Luxury Institute News

March 24, 2016

Younger affluents with higher incomes more willing to pay for fine wines

Luxury Daily
By: Jen King
March 24, 2016

As a consumer’s income bracket increases, the likelihood of drinking wine once per week also rises, according to a new survey by the Luxury Institute.

The “Premium Wine Luxury Brand Status Index (LBSI)” survey found that 90 percent of affluent consumers in the United States self-identify as wine drinkers, with 58 percent drinking wine at least once per week. How often an individual indulges in a glass of wine and how much they are willing to spend on bottles is directly linked to income, insights that may provide the oenology industry an understanding on how to best market to this demographic.

“Wine is experiential. Consumers are purchasing wine at higher volumes because they enjoy the restaurant and at-home dining experiences that include a great quality wine,” said Milton Pedraza, CEO of the Luxury Institute. “Consumers will continue to spend more on experiences rather than products. Not only will they consume more wine but they will consume wine of higher quality and at a higher price.

“Wine continues to be more popular than beer or spirits, and it is acquiring a greater share in the beverage market; this trend has been evolving over the years,” he said. “Women and millennials, in particular, are consuming at a much higher rate as their buying power and connoisseurship evolves.”

The Luxury Institute’s Premium Wine Luxury Brand Status Index surveyed consumers 21 and older from households with an income of at least $150,000 a year.

Wine or reason
For the survey, affluent consumers were asked to evaluate 21 premium domestic wine brands based on the four pillars of brand value. Luxury Institute defines these pillars as superior quality, exclusivity, enhanced social status and an overall superior consumption experience.

The survey also asked participants to share which winemakers they feel are worth paying a premium price for, those they would recommend to friends and family and which wines they plan on purchasing next.

Luxury Institute found that of the 90 percent of affluents wine drinkers, 58 percent drink wine once a week, and 78 percent drink wine at least on a monthly basis. Affluent women are also more likely to be wine drinkers, with 61 percent drinking wine at least once a week compared to only 55 percent of men, who also tend to spend more on fine wine.

As consumers age, the frequency of weekly wine drinking also increases, notably after age 55, and peaks at 65 and older. Of this older demographic, 63 percent consume wine at least weekly.

Puiforcat Sommelier
Puiforcat Sommelier collection 

Similarly with age, as income rises so does the likelihood of enjoying a glass of wine during the week. Luxury Institute found that 53 percent of respondents earning less than $200,000 drink wine weekly or more frequently, with the statistic rising to 67 percent for those earning $500,000 or more in annual income.

Understandably, the price a consumer is willing to pay for bottles of wine is dependent on their income demographic. Willingness to pay for higher priced bottles increases with income and surprisingly decreases with age.

Consumers earning less than $200,000 spend $24 on average, compared to an average of $41 per bottle for those with incomes of $500,000 or more. Additionally, consumers under the age of 45 years old spend $33 on average for fine wine, but those 65 and older purchase bottles at retail stores for $23.

These averages are also dependent on occasion, with consumers typically purchasing  $28 at retail stores, $36 for a casual weekday dinner at a restaurant and $48 for weekend dining or during a special occasion of some sort.

Silversea Culinary Arts & Wine Voyages
Silversea Culinary Arts & Wine Voyages

In regard to purchasing wine at a restaurant, the survey found that seven out of eight affluent consumers do so. Twenty-eight percent do so at least once a week, with 62 percent of purchases being by the glass rather than the bottle.

The higher the income, the more likely it is that a consumer will opt for a bottle. Those with $500,000 or more in income are 63 percent more likely to buy wine by the bottle in a restaurant, spending on average $70 for special occasions and $55 for a weekday dinner.

This is much higher than the average of $48 per bottle for special occasions and $36 for weekday dining spent by affluent consumers.

It’s okay to wine a little
Recently, increased attention has been placed on the wine industry from luxury brands.

Four Seasons Hotels and Resorts, for example, is pursuing a different kind of California dreamer with its latest property.

Alongside Alcion Ventures and Bald Mountain Development, Four Seasons will open 85 guest rooms and 20 private residence villas in Napa Valley, CA in early 2018. Napa Valley’s allure to cultured luxurians makes it an obvious destination for the hotelier, which already has several California properties (see story).

Four Seasons Napa Valley
Four Seasons’ Napa Valley, CA property 

Also, Hermès-owned silver maker Puiforcat is paying homage to the ritual of wine tasting with the help of a duo of experts.

Together with sommelier Enrico Bernardo and designer Michael Anastassiades, the brand created a collection intended to bring a new experience to those who revel in the tasting or serving of the beverage. Working with external creatives helped Puiforcat go outside the expected, traditional wine glass (see story).

Winemakers should rely on experiential storytelling and outreach to pull consumers in their direction.

“Quality and experience matter tremendously,” Mr. Pedraza said. “Winemakers should use their winery and membership experiences to create a client experience that makes them feel special.

“Wine companies should also use the on-premise platform, restaurants, hotels, etc., and off-premise platform, wine and liquor stores, to deliver beyond the product and create an experience that is focused on a great quality product with a compelling story and an experience that creates a long-term relationship,” he said.

Source: http://www.luxurydaily.com/younger-affluents-with-higher-incomes-more-willing-to-pay-for-fine-wines/

February 25, 2016

SURVEY REVEALS THE 5 LUXURY BRANDS RICH GUYS BUY MOST

D’Marge
By: Elyse Romano
February 25, 2016

When you finally get around to making that billion dollar app idea, what will you do with your new-found wealth?

