Luxury Institute News

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/

April 25, 2016

Inside the Hermès Birkin Bag That Sold For Record $298,000

Forbes
By: Eustacia Huen
April 26, 2016

It has only been ten months since an Hermès fuchsia Birkin bag was sold at Christie’s handbag auction in Hong Kong for record-setting $221,846. But earlier this month, an extremely rare 35cm Hermès braise shiny porous crocodile Birkin bag with 18-karat white gold and diamond hardware became the most expensive resold Birkin bag at $298,000.

Aside from being one of the rare few handbags that has ever been produced in the world, what makes this particular Birkin bag so special is how it represents the pinnacle of luxury handbag craftsmanship, according to Dirk DeSouza, Spokesperson of Privé Porter. Featuring the “finest crocodile skin treated with the most decadent, deepest red color imaginable, it takes a craftsman (with at least two years of apprenticeship experience at Hermès) about 50 hours to singlehandedly assemble this bag, perhaps even more when considering the diamond inlays and gold hardware,” he said. As for the condition, this $298,000-handbag which Privé Porter acquired in 2015 was unused, in “store fresh” condition and in its original packaging.

But beyond all the labor, material cost and exclusivity, another factor that could explain this hefty price tag may boil down to preference, according to DeSouza. “Marked by the fact that one could only buy a Birkin after developing a long, verified financial relationship with the brand, showing loyalty through spending roughly around $10,000 or $20,000, some of the notable challenges of landing a Birkin bag include the multi-year long waiting list and stringent quota that only allocates even Saudi princesses only two Birkin bags per year,” he said. And “with stores being allocated only a very small number of bags discreetly held in the back,” DeSouza continued, “odds are slim for customers to get a particular color, material, and size upon first try.” Hence, this may be why the anonymous buyer was willing to splurge much more for the exact bag he or she coveted.

Unlike previous record-breaking sales, this particular bag was not auctioned off at Christie’s ($221,846 in 2015) or Heritage Auctions ($203,150 in 2011). It was sold by Privé Porter—the world’s largest curator of unused Hermès Birkin bags which exclusively posts their inventory on Instagram. Typically, most buyers would review the inventory, request for additional photos, details, and verification of original documentation before making the purchase with Privé Porter. But the anonymous buyer of this $298,000-handbag actually first took note of the luxury bag in the press coverage of the World’s First Pop-Up Yacht that contained $2 million in Birkin bags during the 56th Fort Lauderdale International Boat Show in November 2015.

While this deviation from previous record-breaking auctions by no means indicate a shift in the way people shop for luxury goods, it does highlight how shoppers are more readily able to access coveted luxury items beyond notable auction houses and vintage stores. Nevertheless, Milton Pedraza, Founder and CEO of the Luxury Institute believes the increasingly fierce market would still have room for auction houses such as Christie’s and Sotheby’s, as consumers could generally trust them more for authenticity. Ultimately, Pedraza noted, “So long as you could trust the seller, ensure that the transferal of funds is safe and sound, and verify the product’s authenticity, it almost doesn’t matter whether you first gain knowledge of the product from an auction, a boat show, Instagram or Snapchat.”

Source: http://www.forbes.com/sites/eustaciahuen/2016/04/25/inside-the-hermes-birkin-bag-that-sold-for-record-298000/2/#34e3347f74ba

April 21, 2016

The Future of Luxury Is Now, as Heritage Brands Meet New Demands

Robb Report
By: Booth Moore
April 19, 2016

The world’s most exclusive brands—many of which cling to tradition—are reshaping their long-standing practices to provide smarter, more immediate, more sustainable, and healthier products and services. Yet technological advances and innovative new business models are not the only forces driving the rapid evolution of the luxury marketplace. At the heart of these changes are dramatic shifts in the values, attitudes, priorities, and expectations of you—the consumer.

