Luxury Institute News

March 3, 2014

Soaring Luxury-Goods Prices Test Wealthy’s Will to Pay

Sales Growth Slows as Competition Heats Up; ‘Prices Have Gotten Really Crazy’

By Suzanne Kapner and Christina Passariello
Wall Street Journal
March 2, 2014

Despite expanding into new markets, the luxury-retail business has been relying on price increases to drive sales. Now, even the very wealthy are nearing the limits of what they are willing to spend.

In the past five years, the price of a Chanel quilted handbag has increased 70% to $4,900. Cartier’s Trinity gold bracelet now sells for $16,300, 48% more than in 2009. And the price of Piaget’s ultrathin Altiplano watch is now $19,000, up $6,000 from 2011.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute:


May 15, 2012

Will Christian Louboutin Beauté dilute the brand name?

By Tricia Carr
Luxury Daily
May 14, 2012

French footwear designer Christian Louboutin will begin selling beauty products in late 2013, which could leverage the brand across a mainstream category as long as it does not dilute the name.

Louboutin announced last week that it will partner with Batallure Beauty to create and market Christian Louboutin Beauté products. While some experts say this is a good move to broaden the consumer base, others feel that a beauty line could dilute the brand.

“Christian Louboutin has established a strong brand around a single product line of high-end designer shoe with the immediately-recognizable red sole,” said Karen Kreamer, president of K2 Brand Consulting, Overland Park, KS. ”Extending the brand into beauty products is a good first step before determining how, or if, the brand should be further extended.

Click the link to read the entire article which includes quotes from Milton Pedraza, CEO of Luxury Institute:

November 16, 2011

Jimmy Choo: Mellon departure may force redefinition of footwear brand

By Rachel Lamb
Luxury Daily
November 15, 2011

Following the abrupt departure of Jimmy Choo cofounder and creative officer Tamara Mellon and CEO Joshua Shulman, the footwear giant’s success and brand reputation will rely solely on their successors.

Not only did Ms. Mellon serve as the brains and creative behind the brand, she was also seen as a brand ambassadress and even posed in ads for the recently-launched Jimmy Choo fragrance. Although the reason for the resignations are not concrete, many reports suggest that Ms. Mellon and Mr. Shulman’s leaving likely has to do with Jimmy Choo’s buyout by famed footwear conglomerate Labelux in May.

“The bigger question for Jimmy Choo is not the departure of Tamara Mellon, but how the new owner of the brand Labelux will manage the brand,” said Pam Danziger, president of Unity Marketing, Stephens, PA.

“The company’s stated goal for the brand is to accelerate growth,” she said. “As a luxury brand, that growth needs to be carefully managed.

“In the current economy, we are seeing the dividing line between mass and class blurring,” she said. “It may not be in the best interest of the luxe-leaning Jimmy Choo  brand to become too popular among the masses in the interest of stimulating fast growth.”

Named after a Malaysian shoemaker, Jimmy Choo competes with footwear brands such as Manolo Blahnik and Christian Louboutin. The company has changed hands several times in the past decade.

Big shoes to fill
Ms. Mellon has been the creative director and cofounder at Jimmy Choo for 15 years. She is slated to leave at the end of this month.

Jimmy Choo CEO Mr. Schulman has been with the brand for five years. He plans to stay on until early 2012 for a “transitional period,” according to a report from New York Magazine’s The Cut.

Since Ms. Mellon has attached herself so personally to the brand, it may be difficult for consumers to accept a new spokesperson for Jimmy Choo.

“I think that some of the main challenges would be redefining the brand,” said Courtney Albert, consultant on marketing and branding at Parker Avery, Atlanta. “Mellon was the face of the brand and a lot of women bought into not only Jimmy Choo, but her lifestyle and the kind of woman she exemplifies.”

A more pressing matter, however, is bringing the brand back to the luxe label that it once was.

“The brand did very well financially and was successful, but brand equity-wise it is not on the same level as it was early-on,” she said.

Heeling touch
To bring Jimmy Choo back to its original luxe, the executives at Labelux have their hands full.

“I think it’s unfortunate to lose such high-performance executives at a critical transition time because they are the creators of brand culture,” said Milton Pedraza, CEO of the Luxury Institute, New York.

One of the cornerstones of the luxury industry is, of course, customer service.

The brand’s greatest opportunity is creating a customer-centric culture that is measurable, per Mr. Pedraza.

Another kind of marketing may also help Jimmy Choo reinvent itself with a new face and as a new company.

“I think that with the right marketing, it can overcome this bump because for a long time people didn’t know that there even was a Jimmy Choo and didn’t know the real story,” Parker Avery’s Ms. Albert said.

“I don’t necessarily think that her departure will crumble the brand, but they’ll have to take a series of strategic initiatives to build upon what she created,” she said.