First you’ll build a Scrooge McDuck money pool and take morning dips. But once that’s taken care of, your closet will need a big-money makeover. A new study by the Luxury Institute reveals the luxury brands that wealthy men love most.

Each brand was rated on quality, exclusivity, social status, and self-enhancement. Of 42 famous menswear purveyors – including Alexander McQueen, Salvatore Ferragamo, Prada, Paul Smith, and Gucci – Calvin Klein topped the list of brands that moneyed men have purchased from in the last year. Calvin also scored highly on name recognition, taking a second top spot on the list of brands men are most familiar with.

Rounding out the top five brands rich guys like to buy are Ralph LaurenHugo BossBurberry, and Giorgio Armani.

Source: http://www.dmarge.com/2016/02/survey-reveals-the-5-luxury-brands-rich-guys-buy-most.html

Affluent men most apt to recommend Isaia, Loro Piana to close connections: report

Luxury Daily
By: Sarah Jones
February 25, 2016

Being popular does not always lead to strong word of mouth, according to a recent survey of affluent men conducted by the Luxury Institute.

The top five brands listed in the men’s consideration sets were not the same as the five they would be most keen to endorse to family and friends. With luxury consumers, particularly those in emerging markets, becoming more sophisticated shoppers, smaller boutique labels have the opportunity to expand awareness by leveraging the recommendations of existing clientele.

“With technology and information at the tip of everyone’s fingertips, customers are becoming much more aware and interested in the boutique and ‘in-the-know’ brands,” said Milton Pedraza, founder and CEO of Luxury Institute. “The customer is better informed not only about the product, but also every aspect of a company’s brand values down to the supply chain.

“The most recognizable brands still have a major advantage, but with the customer’s ability to access product and brand information like never before, these companies are held under a microscope and their clients are willing and able to move to another brand at any moment.”

Luxury Institute’s latest Luxury Brands Status Index polled 3,900 affluent men from the top seven wealthiest nations about 42 menswear brands. Individuals had annual household incomes of at least $150,000 in the United States; 60,000 pounds in the United Kingdom; 50,000 euro in France, Germany and Italy; 1 million yuan in China and 150 million yen in Japan.

Public perception
Consumers were asked how much they agreed with four statements about each brand in question: “This brand delivers consistently superior quality,” “This brand is truly unique and exclusive,” “This brand is purchased by people who are admired and respected” and “This brand makes its buyers feel special across the full customer experience.”

The resulting LBSI ranges from one to 10 and represents an average of all respondents’ scores for the label.

According to the study, Isaia is the most effective at making consumers feel special across the entire purchase experience. The brand is perceived as being a label respected, admired men wear and buy.

While the Italian label is not widely known, with only 3 percent of those surveyed aware of the brand, the relatively small population that is familiar feels very strongly about the brand’s quality. Seventy-five percent of those who know Isaia would recommended it to other consumers.

The top five brands based on status were all small Italian designers with comparably limited awareness. Besides Isaia, men are most willing to endorse Loro Piana, Brunello Cucinelli, Brioni and Ermenegildo Zegna.

Loro Piana Gstaad illustration
Illustration by Loro Piana

On the opposite side of the spectrum is Calvin Klein, which men were most likely to have purchased in the past year. Despite its popularity among affluent male shoppers, Calvin Klein’s LBSI score is lowest among the brands studied.

Next in popularity is Ralph Lauren, which topped the list of brands considered for the next apparel purchase. Rounding out the top five most well-known and frequently purchased labels are Hugo Boss, Burberry and Giorgio Armani.

When it comes to high prices, affluent men feel that Hermès, Brioni, Ermenegildo Zegna and Loro Piana are the most worthy of premium price points. Armani, which came in fifth, was the only brand ranked at the top of the list for price justification and purchase intent.

“Quality, while extremely important, is only one factor that contributes to the success of a brand,” Mr. Pedraza said. “While Loro Piana and Gianluca Isaia scored highest in the Superior Quality LBSI score, they were also among the lowest ranked in Brand Familiarity.

“The consumers’ considerations for next purchase coincide closely with brand familiarity, likely because customers want certainty in their purchases, especially in a downward economy,” he said. “The trusted and familiar brands provide that.”

A similar Luxury Institute survey of affluent women yielded complementary results, showing that both male and female clientele may have more esteem for the labels they are not currently buying from (see story).

Spreading word
Affluent consumers still care about a brand’s rarity, with less common labels having better appeal.

Exclusivity and desirability go hand in hand for China’s wealthy, with the same brands ranked in the top five for both characteristics in a recent study by Promise Consulting and BNP Exane.

Hermès takes home top prize for exclusivity, which measures the consistent quality of goods, the brand’s prestige, the valuation of the brand’s customers and its ability to justify a high price point. Chinese consumers are generally becoming more sophisticated luxury consumers, making for tougher competition between labels for their attention and affection (see story).

For brands with a strong, loyal following, social media makes it easier for word-of-mouth recommendations to spread. Particularly among luxury consumers, a referral can have a large impact on purchase decisions.

According to a recent report by The Future Laboratory, the luxurian demographic relies heavily on the recommendations of friends and family. Many respondents shared that they ask for information and opinions of their peers before purchasing a luxury good or service.

Overall, 23 percent of respondents refer to peers when contemplating a purchase, showing that word of mouth remains powerful in the luxury goods sector (see story).

“Isaia has an incredible opportunity to increase recognition and awareness through relationship building at the front-line level, referral programs and word of mouth generation,” Mr. Pedraza said. “Using social media platforms to appeal to millennials and producing information for customers to review will draw in new consumers.

