americas were flat on a constant exchange rate basis, according to Bain.

Besides global economic pressure, even the most tony retailers are feeling the same heat from discounters and online sellers as the mainstream retail industry.

A recession-era boom in outlet and off-price stores had everyone from Coach to Prada hawking their once-coveted goods at a discount, or department store offshoots such as Nordstrom Rack and Saks Off 5th doing it for them. Fast-fashion players such as H&M and Zara churn out luxury lookalikes at a fraction of the price.

When it comes to online, some shoppers are turning to luxury-for-less sites such as Gilt or The Real Real.

“The story with luxury is it’s just not as exclusive and it doesn’t justify the price like it used to,” Pedraza says. “Too many of them are discounting, and there’s not enough consumer demand.”

Source: http://www.usatoday.com/story/money/2016/07/18/luxury-retail-hurting-from-over-distribution-lack-of-tourist-spending/85872502/

July 13, 2016

How will Burberry’s changing leadership impact the brand?

Luxury Daily
Sarah Jones
July 13, 2016

British fashion label Burberry’s terminated experiment of having Christopher Bailey serving as both chief creative and CEO holds lessons for others in the luxury sector.

On July 11, the house announced that Mr. Bailey would be stepping down as chief executive, taking on the role of president in 2017, when Marco Gobbetti will join the brand as its new CEO. With the luxury industry facing challenging times due to geopolitical and economic turbulence, Burberry is not likely to be the only brand to see changes in leadership.

“There’s no question that Christopher’s skills as it turns out lie in being a great creative as opposed to operational,” said Milton Pedraza, CEO of the Luxury Institute.

“Luxury has not had such a difficult moment with so many factors affecting it on the downside in a generation,” he said. “Even the 2008 recession, everybody knew that if real estate came back and the stock market came back, people would go back to their old buying habits.

“This is uncharted and unpredictable territory now, where there are so many factors working in such as chaotic way on the luxury industry…I think it’s not only Christopher not having the operational skills, not having what we call adaptive expertise, the ability to adapt in a complex environment.”

New era
Mr. Bailey took on the role of CEO in 2014 in addition to his creative duties when Angela Ahrendts left for Apple.

The luxury landscape in 2014 looked very different than it does today. Between China’s bubble, Brexit, the pound’s deflation, changing consumers habits and the shift toward digital and ecommerce, the industry is much more uncertain than it was just a few years ago.

This era of uncertainty requires more complex decision-making and leadership than was needed before, when strategy was more direct and obvious.

“It was unfortunate that he took on both jobs at a time when things are so complex, and where you need more operational expertise right now than perhaps creative expertise,” Mr. Pedraza said. “Maybe you need both, but clearly one person cannot do both. I think that’s what was proven out.

“Maybe in easier times, he might have been able to do it, but this is so complex,” he said. “I don’t even look at it as a demotion. I look at it as a change that was necessary and he graciously accepted.”

Burberry, as with a number of other brands, is being stretched.

Burberry SoHo, 131 Spring Street New York, New York - Main Entry
Burberry store in New York’s SoHo neighborhood

The company’s revenues dipped 1 percent for the 2016 fiscal year, leading the public company to unveil a three-year plan aimed at improving profitability.

Burberry’s 2.5 billion pounds, or $3.655 billion, in revenue for the year was slightly behind 2015’s figures, but the brand remains optimistic about the future. The label is establishing a three-year strategy that will cut costs by 100 million pounds, or about $146 million per year by 2019, enhance productivity and spur revenue growth (see story).

“Burberry’s challenges are more operational than creative,” said Chris Ramey, president of Affluent Insights, Miami. “They’ve made strategic mistakes in China and the United States that have to be fixed.

“Keeping Bailey was in their best interest,” he said. “There is value in continuity.”

Burberry is not alone, with Ralph Lauren designing a similar plan to restructure for growth (see story). Hugo Boss’ CEO also stepped down, ending his eight-year tenure amid the German fashion label’s dimmed profit outlook (see story).

“You can’t just cut your way into success,” Mr. Pedraza said. “Yes, you need to restructure, you need to cut costs, you need to slim down that organization, and then you need to get creative.

“You need a plan to innovate on product, and you need to dramatically shift your front line people from being transactors to expert relationship builders,” he said. “So they need to build true relationships with their clients, not transactions.

“And they need to make those two—the product and relationship building—into competitive advantages, which means that they need to sit way up on the bell curve because they are high performers. They need to be experts at learning and execution, and very few companies right now are prepared for that task.”

