Luxury Institute News

December 2, 2016

55pc of affluents deem luxury prices unjustified by product value

Luxury Daily
By: Staff Reports
December 2, 2016

Image courtesy of Printemps 

Quality tops attributes such as craftsmanship and service as the number one defining attribute affluent consumers use to discern a good’s luxury status, according to new research by the Luxury Institute.

Behind quality comes customer service, which more than half of consumers mentioned as a characteristic they associate with luxury. Despite global trends, residents of individual nations have varied priorities when it comes to luxury goods, with differing sentiments towards the value of products.

Luxury Institute’s survey was conducted in the United States, the United Kingdom, France, Germany, Italy, Japan and China, with respondents from about the top 10 percent of earners in their respective countries.

Divided priorities

Customers in the U.K. and the U.S. are more apt than respondents from Japan and China to mention superior customer service as a necessity for luxury. A superior design ranks third, but those in the U.K. and U.S. mention it more frequently than those from other countries.

While superior craftsmanship comes in fourth among global consumers, this attribute is mentioned by 59 percent of U.S. residents, compared to 33 percent across the other six nations.

Personalized offers, loyalty programs and value add-ons were mentioned by less than a quarter of consumers, but those who do define luxury by these points are inclined to say they are improving.

There is a disparity about the general quality of luxury goods. Those in China and Italy are more likely to report improvement in quality, while those in the U.S. are more apt to believe that luxury goods’ quality is declining.

When considering the ideal front line staff in a luxury boutique, courtesy and politeness are most important to affluent shoppers. Product expertise is a close second, with more than half saying they look for this knowledge in the associates they deal with.

 

Hugo Boss On Demand

Boss on Demand

The survey participants mentioned jewelry and hospitality brands as having the best customer service staff, while real estate and designer shoes got the least nods for their quality of service.

“From our numerous one-on-one discussions with luxury CEOs, we’ve often heard that a majority of success stems from superior products, but the rest depends on relationship-building expertise and execution of front-line teams,” says Milton Pedraza, CEO of the Luxury Institute. “Half of affluent consumers we just surveyed say that luxury sales associates deliver a personalized and relationship-oriented experience, which is encouraging, but it also suggests plenty of room for improvement when it comes to delivering a superior customer experience.

Even with the rise of digital channels, frontline sales staff are far from obsolete, according to results of a survey conducted by InMoment.

The bricks-and-mortar shopping experience no longer exists in a vacuum, with consumers arriving at a store armed with information from research conducted before or even during their trip. However, while shoppers spend about twice as much in-store when they navigate to a brand’s Web site while shopping, their expenditures grow to four times more if they interact with both an associate and the brand’s Web site while in-store (see story).

Source: https://www.luxurydaily.com/55pc-of-affluents-deem-luxury-prices-unjustified-by-product-value/

 

November 14, 2016

Eyeing incipient need, Luxury Institute founder launches Retail Performance Academy

Luxury Daily
By: Mickey Alam Khan
November 14, 2016

Milton Pedraza, CEO of the Luxury Institute and a luxury marketing expert who has helped brands such as Gucci, Bottega Veneta, Intermix and Porsche, has set his sights on one of the most challenging aspects of retail: qualified talent.

As founder of the newly launched Retail Performance Academy, Mr. Pedraza aims to introduce high-caliber training, coaching and networking to select students who will then graduate onto retail jobs in luxury and other sectors within the $5 trillion retail business in the United States. The non-accredited Elite Retail Program will run 10 weeks, three nights a week, followed by nine months of coaching and mentoring.

“There is a crisis today in retail,” New York-based Mr. Pedraza said. “Simply put, there are many high-paying, front-line jobs in retail and a lack of qualified candidates.

“Many retail executives that I meet lament privately that the retail industry fails to select and educate most of the people they recruit,” he said.

“Meanwhile, the industry bleeds associates, and clients, who are dissatisfied with the experience, even at top-tier luxury brands.”

In this Q&A, Mr. Pedraza discusses the state of retail and why it cannot hold on to its talent, especially sales-level staff, how the Retail Performance Academy meets a need, the process of recruiting and placing students and the role of bricks-and-mortar stores in an era where shopping and buying are increasing migrating to online and mobile. Please read on.

In an age of growing digital sales, including ecommerce and mobile, why come up with the idea of the Retail Performance Academy?
It’s a question of quality over quantity.

Digital will continue to grow, and there may be less stores, and less sales associates, relatively speaking.

However, according to the 2016 World Economic Forum report on “The Future of Jobs,” specialized sales representatives will always be in high demand, second only to data analysts.

Think of what Apple would be without its front-line associates.

Retail Performance Academy is an innovative training alternative to college, and/or supplementary to college. It is modeled after a post-graduate invitation-only program I have been attending at Stanford Business School on Scaling Up Excellence.

There are three secrets to the success of Stanford and other great educational institutions such as Harvard.

First, selecting the best people.

Second, having the best teachers, educational content and standards.

Third, maintaining a network that helps the alumni thrive, especially after they graduate.