“Because of their exceptional ranks in quality and customer experience, they have an advantage that will allow brand referrals to spread quickly.”

Source: http://www.luxurydaily.com/affluent-men-most-apt-to-recommend-isaia-loro-piana-to-close-connections-report/

February 24, 2016

What Are The Best Luxury Brands?

Luxury Institute 2016 Global Survey Utilized Those Who Know, Voted – Affluent Men From Seven Countries Rank 42 Luxury Fashion Brands, Rate Each on Multiple Criteria

Pblicty
February 24, 2016

The New York-based Luxury Institute surveyed 3,900 high-income consumers from seven countries who met the following income thresholds in local currencies: United States ($150,000); United Kingdom (£60,000); France, Germany, Italy (EUR50,000); China (1 million CNY); and Japan (¥150 million).

Interestingly, “smaller brands now more than ever are finding it easier to make a big impact on the fashion industry in a relatively short period of time as they use the latest technology to bring their designs to a global stage,” says Luxury Institute CEO Milton Pedraza. “In this kind of landscape, both bigger and smaller fashion houses need to monitor the degree to which their brands resonate favorably with their target customers.”

Respondents rated 42 men’s fashion brands (0-10) on quality, exclusivity, social status, and self-enhancement. In addition, affluent shoppers weighed in on whether they are willing to recommend specific brands to family and friends. They also indicated which fashion brands are worth the premium prices, and which brands they are most likely to consider for upcoming fashion purchases.

Luxury Brand Status Index scores range from 0-10, and are an average of respondents’ degree of agreement with each of the following four statements:

- “This brand delivers consistently superior quality.”

- “This brand is truly unique and exclusive.”

- “This brand is purchased by people who are admired and respected.”

- “This brand makes its buyers feel special across the full customer experience.”

Worldwide popularity does not equate to higher brand status. In fact, each of the top five men’s fashion brands are smaller Italian designers with which only a very few affluent men were familiar.

Gianluca Isaia is a worldwide standout for being purchased by people who are admired and respected, and was also named the best brand at making buyers feel special across the full customer experience. In addition, 75% of men who are familiar with the Isaia brand would recommend it to others. Despite being held in high esteem by affluent travelers, Isaia is not a well-known name, identified by only 3% of men surveyed.

Calvin Klein is the brand that men around the world are most likely to have purchased in the past year, even though Calvin Klein ranks last in overall LBSI score among all brands evaluated. Ralph Lauren is the brand most likely to be considered the next time a fashion purchase is made, and it is among the three most popular brands along with Calvin Klein and Brooks Brothers among affluent U.S. men.

Worldwide, the top five fashion brands with which affluent men are most familiar, and most likely to have purchased in the past year, are Calvin Klein, Ralph Lauren, Hugo Boss, Burberry, and Giorgio Armani. Armani is also one of the top five brands that affluent men from around the world view as most worthy of premium pricing. The top four are Hermès, Brioni, Ermenegildo Zegna, and Loro Piana.

The willingness of affluent shoppers to recommend a brand to family and close friends may be the best overall measure of satisfaction. On a global basis, wealthy men are most likely to recommend Gianluca Isaia, Loro Piana, Brunello Cucinelli, Brioni, and Ermenegildo Zegna.

Below are all 42 men’s luxury fashion brands under consideration in the 2016 LBSI survey:

1. Alexander McQueen

2. Balenciaga

3. Bally

4. Bottega Veneta

5. Brioni

6. Brooks Brothers

7. Brunello Cucinelli

8. Burberry

9. Calvin Klein

10. Canali

11. Dior Homme

12. Dolce & Gabbana

13. Dunhill

14. Ermenegildo Zegna

15. Etro

16. Faconnable

17. Salvatore Ferragamo

18. Giorgio Armani

19. Gianluca Isaia

20. Givenchy

21. Gucci

22. Hermes

23. Hugo Boss

24. Jil Sander

25. John Varvatos

Source: https://www.pblcty.com/article/12645/what-are-the-best-luxury-brands

Dollars & Ssense

A Montreal computer engineer has built one of the world’s most successful designer fashion platforms. Marina Strauss goes behind the scenes to learn how Ssense’s Rami Atallah coaxes shoppers into $860 sweatpants

The Globe and Mail
By: Marina Strauss
February 24, 2016

In Montreal’s shrinking Chabanel garment district where businesses increasingly struggle to stay afloat, an unlikely fashion player has emerged. Fast-growing Ssense (pronouced “essence”), which stocks hundreds of luxury brands ranging from the established Alexander McQueen to up-and-coming Vetements, is headed not by a fashion professional but a computer engineer. Rami Atallah, its chief executive officer, caters to a global clientele by selling goods mostly online (he has one store in Old Montreal), while many tony rivals have been slow to embrace e-commerce. In doing so, he is set on shaking up the estimated $396-billion international luxury fashion segment, one pair of $860 sweatpants at a time.

“[The luxury market] is definitely changing,” says the slender Atallah, clad in black Saint Laurent jeans – a label he favours for its slim fit – and Eytys sneakers. He’s sitting at a sleek marble boardroom table at Ssense’s expanding head office, where large windows provide an unobstructed view of the city centre and Mont Royal in the distance. “There is a shift from pure luxury to something more experiential. There has to be a strong message, at the end of the day. It has to bring an added layer to the conversation that is happening around fashion.”