Mr. Pedraza predicts that other brands may be “casualties” of an inability to adapt, estimating that about half of CEOs are not prepared to deal with the complexities of today’s market. According to him, Burberry’s position is a sign of a larger trend in the industry that extends beyond hard luxury goods into other services and products that target the wealthy, such as yachts and real estate.

With Burberry’s revenues in decline, this leadership shift will enable Mr. Bailey to focus on where his talents lie most: in design. Taking over for him will be Mr. Gobbetti, an industry veteran with 20 years of experience, who is currently at Céline.

Burberry Christopher Bailey
Christopher Bailey

“The board firmly believes that these new leadership roles coupled with actions, identified in the recent business review, will significantly enhance our ability to deliver long-term sustainable growth and sector outperformance over time,” said Sir John Pearce, chairman of Burberry, in a brand statement.

“Since taking on the combined role of chief executive and chief creative officer, Christopher Bailey has done an excellent job set against a backdrop of challenging market conditions,” he said.

“The review that he has led into our ways of working is the blueprint for the next phase of Burberry’s evolution. To maximize our ability to successfully implement these plans, Mr. Bailey identified the need for a new chief executive for the business who could partner with him as we execute on the new strategies and I am excited to see what they will do together.”

Digital divide
For years, Burberry has been known for its digital prowess and as an early adopter of everything from Snapchat to Apple TV.

Burberry scored the highest in L2’s Digital IQ test for fashion brands. In addition to success on emerging platforms, updates to its mobile site have tripled while legacy investments such as “Art of the Trench” continue to find success with regional updates (see story).

On the other hand, Mr. Gobbetti’s employer since 2008, Céline, is almost the complete opposite, with no ecommerce, no social media accounts, a simple Web site and limited digital marketing.

Given that Burberry’s modern brand positioning partly hinges on its innovation, it is unlikely to regress within digital. However, this may be a case where Mr. Gobbetti’s experience driving a brand with mostly traditional channels will need to mix with digital expertise within the Burberry team.

“Looking at things through a digital lens, Burberry’s decision to name Gobbetti as CEO was an interesting one, considering that he comes from a brand with little digital prowess,” said Elizabeth Elder, L2 research associate.

“The managerial movements can be perceived as indicating a shift in priorities, from digital engagement to fiduciary responsibility,” she said. “It remains to be seen what will happen with Burberry’s place as an industry leader in digital, as it will depend upon Burberry’s ability to not only maintain—but continue to grow—it’s digital footprint. 

“In the luxury fashion space, Burberry has established itself as a trailblazer in the digital sphere. This has undeniably contributed to the brand’s success.

“We will have to wait and see how Gobbetti’s leadership unfolds with respect to digital, however the brand shouldn’t rest on their laurels. It will be necessary for Burberry to maintain their innovations in digital if they hope to increase profits moving forward.”

Leadership and strategy should not be limited to the CEO and creative director, but rather spread among a team of individuals with specific abilities and expertise. With the changing luxury industry, decades of experience does not always translate to preparedness for today’s market.

“Gobbetti will dissect every initiative including digital,” Mr. Ramey said. “Its existence doesn’t mean it is successful. Nor does Gobbetti’s lack of digital experience predict its demise.

“Each position requires a specific skill set,” he said. “It’s rare when one person possesses the necessary left and right brain processes for a billion dollar brand.”

Source: https://www.luxurydaily.com/how-will-burberrys-changing-leadership-impact-the-brand/

June 3, 2016

Retailers’ personalization efforts fall short of consumer expectations

Luxury Daily
By: Sarah Jones
June 2, 2016

When it comes to personalization, retailers’ ideas of their own capabilities are often inflated when compared to consumers’ assessments.

A TimeTrade report found that while 69 percent of retailers say they are delivering an individualized shopping experience to customers all of the time, only 26 percent of consumers agree that the retailers are successfully providing a consistent experience across all channels. This divide shows definite room for improvement among retailers as they seek to provide a positive, personalized customer experience.

“This disconnect stems from how retailers define ‘personalization’–as providing a consistent experience across all channels–and how they deliver that personalized experience,” said Lauren Mead, vice president of marketing at TimeTrade.

“Let’s say a customer who has loyalty rewards enters a store–great chance to personalize the customer experience,” she said. “Unfortunately, that customer will likely remain anonymous until point of purchase. By then it’s too late for personalization.”

TimeTrade’s “Personalization in Retail: A Reality Check” is based on a survey of 10 C-level retail executives and 2,064 consumers.