June 6, 2011

Is the luxury footwear arms race on?

By Rachel Lamb
Luxury Daily
June 3, 2011

With the recent acquisition of luxury footwear company Kurt Geiger by Jones Group following the sale of Jimmy Choo to Labelux last month, the two massive conglomerates are being presented with new opportunities that rival fashion empires LVMH Moet Hennessey Louis Vuitton and Pinault-Printemps-Redoute.

Although this does not seem to be a typical arms race of footwear giants, both conglomerates are clearly decisive when choosing brands to add to their respective portfolios. Additionally, both Jones and Labelux are most likely to be watching one another quite closely as the market continues to improve and acquisitions become more likely.

“You still have a situation where many small but high-growth potential luxury brands are available, especially with the economy and BRIC markets put together which are giving tremendous growth opportunities,” said Milton Pedraza, CEO of the Luxury Institute, New York.

“These two parent companies will be the LVMH and PPR equivalents and have a portfolio where one or few brands become a massive hit and it can have very significant returns that drown out the others that don’t do so well,” he said.

“What you’re seeing is a very active market in acquisitions.”

The mergers
Jones Group announced yesterday that it is buying British retailer Kurt Geiger for $350 million from Graphite Capital.

Kurt Geiger is one of the leading footwear maker in Britain, selling its nine brands at high-end department stores such as Selfridges and Harrods.

The brand will join companies such as Stuart Weitzman, Givenchy, Judith Jack, Jessica Simpson and Anne Klein in the Jones Family.

Meanwhile, upscale footwear manufacturer Jimmy Choo was sold to German luxury goods company Labelux last month.

At the time, Jimmy Choo was said to have been valued between $650 and $895 million.

Labelux owns Derek Lam, Bally, Zagliani and Solange Azagury-Partridge.

“Public and private often organizations operate and exist for different reasons,” said Chris Ramey, CEO of Affluent Insights, Miami. “Public companies work to increase stockholder value by nurturing the value of their brands.

“Historically we’ve found that private equity groups buy properties to sell them at a profit,” he said.

Just as luxury conglomerates LVMH, PPR, Richemont and Prada Group are acquiring other brands at the same time, their rivalry is not a battle.

“There is a label of expertise that the Labeluxes of the world have that [small] luxury and premium brands really need in order to grow,” Luxury Institute’s Mr. Pedraza said.

There does not seem to be a trend with other acquisitions that suggest brands will lose their identities or drastically change their marketing efforts.

For example, even though Christian Dior has been owned and controlled by LVMH since 1984, it still retains the classic and timeless advertisements, products and image as it did when it was first conceived earlier in the century. That portral is classic: elegant women wearing or using Dior products.

Kurt Geiger’s marketing consists of digital, out of home and print media, especially in publications such as The New York Observer and Glamour.

The ads are slightly risque and usually just show the shoes.

Jimmy Choo’s ads, on the other hand, consist of women in brightly-colored clothing against bold backgrounds.

Also, Jimmy Choo runs extensive marketing, including print ads in Vanity Fair and Vogue and out-of-home and online ads.

Only time will tell if these brands will control their advertising techniques under the new leadership.

“Some holding companies have tremendous expertise and position that a lot of small premium brands don’t have within their ranks,” Mr. Pedraza said. “Every time conglomerates bring someone in their ranks that become a great marketer, they are squashed and removed from the ownership.

“In order to survive with a new leader, you need to be brand-centric and customer-centric,” he said. “This is what conglomerates such as Labelux are designed to do.”

The competition
As in the fashion world, there are conglomerates and there are independents.

From the outside, it does not seem as though these acquisitions are as emotional as, say, LVMH’s lust over scarf and handbag maker Hermes, but in the world of fashion politics, feelings cannot get in the way.

“Acquisitions are about economies of scale,” Affluent Insights’ Mr. Ramey said. “Brands may be about emotion, but financial organizations are not.”

Furthermore, acquisitions do not always mean that brands will suffer.

On the contrary, luxury and fashion houses are usually picked up when they are on the verge of bankruptcy or are having trouble surviving.

Footwear powerhouses such as Tod’s and Manolo Blahnik are self-governing – for now – but can independents survive in a world of luxury conglomerates?

“Companies with money like Labelux are looking to buy, and they are very good at doing what they do and they tend to manage brands very well,” Mr. Pedraza said. “These two brands need to become strategic in their growth and brand communications, especially needing to make sure that they build relationships with top-tier products and find out which products resonate with consumers in the market.

“Resources such as these in the luxury world are very scarce,” he said. “If some resources grow independently they can become scattered and although they will be large, they are undisciplined, unwieldy and sometimes unprofitable.