Ssense’s customers are big spenders like marketing executives, musicians and athletes who don’t think twice about dropping an average of $900 on a piece of clothing (its priciest sale to date was a $30,000 black limited-edition Rolex). Though its roots are in men’s wear, Atallah is predicting that women’s apparel will soon dominate.

Less affluent shoppers buy single items – a $375 Marc Jacobs sailor blouse, perhaps – and mix it up with lower-priced staples, he says. Only 18 per cent of the clientele is Canadian, his figures show. Almost half live in the United States and 10 per cent in China (others are in places as far-flung as South Korea, Australia, Hong Kong and Japan). And almost 80 per cent are coveted millennials, between 18 and 34.

Contrary to the merchandising strategy of many other luxe outlets, the product selection at Ssense prioritizes statement pieces over everyday basics. Recent arrivals include looks by (from left) Sacai, Yeezy, Roksanda and Vetements.

 

Contrary to the merchandising strategy of many other luxe outlets, the product selection at Ssense prioritizes statement pieces over everyday basics. Recent arrivals include looks by (from left) Sacai, Yeezy, Roksanda and Vetements.

At just 33, Atallah shares a demographic with his customer. He got the e-commerce itch as an engineering student in the early 2000s when he bought a $200 pair of Diesel jeans and sold them on Ebay. They fetched $350, so he bought more posh denim and made $15,000 in a month. He was so enamoured with the process that he decided to build an e-commerce platform as his engineering thesis. His brothers, Firas (who now serves as chief financial officer) and Bassel (chief operating officer) joined him in launching the business. His family, who immigrated from Syria when Rami was 15, invested tens of thousands of dollars in the company.

Founded in 2003, Ssense stands out not only as a Canadian player in the luxury e-commerce field, but also for its fashion-forward merchandise mix. Spring’s women’s-wear selection includes Sacai’s contemporary lace pieces, Yeezy’s moth-eaten knits and tailored streetwear by Acne Studios. Ssense’s influence on suppliers is such that it can work directly with a label like Vetements – whose following includes Rihanna and Kanye West and whose creative head, Demna Gvasalia, recently took the reins at Balenciaga – to develop exclusive capsule lines. “Ssense are great partners and our most important account as of today,” says Vetements’s CEO Guram Gvasalia.

The website’s edgy, anti-fashion tone sets it apart in a competitive marketplace where retailers struggle to make a profit while vying with big brands that increasingly sell from their own sites.

Ssense started with a focus on men’s wear and still sells a good chunk of its inventory to fashion-forward guys. Its new campaign features Majid Jordan – the producing and recording duo signed to Drake’s OVO Sound label – photographed at the University of Toronto wearing minimal sportswear by labels such as Miharayasuhiro, Calvin Klein, Lanvin and Reebok Classics.

 

Ssense started with a focus on men’s wear and still sells a good chunk of its inventory to fashion-forward guys. Its new campaign features Majid Jordan – the producing and recording duo signed to Drake’s OVO Sound label – photographed at the University of Toronto wearing minimal sportswear by labels such as Miharayasuhiro, Calvin Klein, Lanvin and Reebok Classics.

“It’s a tough business,” says Darrell Kopke, foudner of business accelerator Institute B and former CEO of Kit and Ace, a high-end casual-wear chain. “Young people who are willing to buy a brand online that they haven’t previously experienced are not into luxury fashion.”

The online market is dominated by Net-a-Porter, which was bought late last year by e-commerce titan Yoox. But even Net-a-Porter had been in the red. Other consolidation has hit the industry in a bid to boost the bottom line. In January, Hudson’s Bay Co. snapped up Gilt.com for $250-million (U.S.), a far cry from the $1-billion valuation it received following a 2011 round of funding, while a few years earlier, Nordstrom swallowed HauteLook.com. Fashion e-tailer Nasty Gal recently cut about 10 per cent of its staff.

“There will continue to be consolidation among all these players and some will go under,” predicts Milton Pedraza, CEO of the Luxury Institute in New York.

Atallah says privately owned Ssense has enjoyed 82-per-cent compound annual sales growth since its inception, with a projected five million monthly visitors by the end of 2016. Industry estimates suggest its total annual sales are in the nine figures. What’s more, Ssense turns a profit, pouring only the money it makes back into the business rather than investing more by raising venture-capital or other outside funds, as rivals do, he says. With more than 200 full-time employees today (more than double the number it had two years ago), the company plans to expand to more than 300 this year.

Atallah used his computer engineering background to build the e-commerce platform.

 

Atallah used his computer engineering background to build the e-commerce platform.

What is key for Atallah is collecting data on shoppers who come to his site, tracking their habits and responding appropriately. For instance, the faster Ssense ships an order, the more likely customers are to shop again, he says (the site offers free next-day delivery in Canada). He’s also found that those who read the site’s extensive editorial content are more likely to eventually make a purchase.

Atallah recently hired Joerg Koch, a Berlin-based fashion guru and founder of the indie magazine 032c as the website’s first editor-in-chief.

Koch’s mandate is to focus not on touting products so much as ideas to reach the sensibilities of Ssense’s young, well-heeled customer – some of the stories are provocative. In a profile on Ian Connor, a member of Kanye West’s creative team and, purportedly, the pop culture icon’s style muse, the 22-year-old liberally uses the F-word and other potentially offensive language as he holds forth about the power of social media and creativity, while a photo shows him pensively smoking.

Kopke gives Ssense high marks for taking risks with its content. “That is the attention-grabbing headline you need to cultivate a tribe of followers,” he says. “It has to be divisive.”

