Luxury Institute News

November 14, 2017

Facial-tracking study reveals 4 key tips for successful luxury advertising

A study of luxury ads released over the last two years by The Luxury Institute and emotion measurement firm Realeyes has revealed the four key ingredients to successful luxury brand advertising – and highlights which ads were the best.

Using facial tracking technology, the firms analysed how video ads from 24 brands were perceived by 1,200 people from $100,000+ income households (the findings are applicable to the UK).

One of the key findings was the gradual shift in luxury brands’ communications from “show and entice” to “engage and connect”, or as Realeyes CEO’ Mihkel Jäätma says, “We’re beginning to see signs that luxury advertising may be shifting away from what might be considered a more aloof and elitist past to trying harder to connect emotionally with viewers.”

The four key ingredients are:

Avoid the ‘look-book’: videos that are just lovely moving images don’t cut it – an emotional connection must be made with the viewer. Speaking has high engagement value. Films with dialogue outperformed films with monologues or no speaking at all.

Tell relatable stories: a simply story that a viewer can understand, follow and relate to yields a stronger emotional reaction compared to those that don’t.

Question celebrity: Recognisable stars may grab attention but it doesn’t ensure engagement in itself, unless the celebrity is seen to interact and engage. It’s the story that helps make the more important emotional bond.

Income matters: The highest income bracket was generally far more emotionally engaged across the videos within the study, which highlights the benefits of accurate targeting.

Milton Pedraza, the Luxury Institute’s CEO says: “The luxury industry has a very strong tradition of creating a mysterious and distant dream in its advertising but as consumers change, it’s responding by making clever use relatable truths and humor, casting celebrities in a more approachable light, and representing a broader spectrum of the human experience.”

These are the three ads that scored the highest emotional engagement with viewers:

1. Mercedes’ “Easy Driver” with Peter Fonda (scored better than 87% of all ads ever in Realeyes’ database): a strong start and a steadily increasing “happy” response ensure engagement keeps growing. The film’s nostalgia, manliness, humor and celebrity has particular appeal to a female audience, with a higher engagement score (9) and a perfect 10 in attraction.

2. Dolce & Gabanna “Light Blue Eau Intense: a new chapter” (better than 87%): sex sells but does so even better when combined with humor – the happiness curve spikes as the director interrupts at the end.

3. Kate Spade “#missadventure” with Miss Piggy (better than 83%): starts on a neutral note before introducing a story to hold attention and artfully strengthen engagement. It finishes with the highest impact score of all the films in the study.

“The key to success in luxury advertising today is in mastering the perfect balance between building the desire of the exclusive, whilst making it tangible enough to buy,” concludes Jäätma.

 

Source: http://www.netimperative.com/2017/11/facial-tracking-study-reveals-4-key-tips-successful-luxury-advertising/

November 2, 2017

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

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

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

Luxury Institute’s 10 Luxury Trends For 2018

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

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

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

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

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

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

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

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

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

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

Building Relationships Based On Data

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

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

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

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

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

October 13, 2017

‘She just broke her brand’: Donna Karan’s defense of Weinstein is taking its toll

The Washington Post
By: Abha Bhattarai
October 12, 2017

 


(Craig Warga/Bloomberg News)

Donna Karan’s clothing lines were already struggling before the designer sparked a fury over remarks she made this week asking whether victims of sexual harassment were “asking for it.”

But retail analysts say Karan’s comments, which she made after a number of women said they had been sexually harassed and assaulted by film producer Harvey Weinstein, have further complicated turnaround efforts at her namesake brand.

“How do we present ourselves as women?” Karan was reported as saying at an awards ceremony Sunday evening in response to a question about the accusations against Weinstein. “What are we asking? Are we asking for it? By presenting all the sensuality and all the sexuality? What are we throwing out to our children today? About how to dance, how to perform and what to wear? How much should they show?”

The Daily Mail reported that Karan, who stepped down from her leadership role at the company in 2015,  later told a journalist: “It’s not Harvey Weinstein, you look at everything all over the world today, you know, and how women are dressing and what they’re asking by just presenting themselves the way they do. What are they asking for? Trouble.”

On social media and elsewhere, the reaction has been swift: TV host Megyn Kelly and actresses Mia Farrow and Rose McGowen have said they will stop buying Donna Karan products, and an online petition with more than 8,000 signatures is calling on Nordstrom to drop DKNY and other Donna Karan-branded apparel, bedding and accessories. (Beginning in February, Macy’s will be the exclusive retailer of DKNY products.)

Shares of the company that owns Donna Karan International have fallen nearly 10 percent this week. Stocks closed down more than 2 percent on Thursday to $26.03 a share.