“Being under the care of a conglomerate can add skill, technique and knowledge to the luxury label, especially in terms of marketing and knowing the customer.”

May 19, 2011

Sell Your Sole

Christian Louboutin’s red lacquer sole is even more valuable than you think

By Robert Klara
May 18, 2011

You’re not likely to quicken the pulse of many fashionable women by mentioning Registration No. 902955, Pantone 18.1663TP, Class 25. But you’ll probably get much further by translating what this identification code—currently in the files of the World Intellectual Property Organization’s headquarters in Geneva—means to female shoppers around the world: a pair of Christian Louboutins.

More precisely, a pair of Louboutins with a red-lacquer sole. Infact, there is no other kind. The chic Parisian cobbler first slapped alittle red paint on the bottoms of his pumps
and platforms back in1993. Since then, his irreverent designs have used everything from toundra fur to blue Austrian crystals. But it’s those shiny, inevitable red soles that have become a veritable trademark.

Make that a literal trademark. Louboutin’s attorneys secured the rights to the red-lacquer sole in 2008, both in the U.S. and in the 75 other countries that observe WIPO’s conventions. It’s just too bad the designer waited so long, because—as the selection on page 2 demonstrates—several other brands have been making red-soled shoes, too. Last month, Louboutin put his foot down, filing separate suits in Manhattan Federal Court against Yves Saint Laurent and Carmen Steffens for their forbidden use of la semelle rouge.

While neither Louboutin nor YSL responded to requests for comment, Mark Willingham, president of U.S. operations for Carmen Steffens, says red is theirs to use as much as green or purple or canary yellow. “Over the years, we’ve incorporated almost every color imaginable into our footwear soles—including various tones of red,” he says. “It’s part of our brand’s DNA.”

So we’ve obviously got a fight brewing here, and despite how petty it might look, the dispute actually reaches to the core of what it means to create a brand. Alan C. Drewsen, executive director of the International Trademark Association, points out that if Louboutin fails to protect his trademark now, imitators may eventually leave him with nothing to protect at all. “Aspirin and Cellophane were once trademarks that weren’t adequately defended,” he says. “Now they’re generic.” The other core component is color itself: How a certain hue, used in a certain way, can create an icon of fashion.

According to Michael Shaw, a patent attorney with the London intellectual-property firm of Marks & Clerk, it’s only been possible for a brand to trademark a color since 1996, and it’s never been easy. “It [must] be shown that the color has acquired a highly distinctive character as a result of substantial use,” he says. (Rare examples: Tiffany & Co.’s trademark of the robin’s egg blue gift box and Owens Corning’s mark for pink fiberglass insulation.) “Generally speaking, colors don’t function as trademarks,” adds New York Law School professor Dan Hunter. “But they can with enough use, enough marketing, and enough consumer recognition. Which is what happened with red-soled Louboutin shoes.”

But in Louboutin’s case, there’s an X factor that goes beyond what his lawyers will have to prove in court (which is that the competing red soles are likely to cause consumer confusion between the brands). Women don’t drop $1,000 on a pair of CLs because they happen to like red under their feet; they do it because they like what that red represents. “I talked to a very successful businesswoman about this the other day,” relates Milton Pedraza, CEO of the Luxury Institute. “And she said, ‘Of course that red sole matters. It signals to the world that I wear Louboutins—a top-of-the-line shoe. It [says] I’m a successful woman, and I bought these myself, that I’m powerful—and still feminine.”

Christian Louboutin probably didn’t set out to create a product with socio-sexual overtones as complex as that, but it’s part of what he’s defending in court right now. “That sole has a lot of messaging embedded in it,” Pedraza says. “It’s about the emancipation of women in the corporate suite.”

May 13, 2011

How Much Longer Until the Louboutin Love Dries Up?

By Lauren Covello
May 12, 2011

…While it’s impossible to say the brand would have failed had Louboutin stuck to a traditional sole, it’s fair to say that the move has been critical in Louboutin’s branding strategy.

“The brand and that sole are one in the same,” says Milton Pedraza, CEO of independent research firm The Luxury Institute, who says the decision to turn the bottom of the shoe into a focal point was brilliant. “To go with red, with all that implies, is a wonderful carving out of uniqueness in something that had no meaning whatsoever.”…

Click the link to read the entire article which includes several additional quotes from Milton Pedraza, CEO of Luxury Institute

March 29, 2011

High Net-Worth Shoppers Rank Luxury Brands On Multiple Criteria; 38 Women’s Fashion, 27 Women’s Shoes And 28 Luxury Men’s Fashion Brands Evaluated In Luxury Institute WealthSurvey

(NEW YORK) March 29, 2011 – Firsthand perspectives of wealthy U.S. consumers provide detailed rankings of luxury brands’ reputation and prestige in results of the 2011 Luxury Brand Status Index (LBSI) surveys, released today by the independent and objective New York City-based Luxury Institute.