Similarly, Retail Performance Academy will select applicants with great people skills through a rigorous interview process similar to the Ritz-Carlton and Apple.

We expect to accept only 10-20 percent of applicants.

Once accepted, students will master client relationship building expertise through deliberate practice and coaching methods pioneered and proven with top-tier brands.

Then, we will use best efforts to fast-track these students into our network of top-tier retail brands.

After students are certified and go to work at a top-tier brand, they will continue to receive coaching and mentoring from advisors for nine additional months to help them be effective on the job.

There will be an extensive alumni and retail executive network that will scale and thrive over time.

The famed Rodeo Drive in Los Angeles' Beverly Hills areaThe famed Rodeo Drive in Los Angeles’ Beverly Hills area

Retail’s in quite a dodgy shape right now, over-stored, weakening customer and employee loyalty and the threat of Amazon. Is customer-ready talent key to bringing back some of the shine?
Yes, retail is undergoing a fantastic revolution.

A tremendous amount of creative destruction and innovation is required.

Brands are going to have to differentiate dramatically, or die.

Technology will be part of the solution, but great technology is usually a commodity, and rarely a differentiator.

The algorithmic approach to personalization will only go so far with human beings.

One small, but telling, piece of evidence for the need for human expertise and emotional connection is the fact that the use of top-tier travel agents by millennials is up 50 percent in the past year.

In many industries, the synthesis of technology with high performers is the winning formula.

I don’t know one retail executive who doesn’t state that the performance of front-line people is in the top three of the critical success factors.

The relationship skills provided by Retail Performance Academy will prove to be one of key innovations that will be required to overcome the challenges of retail.

Which class of retailers are you specifically targeting with the academy?
We are targeting online and omnichannel specialty, premium, and luxury retailers in dozens of categories.

These are the classic high-value categories such as apparel and accessory, jewelry, watches, technology, automotive, appliances and furniture.

Department stores are also going to a concession model, and many people believe that the boutique retailer is coming back with a vengeance.

All of those retailers are starving for associates who can build a portfolio of loyal clients.

Only a few retailers are skilled at selecting and training, and even they can’t keep up with the demand for top people.

New York's Fifth Avenue near Rockefeller Center and SaksNew York’s Fifth Avenue near Rockefeller Center and Saks

How will you source students?
We believe there are several sources of students.

First are the high school graduates with good grades, who may not want to attend, or be able to afford, college.

Then there are people who don’t graduate, who account for 45 percent of all people who enter college.

Then there are the 44 percent of college graduates who are underemployed – think about baristas, valets, et cetera: honorable, yet, low-paying jobs.

There are also career changers such as the millions of mothers re-entering the work force, or people who retired early, and want to get back to work.

Many people currently working in retail may have the people skills, yet, are not getting the training, practice, coaching and important network access they need to reach their true earning potential.

Finally, there are thousands of small high-end retail business owners. Many of those people have great people skills and can develop a career as an elite retail performer.

As [Fortune magazine writer] Geoff Colvin states in his book, “Humans are Underrated,” “Being a great performer is becoming less about what we know, and more about what we are like. The most valuable people are increasingly relationship workers.”

Eyes on the prizeEyes on the prize

In terms of the faculty, are you turning to experienced retail executives or is it you and your team?
I will personally train the initial classes along with top-tier retail experts. Then I will focus on scaling the business with excellence.

We currently have a waiting list of top retail executives at all levels who would love to teach, mentor and coach our students using our proprietary methods.

We intend to scale slowly.

As my Stanford Professor, Dr. Huggy Rao, likes to say, “Sometimes you have to scale slowly to scale with excellence.”

Milton Pedraza is CEO of the Retail Performance Academy and the Luxury InstituteMilton Pedraza is CEO of the Retail Performance Academy and the Luxury Institute

So what kind of training with these students receive that will make them store-ready upon graduation?
We teach students to be the entrepreneurs of their lives.

Initially, students will receive training on determining their life purpose and true values.

Then, they will have extensive field projects and presentations, and rigorous team exercises using deliberate practice, particularly on building extraordinary client experiences and mastering emotional intelligence skills. They will continuously practice communication skills. They will learn to self-assess, confront the reality of their behaviors, and how those behaviors measurably affect high performance.

Finally, they will have exposure to retail experts and top executives who will mentor and coach them on the opportunities of a high performance retail career.

What will the curriculum look like?
The curriculum is based on training and development science gathered from the military, top-tier hospital operating rooms, top-gun pilot training, cognitive psychology and our expertise in achieving documented results with luxury brands.

The methods are designed to minimize errors and optimize results.

The program content is confidential, but let me give you some concrete examples.

Most retail associates receive ineffective robotic training, and they will never be allowed to be creative and participate in designing a retail-training program.

Retail Performance Academy students, working in teams under the guidance of expert instructors, will create a comprehensive retail-training program. They will rigorously practice training other teams, and receive instant feedback. This achieves a high level of mastery.

As another example, the students will learn the skills of measuring and assessing their own behaviors daily. They will become self-coaching entrepreneurs within the brand.