“What she did was a terrible mistake,” Paula Rosenblum, managing partner of Retail Systems Research, wrote in an email. “General consensus is she just broke her brand.”

Karan has since apologized for her comments, which she said were taken out of context. “I believe that sexual harassment is NOT acceptable and this is an issue that MUST be addressed once and for all regardless of the individual,” she said in a statement released by her publicists. “I am truly sorry to anyone that I offended and everyone that has ever been a victim.”

Representatives for Donna Karan International and its parent company, G-III Apparel, did not respond to requests for comment.

On Thursday, a Nordstrom spokeswoman responded: “We’ve heard from some customers, and we certainly understand their concerns. We’ll continue to listen to their feedback.”

G-III Apparel purchased Donna Karen International for $650 million in December. The New York company also owns Calvin Klein and Tommy Hilfiger. And it manufactures clothing and accessories for first daughter Ivanka Trump’s brand, which has weathered its own share of boycotts and negative press.

“The acquisition of Donna Karan fits squarely into our strategy to diversify and expand our business,” the company says on its website. “We intend to focus on the expansion of the DKNY brand, while also reestablishing DKNY jeans, Donna Karan and other associated brands.”

Karan, 69, founded her eponymous fashion house in 1984 and eventually sold it to the French conglomerate LVMH Moët Hennessy Louis Vuitton in 2001. In the years since, analysts say the brand has lost much of its luster.

“DKNY is a brand that has been struggling for years — that’s why LVMH got rid of it,” said Milton Pedraza, chief executive of the Luxury Institute, a New York-based research firm. “Somewhere along the way, it’s lost identity and direction.”

G-III Apparel, however, has vowed to reinvigorate the brand. In the most recent quarter, the company said the Donna Karan and DKNY brands brought in $45 million in sales, accounting for about 8 percent of the company’s total sales. “We believe that our investment in Donna Karan was the right one for our company,” G-III chief executive Morris Goldfarb said in an earnings call with investors last month. “We continue to see Donna Karan as potentially the highest operating margin business in our portfolio. ”

But analysts said Karan’s recent comments could still introduce new challenges, even if shoppers have a short attention span when it comes to consumer boycotts.

“Was this a screw-up? Yes,” Pedraza said. “It might cause some short-term issues, but I think people will forgive it in the long term.”

Source: https://www.washingtonpost.com/news/business/wp/2017/10/12/she-just-broke-her-brand-donna-karans-defense-of-weinstein-is-taking-its-toll/?utm_term=.191183479af3

 

September 14, 2017

Nordstrom’s plan to attract shoppers: Wine, manicures — but no merchandise

The Washington Post
September 12, 2017
By: Abha Bhattarai

 


The first Nordstrom Local is scheduled to open next month in Los Angeles. (Courtesy of Nordstrom)

Nordstrom’s newest store will have personal stylists, manicurists, a tailor and plenty of wine.

But there won’t be any merchandise for sale. No clothing, no shoes, no accessories.

Instead, Nordstrom Local will serve as a gathering ground for customers to chat with employees, pick up online orders and drop off returns. Stylists will be available to put together personalized recommendations — outfits for a Caribbean vacation, say, or a job interview — that customers can view on their mobile phones and buy directly from Nordstrom.com.

The experiment, which begins with a 3,000-square-foot store in Los Angeles next month, comes as retailers around the country look for ways to blur the line between shopping online and in stores. Analysts say it is also a way for Nordstrom to open smaller locations in more urban areas to keep up with changing customer preferences. (A typical Nordstrom store is about 140,000-square-feet — or nearly 50 times the size of the new concept.)

“As retail continues to transform at an unprecedented pace, the one thing we know is that customers value great service, speed and convenience,” Shea Jensen, senior vice president of customer experience for Nordstrom, said in a statement. “Finding new ways to engage with customers on their terms is more important to us now than ever.”

It’s a model others are trying, too. Apple executives on Tuesday said the company’s newest stores have outdoor plazas, boardrooms, forums and workshops, all with one goal in mind: getting people to linger.

“We don’t call them stores anymore, we call them Town Squares,” Angela Ahrendts, head of Apple Retail, said at a company event Tuesday. “They are gathering places.”

It’s a similar idea at Nordstrom, which in 2014 spent $350 million on Trunk Club, the online personal styling service. The company was also an early investor in Bonobos, the men’s e-commerce company that was acquired by Walmart for $310 million earlier this year.

“Nordstrom has never been afraid to try new things, and that’s become especially important in an environment where bricks and mortar is becoming obsolete,” said Ivan Feinseth, an analyst for Tigress Financial Partners. “Most retailers are struggling because they have no identity and can’t connect with customers. Nordstrom is the opposite: It has always been known for a high level of customer service, and now they’re moving further in that direction.”