Expectation vs. reality
For 93 percent of retailers, personalization is part of their organization’s strategy.

The most widespread definition of personalization among respondents was having a consistent customer experience across channels, with the interaction between a sales associate and a consumer coming in a close second. Less common definitions include being able to make personalized offers by having a 360 degree view of the consumer and delivering personalized messaging through digital channels.

Asking consumers about the most frequent definition of personalization, TimeTrade found that 55 percent believe that retailers somewhat deliver across channels, while 20 percent say great improvement is needed.

luxury shoppers
Shoppers have a different opinion on personalization than retailers

Consumers’ opinions of a need for improvement do not match up with retailers’ ideas of their own prowess. Only 25 percent have any plans for new personalization initiatives within the next year and a half, while 69 percent believe they are already at peak personalization performance.

For those who are planning upgrades, training in-store associates tops their priority list, with 74 percent intending to do so in the coming 18 months. Targeted marketing campaigns, social selling and clienteling are also goals for at least 40 percent of respondents.

The in-store environment is the top concern for retailers looking to boost their customer experience, with 45 percent agreeing it is their number one priority. The next closest channel is social media, at 19 percent.

When consumers were asked to share which channel they believe provides the worst customer service, call centers came in first for half of respondents, followed by in-store, with 26 percent agreeing it could use improvement.

Bloomingdale's Palo Alto store
Bloomingdale’s Palo Alto store

Despite the rise in digital and mobile marketing in recent years, consumers still rely heavily on in-store sales associates to assist them in making purchases, according to a recent report by the Luxury Institute.

The majority of consumers surveyed reported making most of their purchasing decisions in-store without researching online beforehand. Luxury brands looking to improve consumer relations should focus more attention on improving the in-store retail experience and providing consumers with ready assistance (see story).

“Top luxury brands can personalize better by emphasizing the physical store as an opportunity to tailor the shopping experience to each consumer and training in-store associates to use relevant technology and data to improve the customer experience,” Ms. Mead said.

“Execution here is critical- there are many proven technologies that retailers can use that will help automate processes for store associates and also the consumer,” she said. “Simple automation and self-service can enable consumers to have a seamless experience and help them engage sooner with associates for more prompt service.”

Mobile mindset
One key area that could assist retailers in delivering a positive in-store experience is the incorporation of technology.

Only 42 percent of retailers say their associates use a mobile device or tablet on the sales floor, while 15 percent of employees use their own phones for business within the retail environment. Rather than dissolving consumers’ trust in an associate, more than half of respondents say they would be more confident about their prospects of having prompt, personal service if their contact is using a mobile device to communicate with other employees.

Technology could also facilitate luxury services, such as in-store appointments. When asked if they would schedule an appointment with an associate on a device of their choosing, 59 percent of respondents said they would.

When asked about touchpoints they would like to offer for hypothetical appointments, retailers said that text notifications would be most helpful. This was followed by enabling associates to coordinate with each other via mobile devices to handle traffic in the lobby.

“Tools like online appointment booking can help retailers anticipate which customers will be coming into their store, why they are coming and make sure there is a knowledgeable associate ready to serve them,” Ms. Mead said. “This enables personalization from the start.

“To make this to happen, retailers need to also invest in putting more technology in the hands of store associates: 43 percent of retailers report not currently having their store associates using mobile devices,” she said. “Considering that more than half of consumers feel confident of receiving prompt and knowledgeable help if they see associates using mobile devices to help customers, this is a missed opportunity on retailers’ part.”

Rather than harming the luxury shopping experience, technology can allow retailers to speak to consumers on an individual level.

Department store chain Barneys New York is furthering its omnichannel capabilities through the use of integrated iBeacon technology and a personalization platform.

Powered by RichRelevance’s Relevance Cloud, Barneys is emphasising its dedication to creating an in-store experience enhanced by digital touchpoints. The initiative has created a first-of-its-kind digital customer experience at Barneys’ recently opened downtown flagship in Manhattan’s Chelsea neighborhood (see story).

“The key is selecting technology that enables in store associates to better assist customers rather than replace human to human interaction,” Ms. Mead said.

“With this type of technology training is critical,” she said. “Retailers must invest the time and resources to ensure that in-store associates are fluent in the relevant technology and can utilize it on the fly, enabling and not distracting the associate from from serving the customer and proving the best possible experience.”