We know of no entity, even the Ivy League, that includes such a hands-on, rigorous level of practice.

Milton Pedraza at Stanford UniversityMilton Pedraza at Stanford University

How will you win accreditation from retailers for your organization?
We are not seeking accreditation, nor do we expect students to be funded by government loans.

The Retail Performance Academy program’s reputation will be based on how well we select, train and help place our students at top-tier brands.

As with Luxury Institute, our performance will be judged by documented results over time.

After speaking with more than 50 top retail executives, all have expressed interest in fast-tracking our students through the interview process.

Over time, as our graduates achieve great results, our reputation will grow and that will be more credible than any accreditation can ever offer.

It’s surprising that various trade associations haven’t allied with universities to produce retail sales talent for the retail business. Why do you think that’s the case?
The importance of properly selecting and training front-line professionals has not been fully leveraged.

No educational institution currently offers world-class training in front-line selling skills.

A few certificate programs exist that have online modules and/or classroom lectures.

We believe that high-performance relationship building can only be learned through rigorous, live deliberate practice.

There is a crisis today in retail.

Simply put, there are many high-paying, front-line jobs in retail and a lack of qualified candidates.

Many retail executives that I meet lament privately that the retail industry fails to select and educate most of the people they recruit.

Meanwhile, the industry bleeds associates, and clients, who are dissatisfied with the experience, even at top-tier luxury brands.

Retail Performance Academy is an innovative solution to the crisis.

Good service sparklesGood service sparkles

How much are you charging students for the course?
The fee is $9,500 for a one-year program that includes 10 weeks, three nights per week, plus nine additional months of coaching and mentoring.

We expect that most of those accepted will work while attending our program.

Over time, we will provide full, or partial scholarships, at our discretion, to applicants who demonstrate a need.

Placement services – are you offering that as well as any apprenticeship?
Using our vast retail network, we will provide a best efforts service of fast-tracking the resumes of our students into top-tier brands.

Having the 14-year proven track record and network of Luxury Institute is helpful in gaining initial credibility and achieving interviews for our students.

The Retail Performance Academy is a step in the education direction, away from your consultancy leitmotif. How are you going to juggle the two?
Retail Performance Academy is simply another way to serve brands, although with a wide scope, beyond luxury brands.

Luxury Institute will always remain a boutique research and high-performance consultancy specialized in luxury.

Retail Performance Academy is geared to be a larger, yet selective, training program that serves, first and foremost, student careers and lives. The students, in turn, will serve the top-tier brands and their clients.

Retail’s known for its high rate of talent churn. Will this training help stem that?
Yes, we believe the future of front-line retail will be revolutionized.

Front-line associates will be selected for great people skills, much the same as coders today are selected for their great technical skills.

There will be educational specialization in high-performance relationship building skills based on expertise in emotional intelligence.

While most people think emotional intelligence is innate, the research shows it can be taught to anyone.

Those born with an innate talent for emotional intelligence will do far better at client relationship building if they apply that talent.

Retail Performance Academy will deliver Ivy League quality selection, training and networking to our qualified applicants.

Setting store by a bright futureSetting store by a bright future

What goal have you set for your first year of operation?
Our research shows there is a tremendous need in the marketplace.

We expect to see a large number of applicants in our first year.

However, to ensure we maintain our high standards and credibility, we will be extremely selective.

As Professor Rao of Stanford always recommends in scaling up excellence, Retail Performance Academy will always “do the right thing, even when no one else is looking.”

https://youtu.be/igfOHR1hrec

Source: https://www.luxurydaily.com/eyeing-incipient-need-luxury-institute-founder-launches-retail-performance-academy/

November 1, 2016

Affluent consumers to decrease luxury market spend, says Luxury Institute

Luxury Daily
November 1, 2016
By: Brielle Jaekel

The drastic shift in consumer behavior from the rapid evolution of technology has resulted in a 20 percent drop in customer spend with luxury brands, according to the Luxury Institute.

 Luxury Institute’s “2016 State of the Luxury Industry” report shows that consumers are spending much less in the luxury market compared to two years ago, but luxury marketers will have an uphill battle to determine how to combat this. While digital and mobile avenues are vital to success for any retailer or brand, it seems that affluent consumers are interested more in shopping with luxury brands at bricks-and-mortar locations.

The report surveyed 3,900 affluent consumers from the U.S., U.K., Europe, Japan and China, all of which made higher than $150,000 USD, £60,000, EUR50,000, 1 million CNY and Japan ¥150 million.

 Consumer habits

Luxury spending in the United States is ahead of many other countries, but the United Kingdom and Italy are leading the pack. The average spend within the luxury market in Italy is expected to be $17,660, $16,715 in the U.K. and $16,360 in the U.S.

Brands must now focus on how to properly balance ecommerce initiatives and in-store strategy to appeal to the modern affluent U.S. consumer. Bricks-and-mortar are making a slight comeback with 54 percent of high-net-worth individuals preferring to shop in store for luxury brands, compared to only 49 percent two years ago.