It was one of the most exclusive fashion shows of all time. When Tom Ford debuted his comeback women’s collection in September 2010, he invited only 100 people to watch Lauren Hutton, Julianne Moore, Daphne Guinness, Beyoncé, and his other famous muses model sexy python-print gowns and fringed coats on the runway. The event took place months before the clothes would arrive in stores, and no photographs were allowed.

When Ford introduces his latest fall/winter collection this September, by contrast, anyone will be able to view the pieces online, and those with sufficient means will be able to purchase items as soon as they come down the runway. This is part of a new see-now-buy-now approach that Ford is testing. Burberry, Diane von Furstenberg, and several other fashion brands have launched similar programs.

“In a world that has become increasingly immediate, the current way of showing a collection four months before it is available to customers is an antiquated idea,” said Ford in a press release. “Our customers today want a collection that is immediately available.”

Ford’s about-face is telling. New technology, market trends, and changing social attitudes have brands and companies catering to customer demands in an unprecedented manner. Now you can acquire nearly any item (a new Zenith watch from Mr. Porter, for example) the same day or engage any service, even a private jet charter, immediately, with the swipe of a finger, and have practically anything customized to your preferences. Even so, we want more than that.

“People still buy luxury products,” says Claudia D’Arpizio, a partner at the management-consulting firm Bain & Company, which reports that the global luxury industry grew by 5 percent from 2014 to 2015 and surpassed $1 trillion in retail sales. “But they value the experience around them more than the products themselves, since the experience is more shareable.”

More of us, in other words, seek meaning from our means. “We have gone from ‘extra’ values to ‘intra’ values,” says Olivier Abtan, a partner and managing director at the Boston Consulting Group, another management-consulting firm. “That means spending good time, sustainability, health, and family.”

Thus, luxury could be a private meeting at the base of the Himalayas with an oracle ordained by the Dalai Lama, arranged by the travel company Cox & Kings; or waking up to sunrise yoga on the rooftop helipad of the Four Seasons Beverly Hills. It could be a Ralph Lauren necktie that warns you when your heart rate accelerates too rapidly, a Bentley whose interior is lined with a material made from non-animal protein leather, or your own mouse avatar, on which doctors can test cancer treatments to determine which would be most effective for you.

Technical Support

As Ford notes, you want immediate access to items, and digital platforms provide that. They also enable you to make informed purchases more easily and to engage conveniently with brands on a personal level. “Technology is a driver of shopping and customer experience,” says D’Arpizio.

According to Joshua Schulman, president of Bergdorf Goodman and NMG International at the Neiman Marcus Group, 75 percent of his company’s customers do research online before buying an item. Saks Fifth Avenue recently launched a service through which associates are available online around the clock, and they can curate personalized virtual boutiques for you on the company’s website.

E-commerce, once thought to be only for mass-market brands, is becoming critical to the luxury sector. “In the U.S., some fashion brands have 20 to 30 percent of their sales online,” says Abtan. He predicts that within the next year or two every luxury brand will be selling online, including such holdouts as Chanel and Harry Winston. Regardless of the nature of the purchase, it seems everyone enjoys the convenience of shopping online.

But as larger luxury brands proliferate on the web and open stores in every city, smaller boutique brands are filling a niche by providing individualized experiences and access. Human contact, when it’s on your terms, can be the height of luxury.

In February, just hours after his fall/winter-collection runway show in New York, the women’s-wear designer Joseph Altuzarra spent an entire afternoon at Bergdorf Goodman greeting clients as part of the store’s Right from the Runway initiative. He explained his inspiration for the collection (Jim Jarmusch’s vampire film Only Lovers Left Alive), described the work involved in the soutache braided embroidery on the back of a coat, and offered suggestions on how to style different looks. One woman, who was visiting from Europe, planned to buy a green ombré tie-dyed dress from the collection. After chatting with the designer, she purchased several additional pieces. “Women love having a relationship with the product they buy, and part of that is having a relationship with the designer,” says Altuzarra. “Some designers are able to do that through digital and Instagram, but usually that’s a relationship with a younger, more aspirational client. At the price point we’re selling at, with $5,000 dresses, our customers are digitally aware, but they are not influenced by it. They are not on Instagram 24/7 looking at runway shows.”