Janet Bannister, a venture capitalist who was the CEO of online fashion startup The Coveteur, says Ssense is being bold by combining content and e-commerce. Many e-commerce players have tested marrying the two but abandoned it because generating editorial content is relatively expensive, she says. The content “does not necessarily result in incremental e-commerce transactions unless it is very tightly integrated with e-commerce.”

“It’s about earning the trust of the readers so they don’t perceive you as an advertisement but as media,” counters Atallah. Ssense’s data shows that consumers who click through editorial content spend 7 per cent more on their orders and return to the site 300 per cent more often than those who don’t.

Perhaps, surprisingly, Ssense’s growth strategy also involves upping the cachet of its physical stores. Currently, it operates a single flagship in Old Montreal (hanging on the rack during a recent visit: a $670 men’s camouflage T-shirt by Valentino). By next year, Ssense will move to a nearby six-storey building that’s eight times larger than its current shop. It has hired award-winning, London– based architect David Chipperfield to design the new outlet. More flagships in key international markets will follow.

Says Atallah: “We have really big ambitions.”

Source: http://www.theglobeandmail.com/life/fashion-and-beauty/fashion/the-montreal-company-shaking-up-luxury-fashion-one-pair-of-860-sweatpants-at-atime/article28845855/

February 23, 2016

These Are the 5 Brands Rich Guys Buy Most

GQ Magazine
By: Justin Fenner
February 23, 2016

Know what gets between guys (with money) and their Calvins? Nothing.

A new study by the Luxury Institute has found that men with lots of discretionary income really, really like Calvin Klein and the wares created by its menswear designer Italo Zuchelli. Of 42 high-end purveyors of men’s clothes—including Brunello Cucinelli, Alexander McQueen, and Valentino—Calvin Klein is at the top of the list for brands that rich dudes have purchased something from in the past year.

Part of what makes Calvin so successful is its name recognition: the study also found that men of means are more familiar with Calvin Klein than any other brand, which means putting Kendall Jenner and Justin Bieber in all those ads is working.

The rest of the top five brands that rich guys like to buy includes Ralph Lauren, Hugo Boss, Burberry, and Giorgio Armani. Ralph Lauren is the brand that these men are most likely to think about first the next time they go shopping, and Armani is among the companies whose clothes are viewed as actually being worth their high prices.

To find out all of this, the Luxury Institute surveyed over 3,900 men from the United States, the United Kingdom, China, France, Germany, Italy, and Japan who had to meet different income requirements: men in America and China, for example, had to pull in a salary around $150,000 a year to take the questionnaire, but Brits only needed to bring in $85,000.

The results of the survey are a clear indication that regardless of what they make, wealthy guys aren’t afraid to spend money on luxe clothing—so long as it comes from a brand with an established track record of making high-quality stuff. And here we thought half the fun of fashion was taking risks.

Source: http://www.gq.com/story/5-brands-rich-men-buy-study

Chanel defines house style in haute couture vocabulary lesson

Luxury Daily
By: Sarah Jones
February 23, 2016

French couturier Chanel is schooling consumers on its design lexicon in the latest edition of its Inside Chanel series.

“The Vocabulary of Fashion” flips through an imagined dictionary of Chanel terminology, which includes notable codes such as pearls, the camellia and tweed. Throughout this video, the brand documents the details that both house founder Gabrielle “Coco” Chanel and present creative director Karl Lagerfeld incorporate in their garments and accessories, providing proof of Chanel’s enduring, timeless aesthetic.

“In the process of recounting the elements of Chanel’s vocabulary, the brand allows for a direct juxtaposition of Coco Chanel and Karl Lagerfeld,” said said Thomaï Serdari, Ph.D., founder of PIQLuxury, Co-editor of Luxury: History Culture Consumption and adjunct professor of luxury marketing at New York University, New York. “This is not intended as a comparison against a scale of success but rather as as reminder that Coco, the creator of the language, catalyzed the creation of a brand, within which Karl Lagerfeld creates today.

“It shines equal quality and intensity of light on both designers since they both address cultural imperatives of their own time,” she said. “This is where Chanel maintains its advantage today: Lagerfeld’s creations incorporate cultural intelligence that resonate with contemporary society, a trait that has been prominently celebrated in each one of his fashion shows. The brand gives him the tools that Coco put in place and he helps advance the brand in a direction that ensures its longevity and future.”

Ms. Serdari is not affiliated with Chanel, but agreed to comment as an industry expert.

Chanel was unable to comment directly.

Branded definitions
Chanel’s video was published to social media as well as the brand’s Inside Chanel microsite.

The fourteenth chapter begins with a sketched shot of Chanel’s buildings on Rue Cambon. Zooming in, the camera takes the consumer inside of an upper floor, where a book lays on a table.

As if by magic, the animated book opens by itself, and a voiceover begins to read text as it appears on the page. First, the female voice explains that “Chanel is a vocabulary, a set of cannons, a discipline. A grammar.”

Flipping to the definitions, the book first explains “the handbag.” Inspired by the saddle bags with straps used by the military, Chanel made her own version of the “essential” lined with grosgrain, eventually adding the now-iconic quilted pattern and a chain-link strap in 1955, creating the 2.55.

As the voiceover talks, the video sketches the article of clothing or accessory mentioned, illustrating the signature look.

Next is the little black dress, which the virtual encyclopedia explains was fashioned after nuns’ habits. This new style, which freed women from corsets, lives on to this day and is reinterpreted by Mr. Lagerfeld in textiles such as jersey or silk.