Hugo Boss New York Fifth Ave store 400

Social media is now the main avenue luxury fashion brands are using to communicate with consumers for customer service, with 58 percent leveraging Facebook Messenger, according to another report from L2.

Traditional customer service communication platforms are tired and outdated, and consumers now expect a more modern method for reaching out to brands and retailers. Many brands are taking note and launching communication methods on mobile messaging platforms such as Facebook Messenger, with 71 percent of watch and jewelry brands following suit (see more).

The growth of the luxury market is slowing, with only 19 percent of high-income individuals planning to spend more within the next year, compared to the 30 percent from two years ago.

While growth will slow, many U.S. consumers are still planning to spend on luxury goods and services. For instance, 92 percent of affluent consumers in the U.S. plan to spend money on luxury brands within the next 12 months.

The average anticipated spend per consumer is estimated to be $16,360, dropping almost $4,000 from $20,085 in 2014.

Luxury sectors

Watches, fine art, handbags, home appliances and jewelry are likely to be the areas hurt the most from the cut back. About 33 percent of consumers claiming to cutback on spend with watches, 28 percent on art, 24 percent on handbags and home appliances and 23 percent on jewelry.

Michael Kors Access smartwatch

However, travel remains as the dominating sector in which U.S. consumers with high incomes will be spending with luxury brands.

Hilton-owned Waldorf Astoria Hotels & Resorts climbed the ranks in terms of international brand awareness, despite consumers spending less time traveling, according to another report from Luxury Institute.

JW Marriott, InterContinental, Four Seasons, Grand Hyatt and The Ritz-Carlton maintained their places as the most visited hotel brands, reported last year and this year in the LBSI Global Hotel study. However, affluent consumers are cutting down on hotel stays with modest decrease in number of nights stayed (see more).

“The biggest surprise is that while ecommerce is critical to success in luxury, slightly more consumers still prefer the store experience,” Mr. Pedraza said. “Additionally luxury consumers are following less, not more, luxury brands on social media.

“As millennials mature they are recognizing that they have to focus on careers and relationships, not just social media,” he said.

Source: https://www.luxurydaily.com/affluent-consumers-to-decrease-spending-in-luxury-marketers/

September 27, 2016

Meet the Third Cohort of the Stanford Latino Entrepreneur Leaders Program

LBAN
September 27, 2016

PALO ALTO, Calif.Sept. 26, 2016 /PRNewswire/ — The Latino Business Action Network (LBAN) has selected 77 Latino entrepreneurs from across the United States to be a part of the third cohort of the Stanford Latino Entrepreneur Leaders Program (SLELP3). SLELP3 is a six-week program jointly developed by Stanford faculty and LBAN.  Its focus is to help Latino business owners scale – i.e., grow – their businesses. As part of this immersive six-week program, SLELP3 provides participants with valuable concepts and frameworks, enhanced access to capital, personal mentorship from successful entrepreneurs and investors, and a better understanding of the capital resources necessary to grow their businesses, create jobs, and build a stronger economy.

The applicant selection criteria was developed to rigorously filter very early stage companies and target those companies that have received market and/or investor validation. To be considered for this program, the preferred criteria for applicants is to have either generated $1 million in revenue or have raised $500k in funding. As part of the six-week program, the entrepreneurs will take a customized online course based on curriculum developed by two Stanford Professors; Huggy Rao, Stanford Graduate School of Business Faculty and Bob SuttonStanford School of Engineering Faculty, who are internationally recognized as experts in scaling businesses.

SLELP3 business owners are part of an elite and talented group of innovators and business leaders whose drive, work ethic, and ambition will help to grow our economy and communities across the United States.

See the businesses below:

About Stanford University and LBAN Collaboration 

LBAN and Stanford University collaborate on programs for Latino Entrepreneurs including the research focused Stanford Latino Entrepreneurship Initiative (SLEI) and the Stanford Latino Entrepreneur Leaders Program (SLELP). LBAN endeavors to make America stronger by empowering Latino entrepreneurs to grow large businesses through entrepreneurship research, education, and networks. LBAN’s ultimate goal is to double the number of $100 million and $1 billion Latino owned businesses by 2020.

To find out more about our programs, visit www.LatinoEI.org.

Source: http://www.prnewswire.com/news-releases/meet-the-third-cohort-of-the-stanford-latino-entrepreneur-leaders-program-300333852.html 

November 25, 2015

Nordstrom, Bergdorf Goodman lead retailers in overall satisfaction: report

Luxury Daily
November 25, 2015
By: Forrest Cardamenis

Department store chain Nordstrom is the top-rated luxury retailer, according to findings detailed in The Luxury Institute’s third annual Luxury Multi-Channel Engagement Index.

Consumers evaluated six luxury fashion retailers both in-store and online across a total of 31 attributes – 15 online and 16 in-store. Because the findings come from consumers, they can help each retailer determine which areas it needs to improve on and what specialties will help distinguish it from competitors.

“[We wanted] to get the voice of the client, not to have a panel of experts, not to have one individual,” said Milton Pedraza, CEO of The Luxury Institute. “This is the wealthy consumer rating their own experiences, these are all clients of the brands.”