Source: https://www.luxurydaily.com/retailers-personalization-efforts-fall-short-of-consumer-expectations/

May 24, 2016

NYC’s New Cadillac House is More than a Brand-Experience Experiment

It’s an incubator for what the brick-and-mortar economy does that the internet can’t.
The Drive
By: Brett Berk
May 24, 2016

Accompanied by the kind of fanfare usually reserved for a visiting R&B star—champagne, models, exclusive parties, and the launching of helicopters over the Hudson—Cadillac opened a New York headquarters late last year. Mostly used to house its communications departments, the grand offices on the top two floors of a West SoHo tower are meant to imbue the rejuvenated Detroit luxury brand with the trendy vitality of New York City, as well as the cosmopolitan east coast talent that lives here.

“We have great product. Our challenge is relevance,” says Melody Lee, Cadillac’s brand manager, as we walk the halls of the space. Those halls are lined in chevron-embossed leather meant to evoke, but also update, the marque’s vehicular heritage. According to Lee, consumers have a false familiarity with Cadillac; the brand may have positive and luxurious connotations, but they’re dated. “In order to change perceptions, we need to build connections between Cadillac and current luxury consumers’ interests,” she says.

The brand is taking an almost Mormon approach to this conversion mission, seeking not only new audiences, but new partners in the far-flung worlds of fashion, art, food, and culture. But in order to truly fortify a new identity, a contemporary brand must build a fort—a temple that embodies these projections, a dream board made real. Red Bull has its Studios, filled with extreme video and other disruptive lifestyle bullshit. Apple has its Apple Stores, filled with austerity and smugly superior Geniuses. Mars has M&M’s World, filled with candy colored candy and pre-diabetic tourists.

Into this fray Cadillac has opened Cadillac House, a showroom—but not sales room—for contemporary and vintage automobiles, as well as an art gallery, a retail fashion incubator, a coffee bar, and an event space on the corner of Charlton and Hudson. If Cadillac had an actual brand Ambassador, this would be her Embassy.

“We want to bring people into the Cadillac world. Our interpretation of what luxury means to us, which is warm, inviting, funky, and emotional, not austere,” says Eneuri Acosta from Cadillac’s department for lifestyle-, influencer-, and partnership communications.

The space, designed by the San Francisco architecture and design firm Gensler, reflects these notions, with surprisingly human materials like pebbled leather, cork, jute, and wool, along with an audacious use of neon and mirrors. Reclaimed wood, Edison bulbs, and polished concrete are the familiar icing on this cupcake, but the space still manages to transcend the de rigueur global upscale urban style I like to call “unique sameness.”

I live around the corner, so I look forward to visititing—Cadillac House will be open to the public daily—to drink Joe’s coffee, attend lectures and openings, and maintain my aversion to recherché loungewear. But does any of this brand experience misheggas move the needle with actual luxury consumers?

“It’s interesting because it’s very commonplace for brands to think that if they just create a place to hang out, that people are going to hang out. And I think that’s a little naïve,” says Milton Pedraza, head of premium sector research and consulting firm The Luxury Institute. “I think it’s probably not going to do anything significant for the brand.”

If this is the case, then why do so many luxury makes chart this flashy retail route? “Well, I think there are two fundamental reasons,” Pedraza says. “First, because brands and their agencies mistake gimmicks for effective action. And second because the really hard thing to do—to create a brand experience—are beyond their imagination.”

According to Pedraza and his surveys of luxury consumers, the enlightened path to retail engagement requires the imbuing of three characteristics: empathy, trustworthiness, and generosity. “People want to make personal, emotional connections,” Pedraza says. The difficulties that luxe brands have in this sphere comes mainly from failing to adopt a brand culture—and retail employee training program—that privileges these interactions. “They don’t know how to scale the humanity of their associates,” Pedraza says.

Perhaps counter-intuitively, all of this is more, not less, important given the ubiquity of online shopping. According to Pedraza’s research, 80 percent of luxury consumers do significant virtual Internet research prior to entering a store. They come into the store looking for more than what they can find online. “I don’t expect you to be my hotel concierge and make reservations for me at a restaurant. I mean, it’s nice, but that’s not the expectations I have when I enter an apparel, or a watch, or a jewelry shop,” Pedraza says. “I expect them to be experts on what they sell, and the competition, so that they can inform me more than I would inform myself with my friends, my peers, and going online. I don’t need that again. I need more information, or better information. Or affirmation.”

John Bricker, creative director at Gensler and lead on the Cadillac House project, concurs. “Product is product,” he says as he gives me a tour. “The reason people go to a bricks and mortar space is about experience. I can buy just about everything I need online.”