At his showroom in Manhattan, jeweler James de Givenchy works with each of his clients to create a one-of-a-kind piece. The average wait time for completion is eight weeks, and no one complains. “We have 12 manufacturers downstairs, and we serve a small market of people who want to have things made especially for them,” de Givenchy says. “It’s the experience of meeting and discussing what their needs are.”

Have It Your Way

The travel industry also recognizes the value of individual attention. Companies understand that you want to personalize trips and experience your passions. This could mean attending a sold-out baseball game in Osaka, Japan, or shopping for a Ferrari at the automaker’s headquarters in Maranello, Italy, according to Scott Wiseman, president for the Americas at Cox & Kings. “It used to be that luxury had to do with being first to a new property or destination,” he says. “Now people want to be part of something instead of watching it.” Wiseman says his clients can overnight in a Maasai mud hut, for example, and learn something of the local culture.

Neil Jacobs, CEO of Six Senses Hotels Resorts Spas, sees a demand for nontraditional travel experiences from his company’s clients. “We never talk about exclusivity,” he says, “we talk about inclusivity.” He cites the appeal of the organic free-range chicken farm at the brand’s Yao Noi property in Thailand, where you can collect your own eggs for breakfast. “It’s about experience and community engagement,” says Jacobs. “Customers who are spending north of $1,000 a night want more than just good service and a great bed.”

Community engagement can extend to guest rooms. Gone is cookie-cutter hotel design: “People are preoccupied with the personality of spaces,” says Ian Carr, co-CEO of the hospitality and residential design firm Hirsch Bedner Associates. “They don’t want generic or transient. They want curated, personal, locally connected.”

Hospitality companies also recognize guests’ desires for seamless service and freedom from awkward, time-consuming social interactions. Technology can help address those demands. “More and more, people don’t want to talk to anyone,” says Herve Humler, president and COO of the Ritz-Carlton Hotel Company, which has a GPS-enabled service in the works. It is expected to allow guests at the brand’s resorts to use their mobile devices to order lunch from the beach, for example, and have a server locate their chaise longue on the sand.

Sustainable Efforts

That lunch likely will not arrive in Styrofoam, and it could well include meat from animals that have been responsibly raised or produce that has been sustainably farmed. Cited in 2010 by the Harvard Business Review as a corporate mega-trend that would rival the impacts of mass production and electrification, sustainability is making its way into the luxury world. The luxury-industry conglomerate Kering’s first Environmental Profit and Loss report, published last year, set targets for reducing emissions and waste from its production and supply chain. Jewelry brands Chopard and Tiffany & Co. have begun using ethically mined gems and recycling gold, silver, and platinum, because an increasing number of customers demanded that they do so.

In the luxury-auto market, the SUV, with its relatively low mileage rating, has remained popular enough for Jaguar, Maserati, and Bentley to launch, or prepare to launch, their first models. However, according to a March report by Donatas Bimba of the market-research firm Euromonitor International, sales of plug-in electric vehicles are set to bounce back in 2016 and record solid growth from 2017 onward thanks to upgraded models and improved charging infrastructure. Bimba cited plug-in hybrid vehicles as “the most dynamic new car segment in the U.S.” and pointed to the BMW i8 and Mercedes-Benz S500e. He also noted the potential impact of the Model X all-electric SUV from Tesla, which is aiming to woo customers away from their Porsche Cayennes and Range Rovers.

“The electrification of the drivetrain is not a temporary phenomenon; it is the future of mobility,” says Gorden Wagener, the chief designer at Mercedes-Benz, which has plans to offer 10 plug-in hybrid models by 2017 and recently announced a new policy requiring top managers to drive electrified, as opposed to gas-powered, company cars.