Ahead of the pack
Barneys New York, Bergdorf Goodman, Bloomingdale’s, Neiman Marcus, Nordstrom and Saks Fifth Avenue were evaluated on the ease of 14 common criteria both online and in-store. In addition, there was one additional criterion for online shopping and two for in-store.

The common traits are: finding desired products, the perception consumers had of the retailer, product selection, customizability, customer service, policy on returns and exchanges, product displays, exclusive or limited products.

Traits also included whether selections were relevant to the consumer’s lifestyle, the availability of proper sizes, pricing, loyalty programs, confidence that the retailer would meet the consumer’s needs and how often products from that retailer receive compliments.

SAKS 5th Ave
Dior beauty counter at Saks Fifth Avenue

Respondents had a median age of 52, minimum household income of $150,000 and an average of $289,000 and $2.9 million in net worth, numbers that align with luxury retailers at large. Among the findings about consumers is that twice as much spending takes place in-store, with women and consumers under 45 years of age being more likely to spend online.

Bergdorf Goodman beat out Nordstrom in some notable categories. It is best perceived as a luxury retailer, as having the best prices and having the best personalized shopping experience.

However, Bergdorf Goodman has only two stores, one for men and the larger for women, both on Fifth Avenue in New York, whereas Nordstrom has 118, which will play into perceptions of luxury. Nevertheless, Bergdorf Goodman’s relative aversion to discounting did not stop consumers from highlighting its prices.
Nordstrom
Nordstrom

Nordstrom topped the rankings of more categories than any other retailer. Among them: its convenient refund/return policy, carrying relevant products and styles, having a navigable Web site, including helpful ratings and reviews and good shipping policies online, convenient locations and in carrying products that are complimented by others. It also beat out national retailers in prices and having good personalized shopping.

Fittingly, Nordstrom is the most popular retailer online and leads in market-share on both channels.

Tough times

Mobile transactions do not comprise a large share of the revenue for any of the retailers. While mobile is an important part of the transaction journey for many consumers, who use it to research and in-store to compare prices and selection, it has not yet become a major source of transactions.

Retailers are missing out on significant revenue opportunities by failing to personalize consumers’ shopping experiences, thanks to the lack of adaptive pages, product recommendations and search functionalities on their mobile sites, according to a Retail Systems Research report.

In its “Personalization Across Digital Channels” report, sponsored by predictive analytics platform Reflektion, Retail Systems Research highlights the major faux paus that brands commit when it comes to mobile commerce. As consumers’ expectations for retailers’ digital offerings grow higher, marketers must deliver optimized experiences, including saved search histories, suggestions on previous purchases and responsive pages tailored to each device (see story).

neiman.hudson yards rendering
Neiman Marcus Hudson Yards rendering

Nevertheless, online shares have grown and retailers have proven themselves adaptable to new technology.

“I think what [the data] tells you is that, even though we thought that the luxury multi brand chains were going to be overrun with the likes of Amazon and others, that just hasn’t happened,” Mr. Pedraza said. “They have become very nimble and very agile at online and ecommerce. Don’t underestimate these omnichannel chains. They definitely will rise to the occasion.”

One of the major obstacles in both ecommerce and in being perceived as luxury is in discounting. Discounting is a surefire way to lure in new consumers short-term but represents longer-term risks for the brand.

As a result, many retailers have opened up discount stores, which, despite also risking perception, could become a venue to funnel discounted merchandise and leave the main store full-price.

Although this change could not be implemented suddenly without alienating some consumers, there are already signs that it is taking place and may become more visible as holiday shopping is amped up.

Bloomingdale's Ala Moana exterior
Bloomingdale’s Ala Moana exterior

Consumers should expect a reduction in holiday promotions from retailers, according to a recent report by Upstream Commerce.

Based on the past two years of holiday promotions, the report predicts that 2015 will see a decrease in both the number of products discounted and in the discount rate. Fewer sales incentives and lower discounts could indicate a new strategy based on the “right” offering rather than simply presenting more promotions (see story).

“There is a lot of discounting out there, but full-price will remain relevant,” Mr. Pedraza said. “Unfortunately I suspect there will be a lot of discounting in the fourth quarter because when you enter their store they are flushed with inventory, all of them, so I think there’s going to be a big reduction.

“Traffic is down dramatically in all of these stores — some insider estimates, people on the inside of these companies, place traffic down anywhere from 20 to 30 percent,” he said. “It’s going to be a very tough fourth quarter, at least on market.

“We may see the top line improvement because of the discounting and you’re going to sell more, but we may see that the margins erode and by the way we may see comps that are not that good. Luxury right is in a very tough place, nowhere near what it was in 2008, everybody is suffering.”

Source: http://www.luxurydaily.com/nordstrom-leads-retailers-in-overall-satisfaction-luxury-institute/?utm_referrer=https%3A%2F%2Ft.co%2FFFJxcMPESf%2Fs%2FAiXG&utm_referrer=direct%2Fnot%20provided

 

October 22, 2015

She Who Controls the Purse Strings

IDEX
October 22, 2015
By: Danielle Max

There’s good news from a recent survey released by the Luxury Institute, which revealed that watch and jewelry companies are more successfully marketing to affluent women these days. In fact, 62 percent of respondents said that these companies do a good job of marketing to them; up from 53 percent in 2012.

