Luxury Institute News

April 12, 2013

Auto consumer mindset changing dramatically

Ford exec says buyers want cheaper, well-equipped mobile technology platforms that sip fuel

By Keith Morgan
Vancouver Sun
April 11, 2013

Ford and Lincoln global marketing executive vice-president Jim Farley  recently delivered the keynote address to the 2013 New York International Auto  Show. Today, we publish extracts from his speech which offered a view on the  role the recession has played in shaping a new consumer outlook.

While the recent recession has fundamentally reshaped the automotive industry  over the past few years, the real game changer may come from a new  post-recession consumer mindset, demographic shifts and how automakers respond,  says Farley.

Click the link to read the entire article which includes findings from a recent Luxury Institute survey: http://www.vancouversun.com/cars/Auto+consumer+mindset+changing+dramatically/8230977/story.html

March 18, 2013

Women Earn The Big Money In Wealthy Families, And Decide How It’s Spent

(NEW YORK) March 18, 2013 – The independent and objective New York-based Luxury Institute surveyed wealthy women from U.S. households earning at least $150,000 a year about their economic situation, personal aspirations, family responsibilities and companies and industries successfully marketing to them.

Wealthy women are economic engines within their families, with 67% employed or running their own businesses; 41% report earning more than half of their family’s total income, up sharply from 27% who were bigger breadwinners in 2008. Women have been earning college degrees at higher rates than men since 1985, and educational attainment has produced economic muscle: median salary of the working women surveyed is $181,000; 66% earn more than $150,000, and 20% have annual incomes of $300,000 or more.

“Luxury executives should know that given the trends we see now, we predict that the Millennial women will achieve parity or surpass the achievements of their male counterparts in managerial, entrepreneurial, income and net worth levels in the next 2 decades,” says Luxury Institute CEO Milton Pedraza.

Despite career prowess, 90% of women 35 and older say that their most important aspect of life is family, and 34% say that their long-term career goal is to retire and enjoy more family time. Women control a majority of spending in 78% of households, with food (85%), clothing (78%), shoes (78%), and vacations (62%) also especially dominated by women.

“Shifting gender roles require brands in traditionally male dominated industries to connect with strong, successful women, but new marketing campaigns are not enough,” says Pedraza. “Companies must drive engagement through channels like social media and one-to-one communication with empowered sales professionals who serve as brand ambassadors.”

About Luxury Institute (www.LuxuryInstitute.com)
The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

March 6, 2013

Why Care About Gen Y?

Aloft Hotels sees them, as well as Millennials, as the perfect target to build lifelong loyalty. Here’s how they are achieving that goal.

By Caryn Eve Murray
Hotel Interactive
March 05, 2013

The generation is celebrated for its youth, momentum, propensity for bold statements and for always going new places. That’s how Starwood describes Aloft, a relatively new generation of its hotels being welcomed into the hospitality world. A baby born in June 2008, Aloft Hotels could well be called the Millennials of the marketplace. This upstart is defined by loft-like interiors, dynamic public spaces for socializing without a loss of privacy, a bar scene showcasing up-and-coming music talent and guest rooms offering easy hookup to personal media.

So it comes as no surprise that Aloft Hotels are, in fact, something of an architectural counterpart to the very generation of guests they target: travelers born sometime in the early 1980s and beyond, now ripening into successful and peripatetic young adulthood. These Millennial Generation guests are gaining recognition as an enviable catch for anyone, and Aloft in particular.

“When Starwood thought of launching Aloft it was looking at the changing trends in the marketplace and understanding how travelers are traveling differently – the different demographics as well as the psychographics,” said Paige Francis, vice president of global brand management for Aloft. “The next generation of travelers would be the Millennials and those that share that mindset as well.”

In other words, said Francis, the brand recognizes that youthful thinking isn’t just found in the very young. “Who is actually coming to our door?” she said. “As you know, this appeals to a larger variety of the population, depending on their mindset. The self-driven early adopter, tech-savvy social person isn’t just limited to an actual age segment.”

Indeed, as Millennials come of age, suitcases in hand, they become a force the greater industry cannot ignore. Even the most traditional bed-and-breakfast segment has had to come to grips with the question of whether to shake the dust off its doilies, and strip its floral wallpaper, judiciously, to attract them.

“It’s not that baby boomers are exiting, they are still going to travel,” said Milton Pedraza, chief executive officer of the Luxury Institute, a ratings and research company that focuses on high-end branding. “But the emerging Gen X and Gen Y, the Millennials, are traveling too. Their world is so interconnected, they learn about new destinations and want to go sooner than we ever did as baby boomers…Global travel today is second nature, especially to these American consumers.”

And unlike the backpack-toting, hostel-focused youngsters of their predecessor generations, said Pedraza, “they are not into roughing it. They want to experience luxury and at least a minimum level of quality in the premises and amenities. They are not willing to compromise on that and they shouldn’t. The world has much higher standards now for travel and hospitality and a lot of options.”

The rapid expansion of Aloft bears this out. Some 63 hotels have been launched so far, with another five to open this month, said Francis. “Clearly this is a product that has been answering a need,” she said. That is as true in the U.S. as it is overseas, where Aloft is making advances into China, India, Malaysia, Latin America and Thailand.