But some said it’s not immediately clear whether Nordstrom’s new concept will be successful. Among the challenges the company could face: higher shipping costs as it mails more items to customers’ homes, and difficulty winning over shoppers who have become accustomed to shopping from home.

“It’s a mixed bag,” said Milton Pedraza, chief executive of the Luxury Institute, a market research firm. “There are people who like the instant gratification of going to a store, and there are others who like the convenience of ordering from home. This model — well, it kind of gives them neither.”

Nordstrom has been a rare bright spot in the retail industry, as longtime department stores chains like Macy’s, Kohl’s, Sears and J.C. Penney report declining sales and profits, and announce plans to close hundreds of stores. Seattle-based Nordstrom, however, reported that both revenue and same-store sales — a measure of sales at locations open more than a year — were up during the most recent quarter, as more people shopped online and in its stores.

But the company is also facing competition from Amazon.com, which this year is expected to surpass Macy’s as the country’s largest seller of apparel. Amazon has been aggressively building up its clothing and shoes businesses with its own private-label brands and last month completed its $13.7 billion purchase of Whole Foods Market, giving it a network of nearly 500 stores around the country. (Jeffrey P. Bezos, the chief executive and founder of Amazon, owns The Washington Post.)

“That’s the big question on everybody’s minds: How do you create a hybrid between shopping online and in store?” Pedraza said. “Nobody has figured it out just yet, so the stakes are very high.”

“It’s not a slam dunk — it’s not like anybody is saying, ‘Oh my God, what a great idea.’ They should’ve done this years ago,’” Pedraza said. “But it’s an interesting idea. And who knows? Maybe it will work.”

Source: https://www.washingtonpost.com/news/business/wp/2017/09/12/nordstroms-plan-to-attract-shoppers-wine-manicures-but-no-merchandise/?utm_term=.18b4f737fdb9 

August 9, 2017

Luxury camping, complete with lobster dinner delivery

CBS Money Watch
By: Irina Ivanova
August 9, 2017

Come August, many families leave the house for camping in the woods or on a beach. But those leery of leaving behind the air conditioning need not forego the natural experience. A newly opened campground in Maine might have just the thing.

Sandy Pines Campground in Kennebunkport has been open less than two months, but its 12 professionally decorated, luxury tents are pretty solidly booked through mid-October, according to a spokeswoman. Those come in addition to the campground’s 320 acres of campsites, lodges and RV hookups.

Each tent measures 450 square feet and comes with heating, air conditioning and a mini-fridge. Travelers also can choose from individualized quirky amenities, like mid-century furniture in one tent and a painting set in another. Rates start at $149 a night before taxes.

Would-be campers should note that dogs are not allowed in the luxury tents, although pets are welcome elsewhere in the park. The glam tents also don’t permit individual barbecuing, but they do offer delivery of a fully cooked lobster dinner right to your tent flap.

sandypines-blixensoasis-bynicolashome.jpg

Blixen’s Oasis, a safari-themed tent designed by Nicola’s Home.

 SANDY PINES CAMPGROUND

 

Glamorous camping, or glamping, has taken off in recent years as the travel industry tries to come up with novel attractions for well-heeled travelers who prefer experiences to things.

“When you have the money, you want to splurge,” said Milton Pedraza, CEO of the Luxury Institute. “Yes, you’ll go out and hike, but you’re going to want to have those luxuries when you come back and when you wake up.”

The Oxford English Dictionary, which added “glamping” in December, defines it as an activity with “accommodation and facilities more luxurious than those associated with traditional camping.”

But the experiences range widely between having a slightly more comfortable sleeping floor and ordering lobster delivered to the tent. Pedraza predicts the less-than-rugged segment of glamping, rather than full-on luxury, will grow the fastest in the coming year. Young families in particular might appreciate camping facilities that are set up with basic amenities, he said.

“They’re pretty spectacular,” camper Katie Latulip told CBS affiliate WGME. “The fact that they’re all equipped with all the amenities that a camper would need to essentially just show up and you know, have a great weekend, is pretty phenomenal.”

sandypines-nauticalnights-ext-bychatfielddesign.jpg

Nautical Nights, a tent by Chattfield Designs, at Sandy Pines.

 DOUGLAS MERRIAM FOR SANDY PINES CAMPGROUND

 

Sandy Pines originally intended to rent two of the tents and sell the other 10, but after “overwhelming interest in the glamping experience,” it’s renting all 12 of them, a co-founder of of the site told Boston.com. For those interested in a more permanent camping experience, the campground also offers mini-cabins for sale, which measure about 650 square feet and sell from $71,000 to $98,000.