The research from the New York-based Luxury Institute ranks industries and specific brands based on their success marketing to women with a minimum household income of $150,000 per year. Respondents reported average household income of $289,000, and a $2.9 million average net worth, so these are exactly the sort of households that the diamond and jewelry industries need to be targeting.

Overall, the watch and jewelry category ranks fifth among industries trying to sell their goods to women – and, given that high-ticket items such as watches and jewelry are not exactly a spur of the moment purchase – that seems pretty good to me.

The top four industries most frequently viewed as doing a good job marketing to women from high-income households through advertising and social media are clothing (75%), shampoos and conditioners (74%), fragrances and cosmetics (72%) and shoes (72%).

And it seems that marketeers overall are doing a better job of selling to what is clearly a key demographic. The Luxury Institute says that compared to 2012, each of these categories enjoys a wider share of women who view their marketing efforts favorably.

However, lest you think the gender gap is a thing of the past, among the industries that affluent women say are doing the poorest jobs of marketing to them are insurance, liquor, electronics, banks, brokerages and private jets, each of which earns an approval rating of less than 5 percent and has fallen in approval since 2012.

In addition, the automobile industry also needs to stop thinking (and acting as if) men hold the purse strings. Apparently, only 6 percent of women are impressed by the efforts of car companies to market to them.

Of course, it’s not just money that comes into play in such issues. According to the research, affluent women in the 45-64 age bracket are much more likely than women under the age of 45 to say that companies are doing well in marketing specifically to them.

Part of the problem seems to be that companies just don’t seem to realize who they should be targeting. The Luxury Institute specifically singles out married women who, according to its research, make two-thirds of all household purchasing decisions.

“Women maintain huge economic power and it is a necessity for companies to step up marketing and how they connect with affluent women regardless of industry,” says Luxury Institute CEO Milton Pedraza. “Research that includes speaking directly with these women about what appeals to them and what turns them off removes much of the guesswork in making marketing decisions.”

We couldn’t agree more.

Have a fabulous weekend.

Source: http://www.idexonline.com/Memo?Id=41250

Women neglected by marketers despite making two-thirds of household purchases

Luxury Daily
October 22, 2015
By: Staff Reports

Brands in the apparel, personal care and footwear sectors are among the best at marketing to affluent women, according to research by Luxury Institute.

The best industries targeting affluent women through advertising and social media do not come as a surprise, but it does shine a light on the sectors that are not doing well at focusing their attentions on this demographic of wealthy consumers. Survey respondents felt that the industries doing the least to target affluent women include insurance, liquor, consumer electronics, banks and brokerages and transportation including automobiles and private jets.

Luxury Institute surveyed women ranging in age from 21-years-old to more than 65-years-old with a household income minimum of $150,000 per year. The respondent pool’s had a reported average household income of $289,000, and a $2.9 million average net worth.

A battle of the affluent sexes
When it comes to marketing to a female demographic, brands in apparel (75 percent), shampoos and conditioners (74 percent), fragrances and cosmetics (72 percent) and footwear (72 percent) unsurprisingly fared the best.

In regard to the industries that are failing at capitalizing on the purchasing power of affluent women, each had an approval rating of less than 5 percent. This approval rating has continued to fall since 2012.

Efforts put forth by automotive brands, for instance, have only impressed 6 percent of the female respondents. Although traditionally associated with a masculine culture, the auto industry should expand its marketing efforts to cater to the sentiments of its female consumers, especially those with families, by touting the safety of high-end vehicles.

On the corporate side, automakers have made strides in being more inclusive of females in general. For instance, British automaker Aston Martin looked to close the gender gap in engineering by teaming up the Royal Air Force to introduce female students to various career routes (see story).

Sectors improving outreach to female consumers include the jewelry and watch sector, which has seen the largest improvement over the past three years. Sixty-two percent of respondents felt that these brands do a good job marketing to their demographic, a 53 percent increase from 2012.

In addition, department stores are listed sixth, with 60 percent of affluent women appreciating the efforts put forth by retailers.

Lux institute.womens marketing graph
Graph provided by Luxury Institute 

Across the board, older affluent women aged 45-64 felt that brands across industries are doing well when marketing to their demographic. This response was much more likely from the older age group than it was for women 45-years-old and under.

But, 25 percent of women 21- to 44-years-old felt that the wine industry is not doing enough, or not marketing to them well enough. This propensity decreases with age, with 21 percent of 45- to 54-year-olds, 16 percent of those between the ages of 55 and 64 and 12 percent ages 65 or older approve of the wine category’s marketing efforts.

In a statement, Luxury Institute CEO Milton Pedraza said, “Married women tell us that they make two-thirds of all household purchasing decisions. Women maintain huge economic power and it is a necessity for companies to step up marketing and how they connect with affluent women regardless of industry. Research that includes speaking directly with these women about what appeals to them and what turns them off removes much of the guesswork in making marketing decisions.”