Costume jewelry, which is defined as “the illumination of Gabrielle Chanel,” incorporates gemstones and crystals. These take influence from Venetian and Byzantine eras along with bygone days in England and Russia.

The camellia makes an appearance in many Chanel designs, as Coco Chanel selected it as her emblem. This scentless flower depicted in white serves as a brightness to the black attire popularized by Chanel.

Chains are used liberally as belts or jewelry, reinterpreting the metallic links with the addition of leather or embellishments. A chain is positioned at the bottom hem of Chanel jackets to perfect the form.

The inspiration behind the two-tone shoes is then revealed, as the narrator explains how beige lengthens the leg while black hides spots. The two colors also break up the foot, making it look smaller.

Much like the camellia, pearls serve as a light against Coco Chanel’s preferred black, and she would not go to her workshop without a strand as her fashionable armor. Mr. Lagerfeld continues to experiment with pearls in his design, making them a “shimmering signature.”

After seeing the Duke of Westminster’s hunting garb in tweed, Ms. Chanel was inspired to work with the traditionally Scottish textile. Made into women’s suits, the narrator says, “The tweed jacket never goes out of style.”

The parting note of the glossary is a quote from Ms. Chanel, who opines, “Fashion passes, style remains.”

“With its latest video, Chanel is re-establishing its own brand,” Ms. Serdari said. “This is a very straightforward message articulated at the opening of the video with the phrase: ‘Chanel is a vocabulary, a set of canons, a discipline, a grammar.’

“What Chanel is, in other words, is a well-defined brand,” she said. “This is extremely important, not only in the context of the previous 13 chapters that spoke to individual elements of Chanel’s mythology and heritage, but most importantly in the context of today’s fashion world and the challenges a lot of fashion brands face as they try to preserve their heritage while also move into the future.

“This is a delicate task and is best accomplished when the set of rules are clear, when the DNA can be broken down to specific elements and when the grammar set in place allows the creative director to speak the language of contemporary fashion rather than an antiquated and tired reworking of elements from times past. Chanel, the brand, has evolved from specific points of departure but continues to explore their relationship with contemporary culture proposing creations that are both recognizable as Chanel staples and innovative applications of the original.”

In a brand statement, Mr. Lagerfeld explains, “Mademoiselle Chanel handed us down a style. And the style she advocated never dates. Chanel’s success was knowing how to get across the elements of her identity. Timeless music built around five notes by which women instantly recognize the essence of Chanel: luxury and refinement.”

Inside look
The Inside Chanel series, launched in 2012, takes a detailed look at elements that make up the Chanel brand. These explore both the label’s history and the life of its iconic founder.

Chanel previously shared the personal inspiration behind its color codes with a social video.

The label’s “The Colors,” the eleventh chapter of Inside Chanel, focuses on the shades that appear as a common theme throughout the label’s fashion, accessories and beauty lines. This video helps Chanel showcase the consistency it has maintained, even with multiple designers at the helm (see story).

Chanel’s efforts to open up its brand to the world have had measured impact on its desirability and positioning.

A recent Luxury Institute study surveyed affluent women from seven of the world’s wealthiest nations to gain insights on which brands hold the most clout in terms of quality, exclusivity, social status and overall ownership. Chanel and French leather goods maker Hermès were ranked as the two fashion houses most worth their premium asking prices, followed by Christian Dior, Louis Vuitton and Prada.

Chanel was also ranked the most desirable luxury brand among wealthy Chinese women in a Promise Consulting survey, largely due to the label’s dive into its heritage through exhibits across the country.

“Let’s not forget that the audience in this case is varied,” Ms. Serdari said. “These videos are produced both for the audience at large but also for in-house consumption. It is extremely important for brands to update their own archives. Speaking of archives, let’s think of them in their most abstract meaning.

“This series of videos itself is a digital archive that has already incorporated material from the original paper archives, has enriched them with a narrative, storyline and contemporary graphic design and has released them to the new generation of customers but also fashion designers who can learn from them,” she said.

“Exploring a brand’s heritage for the sole purpose of flaunting it is a useless exercise–arrogant at its worst. To reflect on a brand’s heritage, update the format of its archives and draw lessons that can be useful within and without the brand is a test of the brand’s respect towards its audience, internal and external.”

Source: http://www.luxurydaily.com/chanel-defines-house-style-in-haute-couture-vocabulary-lesson/

February 19, 2016

Luxury Brands Putting More Weight Into Sustainability

Just Means
By: Vikas Vij
February 18, 2016

Luxury product consumers have increasingly become vocal about social and environmental causes, and more importantly, are willing to make a difference through their buying choices. Luxury companies also face increased attention from investors who want to know about a company’s sustainability practices before they invest.

Positive Luxury has a released a new report titled “2016 Predictions for the Luxury Industry: Sustainability and Innovation,” which examines impactful events from 2015 to forecast how the increasing recognition of climate change concerns will impact luxury in 2016.

Diana Verde Nieto, co-founder of Positive Luxury, London, said that sustainability will help luxury brands to de-risk their business and remain competitive. Together with the Luxury Institute, Positive Luxury conducted interviews with opinion leaders in the luxury lifestyle space, which included LVMH, Kering, Forevermark, IWC and the British Fashion Council, among others.

During the Paris climate summit, French luxury conglomerate LVMH took the opportunity to showcase its sustainability practices. LVMH, which owns brands such as Louis Vuitton and Bulgari, shared insights about its sustainability programs and strategies on its corporate Facebook account.