In addition to offering more environmentally friendly models, luxury carmakers may begin adding sustainable materials to their vehicles’ cabins. “People on the top level of society—our customers—sooner or later won’t order a Bentley with 20 hides, because as a, say, vegan person, they will not accept it,” says Stefan Sielaff, director of design for Bentley Motors. “On the other side, they are not going to accept artificial leather, because it is oil based, so you really have to start experimenting with alternative, organic materials, such as textiles made of animal-free protein leather, silks, even stone.” Bentley is already offering stone veneers, made of rocks sourced from quarries in India, in its Mulsanne models.

The transition to autonomous-driving vehicles could have an even more profound effect on car design. “Maybe in the future, the car is a sitting room, a living room, a conference room, and you use the time in the car in a different way,” says Sielaff. “It becomes like sitting in first class of an aircraft.”

In BMW’s Vision Next 100 self-driving concept car, the steering wheel and center console retract so that the driver and front-seat passenger can turn toward each other. Another autonomous-driving vehicle, the Mercedes-Benz F 015 research car, is described as a “luxury lounge,” with chairs that can rotate to form a club-style seating arrangement.

The Balance Equation

Our own health is as important to many of us as the planet’s, and fashion and hospitality brands, along with hospitals and medical practices, are responding accordingly. Fashion labels are designing their own Fitbit devices (Tory Burch), activewear (Zegna), and connected clothing. Ralph Lauren’s PoloTech shirt works with an iPhone or Apple Watch to put real-time workout data in your hand. A smart suit or necktie that could advise the wearer on heart rate and body temperature may not be far off. “Living a luxury lifestyle isn’t just the dream of having a better life,” says David Lauren, executive vice president of global advertising, marketing, and communications at Ralph Lauren. “It’s also how technology can help you live a healthier, better life now.”

The country’s leading hospitals have long offered executive health programs that work with patients on preventive health care, nutrition, and stress management. The programs were initiated in the 1960s to protect C-level managers and board members considered valuable assets by corporations. “But now, the real growth segment has been in individuals motivated toward this kind of health-care surveillance,” says Dr. Benjamin Ansell, the director of UCLA’s Executive Health Program, which provides personalized, in-depth evaluations. Private practices offer similar programs.

Craig Venter, one of the first people to map the human genome, offers an executive physical at his latest venture, the La Jolla, Calif.–based Human Longevity. For $25,000, the company will sequence your DNA and run a full complement of tests to determine your risk for heart disease, melanoma, dementia, and other ailments. “Having the ability to control health and life outcomes is the ultimate luxury,” he says. (Some experts argue that genome sequencing alone may not be sufficient to detect health risks, and that further research is needed.)

Venter’s company is focused on advanced preventive care; others provide exclusive treatments. Champions Oncology is among the companies offering a mouse avatar to cancer patients. For a price starting at $10,000, Champions will remove a portion of the patient’s tumor, inject it into the mouse, and have the animal undergo different treatments to determine which will work best for the patient. (Doctors disagree on the efficacy of such practices when compared to human clinical trials.)

In the hospitality realm, hotels and resorts are providing health and wellness services that go far beyond facials and massages. The comforts of home on the road now include nutritious foods, fully equipped workout facilities, yoga, and spin classes. “It’s a luxury to have normalcy when you travel,” says Michael Newcombe, general manager for the Four Seasons Los Angeles at Beverly Hills. He oversees all 38 Four Seasons spas in the Americas and has partnered on services with local fitness professionals, dermatologists, and medical providers.

Health retreats offer increasingly sophisticated medical services, such as Alzheimer’s prevention through cognitive stimulation, sleep recovery programs, and couples counseling. “The old-fashioned notion of going to a health spa involves weight loss and plastic surgery,” says Alejandro Bataller, a vice president at the SHA Wellness Clinic near Alicante, Spain. “But now, it’s so much more.” The SHA experience includes classes at the clinic’s health academy, where visitors learn how to manage stress and cook healthy meals. And Bataller is working with a Spanish university to develop an app that will keep track of guests’ progress after they leave. “We are going to be able to support you through technology wherever you are,” he says.