“Generation Y is poised to become the largest consumer buying group,” Francis said. “They are a very quickly growing group defining the present and will continue to define our future.”

But inns and bed-and-breakfast establishments, which grew popular by serving up tidy slices of the past, have been rethinking their Millennial strategies too. In the spirit of last year’s concurrent presidential campaign season, innkeepers launched “Doily Decision 2012,” a tongue-in-cheek social media debate that tackled the importance of adherence to old-time traditions in the face of a youthful, text- and WiFi-driven world of travel.

“A lot of B&Bs have transcended the doily,” said Jay Karens, chief executive officers of the Professional Association of Innkeepers. But, he said, appealing to the Millennials is not just about tossing out the old – or keeping it – or necessarily being gadget-friendly.

“That’s a fallacy,” he said, referring to the notion that if you capture cutting-edge tech, you capture the Millennials’ hearts and wallets too.

“Where B&Bs are hitting the sweet spot is a more contemporary experience.” He said B&Bs appeal to Millennials now by offering an antidote to what he called “the typical corporate experience.” That often means a slightly more modern environment and a strong desire to build relationships, one-on-one.

The most successful hoteliers build their Millennial business on relationships, not transactions, said Pedraza. “For follow-ups, they don’t just send a generic email, they make a phone call. They suggest something for next year’s vacation. This is authentic human interaction as opposed to commercial gobbledygook speech.”

Millennials are being courted along the whole spectrum of inn styles, he said. “They run from the old-fashioned Victorian to the super modern and super elegant with everything in between,” Pedraza said. “There are plenty of innkeepers on that bell curve, offering the modern sophisticated experience. It might be a 200-year-old home but they have updated their interiors so it looks more like Pottery Barn than Laura Ashley.”

In Vermont’s Mad River Valley, Janice Hurley Hollis opted to mix allegiance to tradition with an advance into the bold and new. Hollis, operations manager of The Round Barn in Waitsfield, Vt., took stock of the 12-room inventory at the 19th century property and charted a varied course.

“Our travelers are changing,” she said “and we were thinking of what we can do at the property to make sure we attract all kinds of guests. We looked at our rooms and asked, ‘are there one or two rooms we could change the style in so we could have broader appeal?’ In our property we have a lot of traditional rooms done in the style you would expect. We went in one of the rooms, the Wait Room, and we did it over as a more modern style that doesn’t have wallpaper. We painted it a nice relaxing bluish tone with chocolate browns. It is not as busy as some of our other rooms.”

Much of the accommodations do, however, remain intact. “There are people who want to come and feel like they are staying in an older farmhouse and they want the wallpaper and that feeling,” she said. “We would never change the whole style of the property.”

Still, with the Wait Room as the inn’s first of a handful of Millennial-driven changes, the Round Barn also ramped up its digital welcome mat, updating its website and strengthening its Facebook presence. Online marketing means bold and beautiful imagery, she said. “We use lots of visuals,” she said. “And we stick to the three rules of marketing: People don’t read, people don’t read, people don’t read.”

She believes the inn and B&B segment is the market’s most Millennial-friendly because of its easy flexibility. “You always have to be conscious of who is the next traveler, and how do we maintain the balance of appealing to our current guests while appealing to our future guests. Finding something that appeals to everyone. B&Bs can do that. You are not coming to a hotel where the whole hotel appeals to one type of traveler.”

But whether the property is an inn, a major hotel or even a cruise line or tour, the ingredients for appeal are the same. “You need to have a bold customer culture, something that differentiates you and the way you deliver your experience,” said Pedraza. “The way people greet you, check you in…the people you interact with have to create a fabulous human experience.”

In the end, he said, it comes down to living up to the Millennials’ own expectations. “They think: ‘You have collected data on me, you know my needs and my desires and you had better deliver them, or I will consider your kind a dinosaur in the digital age.’….So don’t neglect the Millennials, they are the future.”

http://www.hotelinteractive.com/article.aspx?articleid=28468

October 3, 2012

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

By: Larissa Faw
Forbes
October 2, 2012

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

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

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

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

May 21, 2012

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

By Larissa Faw
Forbes
May 18, 2012

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

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

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

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

 

April 9, 2012

How Luxury Brands Can Prepare for Affluent Millennials

By Duke Greenhill
Mashable
April 8, 2012

Echo Boomers. Generation Y. Millennials. No matter what you call them, shoppers between 18 to 29 years old are the fastest-growing luxury consumer segment. In 2011, they spent 31% more on luxury purchases than they did the year before, and they did it at full price. Compare that to Baby Boomers, who only saw a paltry 28% growth in spending, and purchased the bulk of their luxury goods on discounted flash-sale sites.

Not surprisingly, by 2015, Millennials are expected to be the largest consumer demographic and nearly a third of the U.S. population. As the founder of one of New York’s top luxury branding and marketing consultancies, I hear a lot of chatter about how luxury brands will soon have to adapt to this market change. What these statistics should really signal is the need for luxury brands to start adapting their strategies now. Below are three key shifts to keep in mind when preparing for the dawn of the luxury-loving Millennial…

Click the link to read the entire article: http://mashable.com/2012/04/07/luxury-brands-millennials/