The concept of traveling in luxury, of course, is nearly as old as luxury itself. A famous example from medieval Europe is the Field of the Cloth of Gold, a summit in Northern France in 1520 between Henry VIII of England and Francis I of France and their respective retinues. They gathered, ostensibly, to celebrate peace between the two countries, but in reality to see which monarch could throw the more impressive party.

An actual wrestling contest during the summit ended with King Henry as the winner, according to Vice, but the question of who was the more successful glamper remains shrouded in the mists of history. © 2017 CBS Interactive Inc.. All Rights Reserved.

Source: http://www.cbsnews.com/news/glamping-kennebunkport-maine-luxury-camping/

July 28, 2017

THE ROLLS-ROYCE PHANTOM PERSONALIZES OPULENCE

Wired
By: Brett Berk
July 27, 2017

 

 

ROLLS-ROYCE

 

FOR MORE THAN 90 years, the rich, famous, and beautiful have been ferried to their special occasions inside Rolls-Royce Phantoms. The car epitomizes imposing elegance, a status symbol that signals, “I’m loaded, but I’m also very classy.” On Thursday, Rolls-Royce unveiled its newest version of the Phantom, a four-door, $500,000-dollar sedan. The car’s design illustrates the balance Rolls-Royce must strike to make the vehicle feel new, innovative, and personalized—worthy of its half-million-dollar price tag—while also maintaining connection to its storied eight-generation lineage.

The general state of the luxury goods market further complicates things. “Wealthy buyers are placing a strong premium on more emotional and personal priorities: travel, food, adventure, and family,” says Milton Pedraza, CEO of the Luxury Institute, which tracks high-end spenders. The challenge for Rolls is to incorporate those spending behaviors into the car’s design.

Making the vehicle stand out is a matter of throwing wide the suicide doors. “If you said to me, ‘What finally defines this Phantom?’ I’d say, ‘Please step inside,’” says Giles Taylor, Rolls-Royce design director.

The feel is “slightly edgy of its time, but not beholden to its time,” says Taylor. That rules out a Tesla-style giant touchscreen. And the Rolls interior has to feel exclusive, so no replicating the health and wellness monitors that respond to drivers’ moods, which Mercedes installs in top-end models.

Rather, Rolls’ approach is to install something called the “Gallery.” That the feature’s term borrows from museum nomenclature is no accident. The Gallery covers the entire central expanse of the upper dashboard with toughened glass, and carves out a three-dimensional display shelf behind it—72-inches wide and 6-inches in tall. The perfect place to install, well, anything you want. You can’t get much more personalized than that.

The Rolls Royce design team and craftspeople at the company’s British headquarters are standing by with some posh ideas for buyers, should they need them—or they’re happy to create installations from scratch. For instance, the company’s most dignified customers might choose to festoon their Gallery with a family crest laser-etched in platinum; a miniature landscape of an ancestral manse fashioned from Austrian porcelain; an abstract wing rendered in feathers and laser light; or a burst of precious gemstones refracting the aurora borealis.

Automakers love this level of personalization because—surprise!—they command hefty price tags. Rolls expects each new Phantom owner to spend almost $100,000 on individual details alone. The company offers Rolls-Royce staples like book-matched burl walnut veneers and preternaturally smooth animal hides, but also novel options like black pear and grey oak woods, outrageous carpet color palettes, even satin and silk seats. The company sees its Gallery as a new way to enhance its up-sell.

THE INSIDE THAT COUNTS

  • The Real Auto Revolution Is Already Happening—Inside the Car

  • Tomorrow’s Cars Won’t Just Drive Themselves. They’ll Feel Different

  • Prepare Yourself for the Sweet, Sweet Luxury of Riding in a Robocar

Now, personalization isn’t a new concept for cars. Pre-war Rolls-Royces were delivered as a rolling chassis to a coach builder, to fit a custom body. The intro of assembly lines standardized things, but now technology means cars can be given bespoke touches with relative ease. “With the digital production we have now, we can make it very individual, but produced in a high industrial quality,” says Thorsten Franck, an industrial designer commissioned to build Gallery concepts. Well into the 21st century, that process gives the Phantom some continuity.

Here’s the best news for those who can’t drop half-a-mil on a car: In the automotive world, what starts as a high-end option often trickles down to the mass market. Watch out for 3D-printed, dash-adorning, family crests at a dealership near you.

July 27, 2017

Jimmy Choo purchase just the start, says Michael Kors CEO John Idol

South China Morning Post
July 26, 2017

Michael Kors isn’t done with deals. The fashion house, which agreed to buy luxury shoemaker Jimmy Choo for about US$1.2 billion this week, is planning to build a portfolio of upscale brands. And that means acquiring more businesses, possibly in the same billion-dollar range, according to chief executive officer John Idol.