Source: http://www.luxurydaily.com/women-neglected-by-marketers-despite-making-two-thirds-of-household-purchases/ 

July 10, 2015

Tesla Hires Ex-Burberry Executive to Lead North American Sales

Bloomberg Business
By: Dana Hull
July 10, 2015

Tesla Motors Inc. has hired former Burberry senior vice president Ganesh Srivats, adding a sales executive to help the electric-car maker extend its reputation for automotive luxury to an increasingly global audience.
Srivats, whose position as vice president for North American sales was confirmed Thursday by the company, will help Tesla deepen its already formidable brand into a premium lifestyle experience to go with its high-tech image, taking a cue from the kind of marketing BMW, Porsche and Ferrari have done.

“This makes all the sense in the world,” said Scott Galloway, a professor of marketing at New York University’s Stern School of Business, in a phone interview. “Tesla is not an automobile company, it’s a luxury company.”
Srivats joins the automaker from a British fashion house known for its heritage plaid cashmere scarf and trench coats as well as digital savvy. Apple Inc. hired former Burberry Group Plc Chief Executive Officer Angela Ahrendts as head of its retail operations in 2013.

The new Tesla executive held strategy and retail posts for Burberry starting in 2009 and most recently was senior vice president for retail in the Americas, according to his LinkedIn profile.

The North American sales job is a newly filled position for Tesla. The Palo Alto, California-based company said in March that it was reassigning Jerome Guillen, who was vice president of global sales and service, to a role focused on delivery and long-term customer care and would hire new executives to lead the sales operations by region.

Sales Target

Tesla plans to introduce its Model X SUV late in this quarter and says it will sell 55,000 vehicles worldwide this year. The automaker ended the first half with 21,552, about 40 percent of the target.
Tesla doesn’t have dealerships and sells its products directly to consumers via stores and galleries. It doesn’t pay for traditional advertising and relies heavily on free media and word-of-mouth among its customers, many of them tech-savvy early adopters.

“Srivats absolutely brings a client-centric approach to doing business,” said Milton Padraza, chief executive officer of the Luxury Institute, in a phone interview. “It’s about long-term relationships, not a transaction. Burberry is the master of client relationships.”

Digital Innovation

Burberry was one of the first luxury brands to embrace digital innovation, from live-streaming runway shows to launching on Periscope. The London-based company has had a makeover in the past five years, moving from conservative high-end fashion to haute couture, said Ken Harris, managing partner at Cadent Consulting Group in Chicago, which advises consumer and retail companies.

“If Tesla is thinking that they are selling a lifestyle and a way of thinking, then someone from Burberry could be the right choice,” Harris said in a phone interview. “Burberry gets lifestyle.”
The 159-year-old company with a “distinctly British attitude” has more than 4 million followers on Twitter and is led by Christopher Bailey, a 44-year-old designer who had been the company’s chief creative officer.

High-end automakers like to push expensive clothing and accessories to boost revenue and deepen their relationships with affluent customers. Besides T-shirts and messenger bags, Tesla has the Tesla Design Collection, which includes a $300 tote bag, $100 sheepskin leather driving gloves and a $40 iPhone sleeve.

Similarly, Porsche sells watches, luggage and other accessories under the Porsche Design brand. Ferrari also offers clothing, shoes and even a cigar box under its brand name. BMW and its Mini brand also sell pricey accouterments.

Source: http://www.bloomberg.com/news/articles/2015-07-10/tesla-hires-ex-burberry-executive-to-lead-north-american-sales

June 25, 2015

The unique way women shop luxury cosmetics

Cosmetics Design
By: Deanna Utroske
June 25, 2015

Luxury Institute, a New-York-based global luxury research provider, looked into buying practices of wealthy consumers and discovered that how affluent women shop beauty is exceptional.

Interestingly enough the institute saw fit to ask only women about their personal care shopping habits. All survey participants were questioned about buying apparel, shoes, and accessories in general as well as particularly about jewelry and watches.  While , only “wealthy women were…asked about beauty products and handbags”, according to a media release from the institute announcing the study findings.

The study compiles survey replies from respondents earning, on average, $289,000 annually and with an average net worth of $2,9m.

Personal

Women in this consumer group tend to depend on the in-store experience to make purchasing decisions, notes the Luxury Institute.

The survey findings show, however, that a fair number of such women would rather not have the advice of sales staff. Only about “one-fifth (19%) of wealthy women prefer to learn about products in-store with a sales associate’s help. “For cosmetics shoppers this number jumps to 29%.

Thus, “For wealthy women, visiting stores and looking at displays without help is the best method of finding out about new products in all luxury categories.”

Personnel

Nonetheless, sales associates and the in-store creative and management team have a real relevance for luxury brands.

With multiple points of information, wealthy consumers have become very say shoppers, but our findings show that decisions,” says Milton Pedraza, Luxury Institute CEO.