But for all the ways luxury companies are employing new technologies to meet your demands and enhance your life—providing instant access to the latest fashions or seamless service at resorts and hotels or cutting-edge wellness programs—their ability to forge relationships with you and other clients may ultimately determine whether they succeed or fail, says Milton Pedraza, CEO of the Luxury Institute, a research organization in New York. “What wealthy people want is empathy, trustworthiness, the emotional elements of humanity,” he says. “It’s not a points program or Champagne when you walk in the store that matters. It’s doing little things that mean so much more.”

Accordingly, Pedraza says, the luxury industry is paying particular attention to women, and not just with marketing initiatives such as Bergdorf Goodman’s Right from the Runway. “[Women’s growing influence] is a big trend in luxury,” he says, citing Gucci’s Chime for Change charity campaign, supporting girls around the globe, and the LVMH-owned Champagne house Veuve Clicquot’s Business Woman Award as strategic outreach programs.

“Women have the say and the money,” he observes, “and we will see that grow as more millennial women get into higher levels of corporations. How will it manifest itself? Maybe a nicer world.”

Certainly that would be the most welcome change of all.

Source: http://robbreport.com/sports-leisure/future-luxury-now-heritage-brands-meet-new-demands#sthash.dNjDZXhF.dpuf

April 1, 2016

Heritage brands must amplify tradition of innovation to reach today’s consumer

Luxury Daily
By: Forrest Cardamenis
April 1, 2016

NEW YORK – Understanding the relationship between heritage and innovation is the key to appealing to today’s new consumer, according to panelists at the FACC Luxury Symposium on March 31.

Heritage brands have been successful for decades or centuries because within the heritage is a history of innovation around a core group of principles. While touting history could suggest to younger consumers that a brand is “old and stodgy” or the brand of their grandparents, focusing on innovating with products that appeal to today’s consumers will let the puzzle pieces fall into place.

“If we are heritage and brands that means we have stood the test of time, and we have stood the test of time because we have a tradition of successfully innovating,” said Trent Fraser, vice president Dom Pérignon, LVMH Wines & Spirits.

“We don’t make things that are required to sustain life; we have to find ways to fulfill people’s dreams and make them fall in love, and this requires innovation,” he said.

“Innovative companies ought to aspire to be heritage brands, because heritage brands have a history of innovation.”

FACC Luxury Symposium was organized by the French-American Chamber of Commerce.

Past and present
Before the commencement of the “Strong Heritage Brands: Artisans, Ateliers & Métiers” panel, a poll of the luxury executives in the room revealed that 81 percent believe the millennial attitude toward heritage brands is considerably different than their predecessors.

dom perignon.atelier bottle tasting
Dom Pérignon

“It’s not that surprising, but I think one of the most important things is desirability, not just in terms of millennials but for everyone,” Mr. Fraser said. “ One of my greatest challenges when I first joined was that there was this history and tradition of the brand’s story that needs to be told, but sometimes what comes with that is ‘old and stodgy, that’s my grandfather’s drink.’

“Telling that story today is quite difficult but we really need to bring it to life,” he said.

For Dom Pérignon, that story has been revitalized for younger consumers through the “Power of Creation” platform, which partners declared vintage wines with creators in different fields, bringing a fun, edgy and modern twist on the Dom Pérignon story.

For Baccarat, the sea change came on the level of how the product itself is marketed with “Everyday Baccarat,” which encourages consumers to extend their day by drinking from the brand’s crystal for breakfast and after dinner, not just for weddings and special occasions.

Baccarat Harcourt
Baccarat tumblers

“I was walking home on my first day, and it occurred to me, ‘We all have designer shoes, we all have designer handbags that we use everyday, yet we’re afraid to chip our glass so we don’t use it,’” said Jim Shreve, president, USA at Baccarat. “But look at the bottom of my shoes. Look at my watch with all the scratches – and these cost much more than some of our products.”

Everyday Baccarat appeals to all consumers, but with millennials being particularly skeptical about buying a product they will use infrequently, the proposition of crystal for everyday use could sell them on the brand.