The company is turning to deals as it tries to regain lost sales – a slump brought on in part by its flagship brand becoming too exposed. Michael Kors plans to focus on integrating Jimmy Choo, known for its Sex and the Citystilettos, in the next six to 12 months. Then it will start shopping around again, Idol says.

The Jimmy Choo acquisition was Michael Kors’s biggest effort to expand beyond its own brand name since its initial public offering in 2011. The takeover gives the company a greater presence in higher-end luxury – and helps it play catch-up with Coach Inc., which agreed to buy Stuart Weitzman in 2015 and made a US$2.4 billion deal to buy Kate Spade & Company in May.

It also helps decrease Michael Kors’ reliance on handbags. Both Michael Kors and Coach are trying to become something akin to European luxury conglomerates, with a diversity of brands.

“These two fashion houses are trying to achieve what Kering and LVMH have done in an American way,” says Milton Pedraza, a New York-based luxury consultant.

But Michael Kors faces a critical challenge: maintaining the cachet of Jimmy Choo while building up its distribution.

“You don’t overexpose it, you don’t oversell it and overexploit it,” Pedraza says. “You can still grow viably without growing like a weed and becoming a weed.”

Like Ralph Lauren, Michael Kors opened too many stores and stretched itself too thin. The company also has relied heavily on struggling department stores and discounters like T.J. Maxx, where steep discounts hurt the brand’s image. On the Macy’s website, for example, Michael Kors’s signature US$298 tote bags are currently sold for as low as US$149.

Its stock tumbled 32 per cent in the past year as the company struggled to mount a turnaround plan.

As Michael Kors works to regain its prestige, it will close up to 125 retail locations in the next two years. The company also is renovating the stores that remain, stepping up product innovation and further cutting promotions – part of the Runway 2020 turnaround plan that Idol announced in May. The Jimmy Choo acquisition will increase the sales contribution of its footwear business to 17 per cent from 11 per cent currently, Idol says.

Michael Kors is buying Jimmy Choo from JAB Holding Company, owned by the billionaire Reimann family. It will pay 230 pence a share for the shoemaker, a premium of 18 per cent over Monday’s close. The price is equal to about 13 times Jimmy Choo’s adjusted earnings for 2017, according to Bloomberg Intelligence analyst Deborah Aitken.

Jimmy Choo rose to prominence in the late 1990s, boosted by high-profile fans, including the late Princess Diana and the fictional Carrie Bradshaw in television series Sex and the City. The brand gets its name from its Malaysian-born co-founder, who created it in 1996 with British designer Tamara Mellon.

For future acquisitions, Michael Kors could seek luxury-footwear and accessories makers with visionary designers, Idol says. The company is looking for names that aren’t already widely distributed. “We are definitely interested in having things that we can help develop.”

Source: http://www.scmp.com/lifestyle/fashion-luxury/article/2104185/jimmy-choo-purchase-just-start-says-michael-kors-ceo-john 

July 25, 2017

Wine as Beethoven … or pop tunes

In Daily
By: Philip White
July 25, 2017

 

Last summer I visited a winery tasting and sales room with a mate from New Orleans. Dr Robert DeBellevue is a music fiend as much as a top-flight wino and obsessive bird-watcher; he’s been to Australia more than 30 times pursuing such delights.

We were under deep cover: plain clothes. It was fascinating to watch the staff trying to discover the level of our vinous expertise, especially that of the tall unassuming dude with the gentle Louisiana accent.

“What do you usually drink at home?” the vendor sensibly enquired.

Dr Bob answered, in all honesty: “Grange.”

Once the staff realised he was fair dinkum – he’s one of the biggest collectors in the USA – everything changed. We got what we’d come for: a leap-frog to the top shelf.

Dr Bob’s story of discovering Grange by accident at a Queensland medical conference in 1978 is a lesson in how such passionate addictions can occur. The big door prize was a bottle of Grange. He didn’t win it, but he heard it was Australia’s greatest wine. So on his way home he called in at Len Evans’ Bulletin Place wine shop in Sydney and bought a dozen mixed vintages from the ’50s and ’60s for $6 a bottle.

The lads on duty that day obviously had no more idea of their value – or price – than the Doc, who knows all too well that price is what you pay but value, good or bad, is what you get.

Once home, he went to a restaurant with a wine merchant mate, and opened his first, the 1965. Value? He couldn’t believe his luck. He was a goner. Gone for all money.

Just as political journalists get free politics to grease the gears of their knowledge, the wine critic is exposed to great volumes of wine. One becomes very aware of the gap between top and bottom shelves, in both value and price, and remains confounded by the discrepancies in both measures.

These kidneys have processed wines of prices so far up the scale one daren’t usually admit to drinking them, much less gratuitously boast of it. One could never possibly afford to buy them. Very few can.