Just about everything, of course, except a car. Due to of our anachronistic, if purposeful, automotive retail system, in most places you can’t just click over to Cadillac.com and purchase a new CT6, as much as you might like to. You have to go to a dealership. Herein lies the big discovery of my visit to Cadillac House.

Cadillac has very publicly announced an emphasis on improving its retail experience—the last mile in the brand’s $12 billion investment in product and positioning, but the first point of contact for consumers. To this end, Caddy will be requiring its 900 dealers to make significant capital improvements in facilities, technology, and training. (In exchange, it will offer upgraded incentives, compensation, and profit sharing.) Certainly this new NYC space is about showcasing aspirational and urbane partnerships. But in addition to being an incubator for a hipper Cadillac brand, it’s also an incubator for the real world physicality of Cadillac’s new retail outlets.

When I ask about this directly, Melody Lee confirms my hypothesis. “Experimentation here will find its way into our facilities, our next generation dealerships,” she says. “That could include things like design and mood and layout, but also technologies like holographic imaging, which we’re working on.”

All of this is further borne out when I enter the small conference room behind Cadillac House’s main showroom. Here, attractive and elegant New York-based product specialists are being trained to offer Cadillac House visitors information on the XT5, CT6, CTS-V, and other new Cadillacs that will line this new showroom.

“The one thing that a computer can’t do, that coffee can’t do, that freebies can’t do, is have great people that are engaging you in a relevant experience within the context of what you sell,” says Pedraza. If Cadillac’s broad plans are to come to fruition, Pedraza-style, these brand-imbued specialists will need to fan out across the country, conducting trainings, and replicating themselves in hundreds of newly renovated dealerships—all of which will resemble Cadillac House, at least in tone. Their practiced scripts and gestures, with an air of New York sophistication, and emotion, will become the human face of a changing brand, on the road to changing minds.

Source: http://www.thedrive.com/travel/3651/nycs-new-cadillac-house-is-more-than-a-brand-experience-experiment

May 23, 2016

Aston Martin unveils latest chapter in 5-decade partnership

Luxury Daily
By: Staff Reports
May 20, 2016

British automaker Aston Martin is revealing a new concept car developed in collaboration with Italian coachbuilder and design house Zagato at Concorso d’Eleganza Villa d’Este.

The fifth edition in a partnership that spans 50 years, the Vanquish Zagato Concept will make its world premier at the show being held at Lake Como in Italy from May 21-22. This longstanding pairing has led to Aston Martin vehicles that combine its sporting capabilities with Zagato’s design sensibilities, leading to some of the automaker’s most creative designs.

Joint effort
For this concept car, Aston Martin’s design team under the direction of Marek Reichman worked closely with Andrea Zagato and his design team. The vehicle, featuring a carbon fiber body, was engineered and developed at Aston Martin’s headquarters.

Showing the blending between both brands, the car features tail lights that have round reflectors, reminiscent of classic Zagato designs, while they use the LED technology found only in Aston Martin’s racetrack exclusive Vulcan.

Aston Martin Vanquish Concept exterior
Aston Martin Vanquish Zagato concept

Further Aston Martin-inspired elements include wing mirrors that resemble those on its One-77 and DB11’s aerodynamic rear end shape.

Inside the vehicle, the collaboration is referenced in herringbone carbon fiber and Z quilting on the seats and door panels.

Aston Martin Vanquish concept interior
Aston Martin Vanquish Zagato Concept interior

Aston Martin’s Mr. Reichman, the executive vice president and chief creative officer, said, “Over the years, we have developed and refined our own design language and we have always gone that little bit further with our special series cars like CC-100, One-77 and Aston Martin Vulcan. The Vanquish Zagato Concept shows how our two companies can come together and push the definition of Aston Martin design.”

Collaborations can sometimes be risky for luxury brands, and half of affluent shoppers say that the biggest risk for a luxury partnership is the potential damage to the brand’s image or reputation, according to a survey from the Luxury Institute.

Overall the study found that most affluent shoppers enjoy brand partnerships, even with the risk. However, luxury marketers should pair up with brands that have the same goals and mindset when seeking partnerships (see story).

Source: https://www.luxurydaily.com/aston-martin-unveils-latest-chapter-in-5-decade-partnership/

May 18, 2016

Retailers’ omnichannel investments exceed consumer expectations: A.T. Kearney

Luxury Daily
By: Sarah Jones
May 18, 2016

As retailers strive to fill out their omnichannel capabilities, they may be investing in more than consumers expect, want or need, according to a new report from A.T. Kearney.