The focus on the product is particularly important in fashion and jewelry, where brands must not shy away from being different or departing the norms.

robb.dec2014 chanel jewelry
Chanel jewelry ad

“Chanel as a heritage brand has been supported and carried by Mademoiselle Chanel through one word, for me, which is ‘disruptive,’” said Olivier Stip, senior vice president fine jewelry & watches, Chanel USA. “We are always trying to find what is the right balance between creation for the sake of the creation and the creation for a use for the customer.

“Heritage brands are the best place to be innovative,” he said. “When creative comes first and the marketing follows just to do the orchestration, that’s how you can create the blend, the innovation, and communicate the proper way.”

When telling a heritage story, brands must remember to keep the history on the present. The goal is not to sell consumers on a past success but rather on a tradition of quality still visible today.

For Van Cleef & Arpels, a museum exhibition must build a bridge between past and present.

Van Cleef & Arpels TEFAF 2016
Van Cleef & Arpels TEFAF 2016

“We go to a museum, we organize an exhibition, but the whole point is to prove craftsmanship is a living art and it doesn’t stay stuck in time,” said Alain Bernard, president and CEO of Van Cleef & Arpels Americas. “Many people, many brands organize exhibitions in museums where they show pieces without any connection to what’s happening now.

“We need that heritage – the branches of a tree are never longer than the roots, so you need to have strong, deep, long roots before branching out – but the whole point of the exhibition is to show the evolution,” he said. “What we do today, what we do everyday, is inspired by what we have done before, and the exhibition shows that.”

Even in the service industry, where the ability to sell a consumer on an experience rather than on a product they don’t strictly need seems different, the principle is the same. Across all sectors, brands must adapt, whatever their service is – whether it is providing a place to stay or providing clothing and jewelry of a high quality that will last a lifetime – to the contemporary mindset.

“At Ritz-Carlton we absolutely believe exceptional service is timeless, it never goes out of style,” said Tina Edmundson, global officer of luxury and lifestyle brands, Marriott International. “What that actually means continues to evolve.”

Ritz-Carlton Chicago Deca Restaurant
Ritz-Carlton Chicago Deca Restaurant

Rather than fear these changes, whether it is mindset about what qualifies as a desirable product, a different purchase journey or something else entirely, brands selling either goods or services must find the proper blend of change and heritage. To that effect, 71 percent of executives in the room believe that brands should communicate CSR guidelines in an explicit manner to connect with millennials.

Shifting emphasis
In the case of personal luxury goods, another balancing act is the one between online and in-store channels. More than half of polled executives say that with new business models and a new generation of luxury consumers, the retail store is more important than before.

Despite the continued importance of the bricks-and mortar store, they are still generally operating in an out-of-date fashion, creating obstacles for sales staff, according to the Luxury Institute.

The consultancy conducted a focus group with 40 store managers who oversee multi-brand, premium and luxury stores, and found that there are a number of improvements that companies could make to help their in-store staff be more productive and effective. From updating technology and CRM systems to reallocating employee resources, there is room for improvement that needs to begin at the top (see story).

By the same token, some brands should opt to play up heritage, especially as they make a move to enter the new market. In these situations, connotations of datedness or stodginess will be displaced by curiosity about national heritage.

British brands looking to gain a foothold in the United States would do well to emphasize their “Britishness,” according to panelists at “GREAT Britain on Madison Avenue” held on Nov. 5.

British identity is wrapped up into ideas of elegance, heritage and wit. Brands venturing out of the United Kingdom into the U.S. or other countries need to find ways to inform consumers not just of the brand but also of the significance of its home country (see story).

“The challenge for our brand is the challenge for any brand – to continue to evolve based on the environment,” said Alex Bolen, CEO of Oscar de la Renta. “We need to evolve around a core set of standards and principles that should remain unchanged, but how those are expressed will change as our environment changes.”

Source: https://www.luxurydaily.com/heritage-brands-must-amplify-tradition-of-innovation-to-reach-todays-consumer/

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