Probably just as well in many instances: I’ve had very famous wines at ridiculous prices that given a glass, many of our winemakers would never get to within thousands of the wine’s true price if asked to make an estimate.

Similarly, I’ve wallowed in legendary bottles whose brands, regions, or even varieties would rarely be recognised by the same crew if presented blind.

Nevertheless most who have never had the readies to risk in those nether regions above, say, the price of current Grange, have favourites they treasure and fondly recall that might cost 1 or 2 per cent of such enormous spends. What obsesses me is the mystery of how different folk measure these fluffy calibrations of true quality and fair charge.

There was a fascinating discussion around the cobweb last week when Peter Martin, the brilliant economics editor at Fairfax, reviewed and considered The Memory of Music, a new book by composer Andrew Ford, who hosts the cognoscenti Radio National program The Music Show.

Most wine drinkers have one or two easy chart-toppers they recall as fondly as a favourite ehrwurm

Andy has written about how a mighty Beethoven symphony can invite the listener into its confounding, mysterious world, while a simple formularised pop song moves instead into us.

“It is small wonder, then, that we associate pop songs with the time and place in which we most vividly encountered them, the girlfriend we had at the time, the summer holiday we were on, the college we were at,” Andy writes.

Which triggered me to write this. Consider, say, the new Domaine de la Romanee-Conti La Tâche 2011, whose 6 hectares of Pinot noir in Burgundy produced 18,196 bottles which sell around the world at between $3000 and $4500 each. This is such a disinterested, remote and easily misunderstood wine it could just invite you in like Beethoven if you’re very, very lucky.

And you listen.

On the other end of the scale, most wine drinkers have one or two easy chart-toppers they recall as fondly as a favourite ehrwurm.

“Songs are like elevators between floors of our lives,” Peter Martin wrote. “They transport us to where we were when we first heard them: the faces, the places, even the smells …

“We share our love of special songs with others who grew up loving them, but not necessarily because they are objectively special. Mostly it’s because they’ve been made special … They are precious, but not necessarily because they are good.”

And so it goes with much wine. Unless you’re feeling exceptionally carefree and bearish, it might pay to forget the Beethoven/La Tâche/Grange world and pursue more bottles of that affordable, unforgettable hit single you had with a lover at the beach, on the grave of a brother, by the campfire in the desert … learn your old favourites; their sources; their makers.

Then comes the tricky bit. In a recent white paper on the future of retail, Milton Pedraza, CEO of the New York-based consultancy The Luxury Institute, wrote: “Today, consumers are at their best. They are educated, informed, and they have a mindset that is light years ahead of retailers. Retail will have to reinvent itself in order to become flexible and constantly adapt to keep up with the consumer.”

While he referred of course to the buyers of Louis Vuitton, Ferrari, Dior and the like, this observation can be applied to retail liquor outlets: there are some wine sales people who know their field inside-out, but most are part-timer Shoppies working to pay for shoes for their kids or their own education and rent, who have bugger-all knowledge of the products they pump.

At which point it’s pertinent to go back to Peter Martin explaining that a lot of hit singles become so only when the record company pays to get songs played on the radio, citing CBS routinely paying $10 million a year to radio stations in the 1980s.

This happens, too, in wine retailing. The maker of that pallet of discount stuff inside the front door has often paid handsome rent for the floor space. That’ll be what the staff are pumping hardest.

So you have to quite literally shop about until you find somebody you can trust, who knows what you like, and can reliably recommend other wines of the type and price of that favourite that’s stuck in your brain like that catchy ehrwurm pop tune. Once you find such a vendor, be they in a shop or a cellar-door, culture them. Nurture them. Teach them about you as they teach you.

Regardless of your budget, you can save a great deal of money and have a helluva lot more fun. I’ll do my best with fairly priced recommendations.

As for the luxury goods shopper, or the aspirant, try the analogy I made reading the shiny magazine for collectible car perves, Octane:

“I had no interest in something fashionable,” wrote Winston Goodfellow, who was looking for a collectible supercar on a limited budget, “I wanted a car with desirable characteristics at a price less than those same attributes would cost elsewhere. Landmark design, history, performance, rarity, potential capital preservation/appreciation … [providing] a memorable, lingering experience that couldn’t be found anywhere else … Like stepping onto the dance floor with the most perfect partner.”

As Dr Bob discovered, sometimes, if you’re diligent and determined, you can find that most perfect partner for $6. So maybe there is something to be said for the wine retailer with such scant knowledge they don’t even know what Grange is, much less recognise a new wine likely to achieve similar glory.

If you have such luck, proceed realising this love affair is likely to end up costing you a lot more than $6 per bottle. In which case you’ll need more than ever that retailer who does know their business and who you know you can trust.