From lightning fast fulfillment to in-store technology, certain additions may be unnecessary for retailers to win consumers’ loyalty and dollars. At the same time, one resource that has the power to drastically impact a retailer’s bottom line is largely ignored: its store associates.

“Store associates can make the greatest impact for luxury retailers versus other sectors,” said Ryan Fisher, co-author of the study and a principal in A.T. Kearney’s consumer and retail practice. “Luxury clients expect a differentiated experience, that in many times is delivered through personal interaction.

“Luxury retailers rely on store associates to be the front line with customers, driving the brand, driving the purchase and creating what may be described as ‘irrational loyalty’–the client will choose the retail brand first, regardless of price, location, etc.,” he said.

“Technology can help to deliver this experience, but it cannot replace the impact of a highly skilled store associate who forms a real connection with the luxury client. If luxury retailers are focusing investments that exclude their store associates, they are forgetting about their most important asset.”

A.T. Kearney’s 2016 Achieving Excellence in Retail Operations study, titled “Retail Operations: People Are Still the Best Investment,” is based on the responses of more than 100 retail executives from the Americas, Europe and Asia Pacific. The researchers also surveyed more than 800 North American consumers.

Delivering on expectations
Omnichannel retailing presents traditional stores with growth opportunities, since their profitability is no longer tied exclusively to their in-store environments.

Retailers are taking action to adapt, as 86 percent have shifted their in-store strategies and measurements to accommodate cross-channel commerce. For instance, store associates may be trained to make online orders for customers in-store, with companies offering incentives to motivate sales staff to sell via ecommerce and fulfill ecommerce orders with in-store merchandise.

In the same survey from 2013, only 19 percent of retailers had a pilot program, whereas today more than 30 percent said the same, showing their growing sophistication in testing new concepts.

Neiman Marcus Memory Mirror comparison
Neiman Marcus’ smart mirrors

Retailer’s bounds in omnichannel may be getting ahead of consumers’ pace, causing a disconnect between efforts to innovate and sales results.

For instance, while retailers take on the costs of rapid shipping times that have sped from two-day to overnight or even same-day, 75 percent of consumers expect shipping to take two days. Consumers were also more likely to say that getting their product within the timeframe promised by a retailer was more important than fast delivery.

Technology is the most widespread area of concern for retailers, with almost all respondents saying they will invest in technology this year. While retailers are spending money, almost 60 percent say they face challenges when trying to execute or measure the efficacy of a particular investment.

Some of the most popular areas of technological investment within the in-store environment are inventory management, the development of a mobile application, customer checkout and staff scheduling. Most of these upgrades focus on consumer-facing technology, which 80 percent of shoppers say provide bad customer service.

One oversight that A.T. Kearney points out is investing in sales staff, since about 90 percent of sales still happen in-store. The retailers that are most effectively leveraging technology are using it to develop digital tools to facilitate associates’ interactions with customers.

Fashion styling Westfield London sales associate
Image courtesy of Westfield London

Consumers also say that their likelihood of buying rests most on their experience and the service they receive. There is definite room for improvement, as almost 50 percent of respondents say their training programs could use “significant” work, and almost all say they are concerned about their staff’s ability to adapt to omnichannel selling.

Around 75 percent of retailers say they plan to invest in training and additional staff, but A.T. Kearney suggests a focus on resources to help them deliver customer service.

“Our study found 60 percent of retailers struggle executing and measuring ROI on technology investments with investments not always aligned to consumer expectations,” Mr. Fisher said. “It is important to remember the consumer and the store associate when making investments, aligning the focus of investments to what consumers expect and how to better enable store associates to meet consumer expectations.

“For example, consumers consistently told us they are far more interested in receiving shipments within the promised delivery window, even if it is two to three days away, than getting it faster but being less reliable,” he said. “Many retailers have aspirations that outpace their internal capability to deliver, resulting in customer disappointment.  It is essential that investments balance internal capabilities with the technology or infrastructure investments that promise a better experience for consumers.

“In addition, the retailers that are investing in technology successfully are using it to help store associates to serve customers better. It helps ease the burden of execution also, as associates are incentivized to learn, adopt and implement new technology solutions to boost productivity, sales and potentially their own commissions. With those tasks being more effective and efficient, the store associates will then have more time to directly interact with customers.”

Despite the rise in digital and mobile marketing in recent years, consumers still rely heavily on in-store sales associates to assist them in making purchases, according to a recent report by the Luxury Institute.

The majority of consumers surveyed reported making most of their purchasing decisions in-store without researching online beforehand. Luxury brands looking to improve consumer relations should focus more attention on improving the in-store retail experience and providing consumers with ready assistance (see story).