Kering, which owns brands such as Gucci, Saint Laurent, and Puma, is helping the world visualize its environmental impact with an interactive environmental profit and loss statement. To ensure transparency, Kering has presented this interactive statement on its website, depicting the various steps in production and environmental categories where it is making an impact.

Brands such as Saint Laurent and Christian Dior have implemented tactics that are environmentally sound. For instance, three Saint Laurent storefronts have been given the highest LEED certification, while Dior has incorporated responsible lighting in a number of its international boutiques.

Additionally, brands are becoming more conscious about protecting the resource supply chain. Prada has purchased the French tannery Tannerie Mégisserie Hervy to ensure the skills held by its workers are preserved. In a similar move, Chanel purchased French lamb hide tannery Bodin-Joyeux in 2013.

Source: http://www.justmeans.com/blogs/luxury-brands-putting-more-weight-into-sustainability#sthash.4tGmYE1y.dpuf

February 8, 2016

Luxury Brands Can No Longer Ignore Sustainability

Harvard Business Review
By:  Andrew Winston
February 8, 2016

If I asked you to picture the consumer luxury market, you might imagine jewels, sports cars, watches, premium drinks, high-end shoes and apparel, and so on. A combination of high quality, glamour, celebrity, and attitude. With a few exceptions, it’s been an industry not traditionally associated with concerns about environmental impacts, human rights, and wellness, even while those trends have been sweeping through the mainstream consumer products sector. But according to a new report, 2016 Predictions for the Luxury Industry: Sustainability and Innovation, that sustainability gap is closing fast.

Two organizations that work closely with high-end product companies, the Luxury Institute and Positive Luxury, produced the study (disclosure: I’m on the latter’s informal advisory board, but I had no involvement in the research). Diana Verde Nieto, the founder of Positive Luxury and main author of the study, makes a compelling case that sustainability and social responsibility are no longer nice-to-have for luxury brands — they are now requirements.

The report lays out a few key pressures.

First, the direct pressure: the laws are changing. The report points to the passage of the Modern Slavery Act in the U.K. in 2015, which requires larger companies doing business in Britain to publish a board-approved, public annual slavery and human trafficking statement. This kind of law clearly drives much more transparency and tracking up the supply chain. And it’s a good thing, as 71% of U.K. retailers and suppliers think it’s likely there are slaves in their supply chain.

Second, the indirect and more powerful pressure: social norms are changing, starting with high-profile tastemakers. Celebrities are more invested than ever in sustainability. Leonardo DiCaprio and Mark Ruffalo have produced movies and started organizations to tackle climate change and promote renewable energy. Harry Potter star Emma Watson is a vocal advocate on gender equality while also appearing regularly in fashion magazines. These names and others are lending their clout to the social and environmental agenda. Given their prominence in the fashion and luxury worlds, their beliefs, statements, and demands on companies matter.

On a larger scale, the expectations of companies are changing generationally — Millennials have different views on how companies should act. The report cites research showing that “88% of UK and US Millennials and Generation Xers believe brands need to do more good, not just ‘less bad.’” This generation is questioning consumption in general – a majority say they are spending more on experiences (meaning, less emphasis on stuff), which is a threat to the luxury world. And they are driving a “clean label” trend, where companies feel pressure to explain what’s in everything and where it came from.

Third, the report highlights the fact that the investment community is waking up to the value to consumer brands of managing environmental and social issues well. There are some early shoots of evidence to back this idea up: in 2015, a Morgan Stanley analyst raised the price target on some mainstream apparel players like Nike based on their sustainability performance. The report sees this pressure coming to luxury companies soon.

Finally, there’s the harsh reality of biophysical limits seriously compromising these companies’ ability to source their products. Luxury goods require digging up, growing, and processing materials throughout the value chain, and that’s all getting tougher. According to Verde Nieto, these are not just ethereal brand risks about labor or image, but actual business continuity risks. Climate change is changing water availability and crop production around the world. That affects cotton-based products and, as Verde Nieto says, cashmere and angora, for example, require a great deal of water to process.

For gems and minerals, Verde Nieto sees a range of challenges from the energy required in production to general availability. With slight hyperbole, she says, “we’re out of gold basically (almost all the gold we use is recycled), various substances and ingredients in skin care are threatening the environment, diamonds are scarce, and exotic skins are in trouble…basically — and this is the big ‘a-ha’ — some of the raw materials, crucial to the luxury industry, are under threat.”

The leading companies in this space have been acting on many of these pressures for years. Both Tiffany and Forevermark, a Debeers company, have certified their diamonds using the independent Kimberley Process as “conflict free.” L’Oreal has quietly been making itself one of the global leaders on climate change and renewable energy. The company has already cut greenhouse gases by 50% and has new targets to be carbon neutral (without buying renewable energy credits) by 2020.

Now all the big brands are jumping in. One of the report supporters, French luxury conglomerate LVMH, has been, according to Verde Nieto, conducting extensive lifecycle analyses of their business lines. Others like Veuve Cliquot Champagne are looking hard at packaging now. They’re all figuring out where their biggest risks and opportunities lie. The report has some additional good case studies in the watch, leather, diamond, and eco-tourism realms.

None of this is easy or obvious. This industry has some tough history to reconcile. “Blood diamonds” were not just a campaigners evocative phrase, but based on real money flows to brutal dictators. Slavery is still a problem. Mines are immense operations that can impoverish people and land — or create jobs and build the economy.