Nurture them. As the robots march in and internet shopping takes over and outlets become self-serve caverns full of muck, such caring professionals are precious indeed.

Source: http://indaily.com.au/eat-drink-explore/wine/2017/07/25/wine-beethoven-pop-tunes/

Is Tiffany & Co. Amazon-proof?

CBS MoneyWatch
By: Jillian Harding
July 24, 2017

Though many major American retailers have had their foundations shaken by Amazon (AMZN) and the wider explosion in e-commerce, Tiffany & Co. (TIF) appears to be a rare diamond in the rough of brick-and-mortar retail.

Exhibit A: The company’s stock price has jumped nearly 30 percent over the last year, even as department stores like Macy’s (M), J.C. Penney (JCP) and Sears struggle with shrinking growth.

Analysts point to several reasons why Tiffany’s, despite a recent dip in sales, remains in favor among investors. Those include the touch-and-feel experience of shopping for fine jewelry, the company’s potent brand, and a global, and well-heeled, customer base.

Another advantage is Tiffany’s small physical footprint of 125 stores in the U.S. and roughly 300 total worldwide. Its stores also are in upscale malls, which have been less affected by the mass department store closings that have affected other malls.

That helps keep Tiffany’s operating costs low and its stores churning out profits, with sales of around $2,600 per square foot in 2016 and a sparkling 62 percent gross profit margin.

Like other retailers, of course, Tiffany must cope with the impact of e-commerce and, as ever, the changing tastes of consumers. To that end, it recently named Alessandro Bogliolo, a veteran of luxury retail who is known for his ability to revamp brands like Bulgari, as its new CEO.

As with many luxury retailers, Tiffany also is looking to add millennial buyers that may be more interested in experiences and paying down student loans than spending on big-ticket jewelry. The trick is to attract younger shoppers while maintaining its core high-end client.

One way to appeal to younger buyers is by offering lower-priced fashion jewelry, which does not include gemstones and carries a lower price tag than fine gemstone jewelry. The fashion jewelry category was responsible for 33 percent of Tiffany’s sales in 2016.

Edward Jones analyst Brian Yarbrough said the company must be cautious about not devaluing its brand. While having different price points opens the door to a different mix of consumers, “You have to be careful — they had this problem in the early 90s… People who are buying $20,000 or $30,000 pieces don’t want teens running around,” he said.

Retail consultant Howard Davidowitz, CEO of Davidowitz & Associates, said that for Tiffany to retain the luxury customer, the company might consider looking to do an offshoot for fashion jewelry or acquire a brand like Pandora to appeal to a different kind of consumer.

“If you have a store and you load the store up with a lot of middle-level merchandise because you are trying to sell to tourists and everyone else, they are going to want to buy a small item and get the Tiffany bag. If you do that, you are a going to lose luxury customers.  I don’t think there’s any way to do it unless you can come up with a store within a store strategy — there is clarity in that.” he told CBS MoneyWatch.

In reporting its first-quarter earnings, the company laid out a new strategy for driving growth, including finding ways to more effectively engage with customers, adding new products, and revamping or even closing some stores.

Yarbrough said Tiffany needs to refresh its product line and improve its marketing, while adding that a greater focus on supply-chain efficiency could boost the retailer’s profit margin. But he also thinks that the company’s core strengths — its allure in overseas markets and high-end jewelry niche, in which customers want to make purchases in person — help buffer it from the competitive ravages of e-commerce.

“We think it’s a brand, as well as a retailer, that is more Amazon-proof,” he said.

Echoing this theme, Cowen senior retail analyst Oliver Chen wrote in a recent note, “In our view, Un-Amazon-Able qualities include… store and vertical integration focus at Super-Premium luxury stocks (Tiffany, LVMH, Sotheby’s),” he said in a recent note.

But Tiffany can’t rest on its diamond-studded laurels, Davidowitz said, noting that high-end clothing retailers with strong brands have been hurt by e-commerce and that Amazon could eventually decide to encroach on the jeweler’s turf.

“They have to have a plan to address the gigantic change taking place… Now is the time to do it. There is no way to say people are not going to buy jewelry online.”

Milton Pedraza, CEO of retail research group the Luxury Institute, said the key for Tiffany is to foster strong relationships with customers built on its compelling products and prestigious brand. 

“I think the world will become a barbell — at the one end it will be Amazon, commoditized products — and then there will be real luxury,” he said. “There are a lot of ‘luxury’ pretenders….Tiffany is no pretender. I think they will continue to survive and thrive.” 

Source: http://www.cbsnews.com/news/is-tiffany-co-amazon-proof/ 

May 9, 2017

Millennials think Coach is ‘boring.’ Will acquiring Kate Spade help?