Making a connection
Social media is frequently looked at by retailers as means to drive engagement and spur in-store visits, but only 5 percent of consumers say that digital media has inspired them to go to a physical store.

Part of the lack of efficacy is seen in that two-thirds of consumers who say they do not connect with retailers at all on social platforms. If consumers do engage with brands, they are most likely following to get access to discount information, with supporting a favorite brand and keeping in the loop lagging behind.

When asked to rank retailers’ touchpoints, including their store locations, product selection and loyalty programs, social media was deemed the least valuable. However, A.T. Kearney says that retailers should not abandon their efforts, but rather refocus their social strategies to be about creating a community online.

One retailer that has leveraged social media to connect its consumers is Net-A-Porter, which launched its social shopping network The Net Set a year ago.

The Net Set
The Net Set

The Net Set was launched in May 2015 for Apple devices, including Apple Watch, giving users a platform that merges social media, fashion and shopping in a single app. Through the Net Set app, Net-A-Porter’s consumers are linked to fashion personalities, curators, designers and brands in real-time while labels can actively manage a social dialogue and relationship with users (see story).

Consumers who are engaged with a brand across multiple platforms are the highest spenders, said a Barneys New York executive at Luxury FirstLook: Strategy 2014.

The traditional consumer path to purchase needs to be amended to get results, and brands should instead focus on creating exclusive content that is of value to consumers. This strategy skews content more toward CRM than media to genuinely engage consumers (see story).

“Luxury retailers should engage with customers in similar ways they have been, but through even more effective methods and channels,” Mr. Fisher said. “Store associates remain a critical interaction point with consumers. With the vast availability of consumer preference and behavior data, retailers can now equip their store associates with consumer information like they never have before, making the experience even better for the customer and driving more value for the retailer.

“Social media is presenting an opportunity to not just directly interact with consumers, but drive loyalty even further with awareness and draw to the retailer,” he said. “Currently, two thirds of retailers are not engaging with retailers on social media and those that do, it’s mainly for discounts.  There is a unique opportunity for luxury retailers to apply social media capabilities to further curate new brands and collections.

“Emerging cross-channel capabilities also offer the opportunity to delight consumers through unexpected service and engagement.  For example, using customer specific information gained in-store to provide targeted promotions online, and using online behavior to inform in-store associates to engage in more meaningful ways.  The myriad of delivery options are also highly valued in the luxury segment.

“For example, the ability to have an item from a favorite designer delivered to a client’s door in another city or at a hotel will delight the client, however, it may take a well-informed and capable associate to be able to make these opportunities a reality.”

Source: https://www.luxurydaily.com/retailers-omnichannel-investments-exceed-consumer-expectations-a-t-kearney/

May 6, 2016

Stella McCartney celebrates individuality to woo next-generation

Luxury Daily
By: Sarah Jones
May 6, 2016

Kering-owned fashion label Stella McCartney is communicating its brand values through a handful of millennial spokesmodels.

To launch its latest scent, Pop, the brand has brought together a posse of personalities who have similar feelings about issues such as sustainability and the treatment of animals, asking them to share their views in a social media campaign. Through this “celebration of individuality, authenticity and adventure,” Stella McCartney opens up its brand to a younger audience whose ideologies may align.

“This campaign feels like it’s taking away the filtered, glossy effect of other social media campaigns on Facebook and Instagram and focusing on providing a real connection with this ‘girl gang,’” said Lauren Klostermann, director of digital marketing at Blue Moon Digital, Denver, CO.

“It targets a younger audience that is interested in issues they share with Stella, including animal rights and sustainability,” she said. “It also emphasizes individuality and acceptance.”

Ms. Klostermann is not affiliated with Stella McCartney, but agreed to comment as an industry expert.

Stella McCartney was unable to comment directly before press deadline.

Personal appeal
Stella McCartney’s #PopNow campaign stars Lourdes “Lola” Leon, the daughter of pop star Madonna and a performing arts student; musician, writer and director Grimes, reach name Claire Boucher; actress and campaigner Amandla Stenberg and animal activist Kenya Kinski-Jones.

When first revealing the campaign faces, the brand’s eponymous founder took to social media, sharing why each of the women inspire her personally. This adds a layer of genuineness to the choice of spokesmodels.

Still campaign imagery shared on Instagram and across other social media channels depicts the young women in natural settings, whether playing an electric guitar sitting on a bed or palling around with each other.

Photographer Glen Luchford, who has previously worked with the brand and worked with Ms. McCartney’s mother Linda Eastman, shot the still campaign.