But in our transparent world, the risk of not tackling sustainability is extremely high for this sector. As CSR and sustainability evangelist John Elkington told the report writers. “The implicit promise [in luxury] is that the consumer need not worry about anything. Everything is taken care of… Until it isn’t, at which point the whole impression of invulnerability and perfection can deflate.”

An unsustainable piece of clothing or jewel is, in the end, anything but flawless. As we all wake up to that reality, the luxury companies have no choice but to act.

Source: https://hbr.org/2016/02/luxury-brands-can-no-longer-ignore-sustainability?

October 22, 2015

Tesla, Musk shine from free celebrity marketing, but will it last?

Automotive News
October 22, 2015

SAN FRANCISCO (Bloomberg) — When “The Late Show With Stephen Colbert” debuted on CBS last month, the host chose Tesla CEO Elon Musk as one of his first guests.

Colbert, who commutes into Manhattan in a Model S sedan, took his enthusiasm for Tesla Motors Inc. one step further in an episode last week. He spoke for almost six minutes about his car’s latest autopilot features, the march toward self-driving vehicles and efforts by competitors Apple, Google and Uber.

“I love my Tesla — it’s so fast, it’s all electric,” he told viewers. Comparing his car to a laptop computer on wheels, he said that with the company’s latest over-the-air software update, “Tesla owners woke up to find their cars could drive themselves.”

That glowing Colbert report shows how Tesla benefits from celebrity enthusiasm — for free, from customers that include Oprah Winfrey — to promote the brand. Throw in some viral Internet clips, test drives and customer referral programs, and Tesla is able to spend money on developing products instead of on marketing. In stark contrast to other automakers, Tesla doesn’t currently pay for traditional media such as television, radio or print advertising or celebrity sponsors.

“The Colbert segment was amazing because it was so long, it was Colbert, it was Colbert’s new show and instead of being playfully sarcastic he was overwhelmingly positive,” said Lincoln Merrihew, senior vice president of client services for Millward Brown Digital in Boston, who first watched the Colbert clip on YouTube. “The magic of a celebrity evangelist is that they love a product so much that they will talk about it for free. It was more than a simple endorsement; it was more like a commercial.”

That air time is valuable. On average, 30-second spots on the “Late Show” will average $38,400 from Colbert’s debut through the end of the fourth quarter, according to media-cost forecaster SQAD Inc. It helps, of course, that the 44-year-old Musk is a brand and a celebrity in his own right — making him a worthy guest — as well as a deft user of social media.

Stock decline

At the moment, Tesla can use a little extra fan love. Its once high-flying stock has fallen to the low $200s from its July peak at $282 in the wake of last month’s long-awaited introduction of the company’s Model X SUV. Three analysts have cut their price targets amid concerns that Tesla, which aims to deliver at least 50,000 vehicles this year, faces a steep production ramp in the fourth quarter.

On Tuesday, the Model S lost its recommendation from Consumer Reports after owners complained about quality issues as mundane as a squeaky sunroof to major issues like the electric motor needing to be replaced, the publication said in its forthcoming December issue. The Consumer Reports news sent shares tumbling 6.6 percent to $213.03, its biggest drop since Aug. 6.

Musk has pushed back on Consumer Reports via Twitter, saying the publication’s reliability survey “includes a lot of early production cars. Already addressed in new cars.”

Fan power

The auto industry already is also legend with celebrity ads, from Matthew McConaughey’s oft-parodied commercials for Lincoln to Clint Eastwood’s two-minute “It’s Halftime in America” spot for Chrysler, a hit of the 2012 Super Bowl.

For Tesla, the celebrities do the work on their own accord, not for a paycheck. Stars such as actress Alyssa Milano, director Jon Favreau, and Teller, the silent partner in the magic duo Penn & Teller, have praised Tesla or promoted the brand to their social-media followers in an increasingly fragmented media market.

Teller’s “customer story” is one of several that can be read in full on Tesla’s website. Oprah shared photographs of her recently purchased white Model S with her millions of followers on Instagram and Twitter. Colbert talked in detail about autopilot — a Tesla product announcement — just as it came out.

“On a daily basis, Stephen brings a smart comedic voice to all types of topical issues,” said CBS in a statement. “We don’t tell him what to say, but we certainly enjoy it.”

Automotive advertising

Other automakers usually have to rely on traditional marketing. General Motors, Ford Motor Co. and Fiat Chrysler Automobiles all rank among the top 10 advertisers in the U.S. in terms of money spent, according to Advertising Age, an affiliate of Automotive News. In 2014 alone, GM spent almost $1.7 billion on advertising in the U.S., according to Kantar Media; Ford spent $841 million and Fiat Chrysler spent $1.1 billion. Those figures are just from the manufacturers and don’t include the vast millions that dealerships spend as well.

In its annual report filed earlier this year, Tesla notes that “we have been able to generate significant media coverage of our company and our vehicles, and we believe we will continue to do so.” But the Palo Alto, Calif.-based company also notes that “to further promote our brand, we may be required to change our marketing practices, which could result in substantially increased advertising expenses.”

For now at least, Tesla’s strategy is working.

“Colbert benefits from talking about Tesla, because it’s a brand that his millennial audience associates with,” Milton Pedraza, CEO of the Luxury Institute, said in an interview. “It’s a massive multiplier effect that is equivalent to spending tens of millions of dollars on media. Tesla doesn’t advertise: They are playing the game of not playing the game, and you win by that. They are doing it brilliantly.”

Source: http://www.autonews.com/article/20151022/RETAIL03/151029937/tesla-musk-shine-from-free-celebrity-marketing-but-will-it-last

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