The Washington Post
By: Abha Bhattarai
May 8, 2017

Luxury handbag maker Coach is buying rival Kate Spade, a brand known for its whimsical designs and colorful patterns, for $2.4 billion in cash, the companies announced Monday.

The deal would bring together two New York-based brands that have competed in recent years to win over younger customers and build a global presence.

“This deal gives Coach a real toehold into the millennial market,” said Ed Yruma, a retail analyst at KeyBanc Capital Markets.

“Kate Spade can substantially expand in China and Japan — there are so many new opportunities for revenue — and Coach is in a great position to take that on,” said Oliver Chen, an analyst at Cowen Group. “The fact that Coach has transformed itself before gives it credibility to do it again.”

Coach executives have spent three years trying to persuade customers to think beyond its ubiquitous logo bags and outlet stores. To that end, Coach introduced its 1941 luxury label, acquired shoemaker Stuart Weitzman, added more stores abroad and stopped offering as many discounts. The changes seem to be working: After years of stalled growth, profits and sales are up.

Now executives say they would like to make similar changes at Kate Spade — where 60 percent of sales come from millennials — to turn it into a larger, more global brand.

“The lessons we have learned during our own transformation provide a blueprint for guiding our strategy with Kate Spade,” Victor Luis, chief executive of Coach, said in a Monday call with investors. “We believe our extensive experience in opening and operating specialty retail stores can unlock Kate Spade’s largely untapped global growth potential, notably in Asia and Europe.”

Among his first moves, Luis said, would be to cut back on online flash sales and deep discounts on Kate Spade goods.

“These channels are profitable and can drive growth,” he said but warned that “they can lead to brand deterioration over time.”

On Monday, for example, Kate Spade’s website was touting half-priced cross-body satchels for $149 (“today only!”). Another bag, the Cobble Hill Adrien, was discounted 60 percent, from $428 to $171.

“There’s been a vicious cycle of overproducing, then discounting prices and hurting your own brand,” said Milton Pedraza, founder of the Luxury Institute, a New York-based research firm. “It will be painful to dial this back — surgical, even — but it needs to be done if Kate Spade is going to become a lean, efficient brand.”

Coach is paying $18.50 for each share of Kate Spade, a 9 percent premium on Friday’s closing price. The deal is expected to be finalized in the third quarter of this year, and executives say they hope to save $50 million by consolidating parts of the business over the next three years.

But while Wall Street seemed pleased by news of the takeover — shares of Kate Spade rose 8 percent Monday, while shares of Coach were up 5 percent — some customers were wary. Kate Spade shoppers took to social media to voice their misgivings.

“WHY WHY WHY UGH,” a user named HellOnHeelsGirl tweeted in response to the news.

“I find Coach to be boring with their brown, unoriginal bags,” tweeted another. “Kate Spade had color and uniqueness! Bye bye pretty bags.”

Coach executives said Kate Spade will remain an independent brand with its own design, merchandising, marketing and sales teams. In addition to handbags and wallets, the company has expanded into jewelry, children’s clothing and homeware.

Kate Spade founded the eponymous brand with her husband in 1993. (She recently legally changed her name to Kate Valentine to coincide with the launch of her new brand, Frances Valentine). The couple sold a majority stake of Kate Spade to Neiman Marcus in 1999. Liz Claiborne bought the brand for $124 million in 2006. (Liz Claiborne was later renamed Fifth & Pacific and is now called Kate Spade & Co.)

In December, the Wall Street Journal reported that Kate Spade began looking for a potential buyer after shareholders said a larger company could help the brand grow faster. Analysts quickly began speculating that Coach would be the buyer.

“This has long been expected,” said Dana Telsey, chief executive of Telsey Advisory Group, a research and consulting firm in New York. “Being part of a larger organization will obviously get [Kate Spade] going where it wants to, faster.”

And, she added, this is part of Coach’s long-term plan to assemble a collection of brands into what it is calling a “New York-based house of modern luxury.”

“This won’t be the last acquisition for Coach,” Telsey said. “This is part of something much bigger.”

Two years ago, Coach paid $574 million for Stuart Weitzman and hired a former Valentino executive to become the brand’s chief executive. In the quarters since, the luxury shoe brand has turned a steady profit and helped boost its parent company’s earnings.

“With Stuart Weitzman, Coach has demonstrated that it can bring in another brand and nurture it,” said Pedraza of the Luxury Institute. “Now the challenge will be, can they do the same for Kate Spade without watering it down?”

Source: https://www.washingtonpost.com/business/economy/millennials-think-coach-is-boring-will-acquiring-kate-spade-help/2017/05/08/50bd9e9c-33f9-11e7-b4ee-434b6d506b37_story.html?utm_term=.ce0be13f8676

 

Older Posts »