Building rapport and trust with luxury shoppers can make a difference. Pedraza notes that, “with proper training in relationship building, along with incentives to produce, store personnel can provide a significant boost to sales across luxury categories.”

Digital

Online and mobile resources figure quit prominently in product discovery for affluent women. And fortunately for luxury cosmetic brands and beauty retailers, these shoppers are reliably visiting their sites for product information.

Browsing a store website is the second-most preferred method of shopping, with 32% of wealthy women reporting this is how they discover new products, while 23% say they do the same at manufacturer’s websites,” finds the Luxury Institute.

 

Source : http://www.cosmeticsdesign.com/Business-Financial/The-unique-way-women-shop-luxury-cosmetics?utm_source=copyright&utm_medium=OnSite&utm_campaign=copyright

 

June 19, 2015

Will nearly 3M Apple Watches sold hurt Swiss watch industry? Meet some non-worriers

New York Business Journal
By: Teresa Novellino
June 18, 2015

It was meant to be a “debate “over whether the Apple Watch would impact the Swiss watch industry, but even the futurist on a Watch Collectors’ Roundtable panel assembled at the Aaron Faber Gallery in New York confessed to being a Rolex man.

Jason Alan Snyder, chief technology officer at global branding agency Momentum Worldwide, says he has tested out many versions of wearable tech, but tells time with a Swiss-made Rolex Datejust his father gave him which, combined with his smartphone screen, he considers to be “ample” for his day-to-day activities.

“The sort of capital you derive from wearing a timepiece is different from the sort of capital you derive from wearing a smartwatch.” Snyder said Tuesday night during a roundtable at the midtown Manhattan jewelry and vintage watch gallery. “Right now it’s the difference between luxury and utility and they’re very different ideas.”

According to a report just out today from Slice Intelligence, utility is selling to the tune of 2.8 million Apple Watches sold so far, with multiple bands being a popular add-on. Apple itself has never shared sales results on the watches, but yesterday it began allowing customers to actually buy the watches in store through a “reserve and pickup” service versus ordering them online.

The roundtable for watch enthusiasts, moderated by Randy Brandoff, founder and CEO of luxury watch subscription site Eleven James, was assembled to hash out concerns among collectors, retailers and others in the watch industry about the disruptive new entrant in a watch industry dominated by traditional players. Before the AppleWatch was released, the company’s design chief Jony Ive reportedly predicted the Apple Watch would mean trouble for the Swiss watch industry. Indeed, Apple stole a marketing page from the industry when stars like Beyoncé were shown wearing them. She posted a selfie of the gold version on Instagram.

Snyder pointed out that the functionality of the Apple Watch, particularly its ability to let people pay for items without out a credit card via Apple Pay would appeal to consumers seeking convenience. The health-related functionality is another lure. Wearables, in general, will evolve to become more incorporated in our lives, he said.

“I think the things we wear will become a part of ourselves in ways we can’t imagine,” he said. “The form it is taking now is a wristwatch, but it could also be something else, like a [miniaturized computer screen that you wear as a] contact in your eye.”

Some brands exhibiting in Switzerland at this year’s Baselworld, the world’s largest watch and jewelry show, met the Apple Watch challenge by saying they would be rolling out their own smartwatches. TAG Heuer, for instance, is partnering with Google and Intel on its version.

“I think it’s a huge over reaction, I don’t think there’s a place for it,” said Jeffrey Hess, CEO of Ball Watch USA. “There are a lot of watch brands that are afraid to not be on the boat.”

Hess, who ran an ad for his watches in Wired magazine, said he got a great response, which he interprets as proof positive that tech geeks like luxury watches too.

Others on the panel seemed similarly skeptical that the Apple Watch would actually eat into their sales. Among them was the roundtable’s host Edward Faber, co-owner of Aaron Faber Gallery, who said Millennial customers seek out the unique and collectible vintage mechanical watches that he sells.

“People want to distinguish themselves whether they’re in a business environment or social setting,” said Faber, author of American Wristwatches: Five Decades of Style and Design. “Soon, the Apple Watch will be everywhere but the luxury watch will continue to stand out.”

Milton Pedraza, chief executive officer and founder of the Luxury Institute, said he wouldn’t “discount the possibility of a surge,” in sales for the Apple Watch, but the first version didn’t seem like something that could compete with a Swiss timepiece. He sees it more a subcategory within the industry.

“The Apple Watch will evolve into something compelling. Today, it is not,” Pedraza said. He also predicted that Millennials, as they age, would become watch collectors, just like their Baby Boomer parents, even if they also own a smartwatch.

“It won’t be this or that, it will be this and that,” Pedraza said. “I see an opportunity to make this luxury [category] larger and I’m not worried about the watch industry at all.

But if the fears of Apple Watch competition have the Swiss watch brands concerned and reacting defensively, he sees it as good thing.

“If TAG Heuer fails, so be it,” he said. “They’ll be better off for it because they tried.”

Source: http://www.bizjournals.com/newyork/news/2015/06/18/will-3m-apple-watches-sold-hurt-swiss-watches.html?ana=twt

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