While the brand began teasing the campaign around the time that the perfume became available in late March, additional video elements of the campaign did not roll out until a month later.

The campaign features the women in separate short social videos, as they talk about their beliefs.

Grimes shares that sustainability is very important to her, saying that an ecological focus is what draws her to Stella McCartney as a brand. She also speaks about her friends, who are not afraid to tell her when her music is not good.

These statements are spoken in voiceover to vintage-tinged footage of the pink-haired Grimes on the California desert.

A second film released May 5 takes a closer look at Ms. Kinski-Jones’ feelings on animals.

As she twirls with pink balloons or hangs with her fellow campaign faces, she talks about how Pop as a fragrance represents the idea of being in the moment and unapologetic.

The animal activist also talks about how people should be thinking of all creatures and not just themselves. This is paired with a picture of a polar bear with the words “Not tested on animals” superimposed.

As a sustainably-focused business that does not use leather, having spokesmodels that reflect not just the brand image but also the ethos will help to reinforce its position. This campaign gives Stella McCartney the opportunity to reach out to younger, cause-minded consumers.

A yet-to-be-released campaign film by Melina Matsoukas follows the foursome on a road trip, a representation of their drive in their own lives. The concept centered on friendship is meant as a departure from the typical fragrance film.

“Pop is a spirit,” said Stella McCartney in a statement. “It is about capturing and celebrating that very special and exciting time when you are finding yourself and coming into your own.

“It is about freedom, and starting your life away from judgments or labels,” she said. “Together as one, these strong young women are a force to be reckoned with.”

Ms. McCartney believes that beauty should enhance natural beauty rather than covering it.

Pop Eau de Parfum, developed under the brand’s licensing deal with Procter & Gamble Prestige, combines tuberose and sandalwood to create a vibrant, contemporary scent. The fragrance is produced using biomimicry technology, extracting oil from a blooming flower rather than processed ones, helping to save a sandalwood tree per every 2,500 bottles.

Taking the concept of flipping tradition, the bottle is an inverted version of the brand’s Stella fragrance bottle, topped with the Stella McCartney coin in metallic hot pink.

Continuing its commitment to the environment, Pop’s packaging was made using technology that limits its ecological impact. The boxes come from sustainably managed forests and the bottles are 100 percent recycled plastic, allowing consumers to support a brand they can trust.

Ms. McCartney approaches her business with an innate sustainability mindset, which she explained to the audience at the 2014 FT Business of Luxury Summit.

From using wind power for a store to foregoing leather and PVC, Ms. McCartney considers environmental friendliness so automatically that she forgets she is doing it. This has become part of her namesake label’s story, even if it is one that it does not overtly promote.

Accompanying the Pop perfume is an accessories collection that includes a Pop Falabella handbag in punchy colors and vegan leather, keychains, scarves and shoes.

“Stella McCartney is looking to connect with a younger, edgier audience with these spokesmodels,” Ms. Klostermann said. “These girls are a down-to-earth version of other Instagram stars like Kylie Jenner.

“The Stella girl cares about specific issues and wants to use her disposable income to support causes that matter to her.”

Next generation
As millennials gain disposable income, marketers are appealing to them with focused campaigns.

Beauty marketer Estée Lauder is appealing to the next generation of consumers with a collection designed specifically for a social media-savvy clientele.

The Estée Edit is retailing exclusively through Sephora in the United States and Canada on March 15, with a coinciding launch campaign featuring influencers and models Kendall Jenner and Irene Kim. When developing the line, Estée Lauder envisioned what its eponymous founder would do to disrupt the beauty market today, keeping heritage at the heart of this new brand extension.

Consumers are split on their willingness to download luxury brand applications, but when dispersed into generations, 72 percent of millennials are inclined to download a branded app, according to a report from The Luxury Institute.

Digitization of the luxury world is slowly evolving as younger generations grow into being affluent consumers. Luxury clients differ across more than just generations, but understanding the prime and upcoming consumer can prepare marketing teams for the future.

“By using video & bios in a magazine-type layout, this will engage the younger audience to hear from spokesmodels that they relate to,” Ms. Klosterman said. “Via the use of Facebook advertising, they will also hit a younger demographic that appreciates the individualistic message.

“Finally, via the use of the #PopNow hashtag, their audience can feel engaged in the mission of the campaign outside of the perfume itself, creating a greater affinity with the overall brand.”

Source: https://www.luxurydaily.com/stella-mccartney-celebrates-individuality-to-woo-next-generation/

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