A balance of men and women from households earning at least $150,000 per year evaluated dozens of luxury fashion and shoe designers on quality, exclusivity, status enhancement and ability to create “special” shopping and owning experiences.

Wealthy respondents also ranked each brand on worthiness of a significant price premium, their willingness to recommend it to friends and family, and the likelihood of consideration next time they make a purchase in that category.

Based on overall LBSI scores (1-10), the top luxury brands rank as follows:

Women’s Fashion
o Hermes 7.72
o Prada 7.70
o Louis Vuitton 7.58

Men’s Fashion
o Brioni 7.66
o Ferragamo 7.48
o Ermenegildo Zegna 7.47

Women’s Shoes
o Versace 8.06
o Christian Louboutin 8.04
o Valentino 7.98

“We find that some categories are very predictable with certain brands rating in similar positions over the years. The luxury women’s shoe category is one where fickle consumers rank and rate brands differently over the years,” said Milton Pedrasa, CEO of the Luxury Institute.”

The proprietary Luxury Brand Status Index (LBSI) survey is the only unbiased measure of the reputation of leading brands provided by direct insights from wealthy U.S. consumers. Sample households had average annual income of $271,000 and $2.4 million average net worth.

About Luxury Institute (

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

For Further Information, Please Contact:
The Luxury Institute, LLC
Martin Swanson
Vice President
(914) 909-6350

November 24, 2010

Holiday Gift Guide: The Best of Everything

November 23, 2010

For a year that started with so many expectations, 2010 is drawing to a less than stellar close. The stock market might be bouncing back, but the economy is still sputtering, yields are lower on everything from government bonds to certificates of deposit, and summer movie attendance hit its lowest level in more than a decade. We even have to look down to find something that’s up: Casual shoes for men are among the few high-end fashion categories to see their sales surge this year.

For two tough years the luxury-goods market has been struggling as well, with 2009′s decline of 8 percent the worst ever recorded for the nearly $230 billion category, according to consultants Bain & Co. And yet 2010 could end up being the year of the comeback for all things upscale: Bain is predicting an increase of 10 percent for worldwide sales of luxury goods. To be sure, with the financial crisis still fresh in Americans’ minds, experts say, folks returning to the diamond counter are being careful with their nonessential purchases. Simple and useful are in; showy and impractical are out. “The severe recession rewrote-and is still rewriting-the rules,” says Milton Pedraza, CEO of research firm the Luxury Institute.

While it might be less conspicuous, it’s still consumption-and we’re here to do our part. Each year SmartMoney does some early holiday shopping, talking to retail experts, strolling through stores and scrolling through online catalogs, all in search of some of the best products for your wish list. To narrow down our picks, we try out our top choices-taking a few swings with the new tennis racket, a few steps in the sharp-looking shoes and a few glances in the mirror at that black-pearl necklace.

This year, in keeping with the so-so economy, we focused on indulgences that can work just as well in the carpool lane or at the park as they do in a five-star restaurant or corner office.

Click the link to read the entire article:

October 28, 2010

Slim chance of Mr Tod’s taking over Saks

By Antonella Ciancio and Phil Wahba
October 27, 2010

(Reuters) – When Italian businessman Diego Della Valle overtook Mexican billionaire Carlos Slim as top shareholder in U.S. retailer Saks (SKS.N) last week, markets jumped on speculation of a possible takeover bid.

But the man who turned Tod’s (TOD.MI) from a family shoe factory into the world’s fourth biggest shoemaker by market value, is more likely to do what he knows well — rake in lucrative returns from selling to the highest bidder.

Della Valle, one of Italy’s most powerful industrialists, is also a keen investor, with interests from French luxury giant LVMH (LVMH.PA) to Vespa scooter maker Piaggio (PIA.MI) and eyewear maker Marcolin (MCL.MI).

He also has interests in banks and soccer.

“A bid by Della Valle for 100 percent of Saks is highly unlikely,” an Italian banker close to Della Valle told Reuters on conditions of anonymity. “If he can make a double-digit profit by selling his stake, he will sell,” he said.

In less than two years, Della Valle has splurged more than $170 million to acquire a 19.05 percent stake in Saks, his second biggest holding after Tod’s.

The size of the investment has prompted questions over whether Della Valle aims at enhancing Tod’s or his stock portfolio.

“Della Valle has strategic holdings only in niche companies, such as Marcolin,” a Milan-based luxury analyst said, asking not to be named. “When someone makes such a big investment, it is for making capital gains,” he said.

Asked about his plans, Della Valle said last week Saks was a “great opportunity,” declining to give detail.

“I bet Della Valle will try to sell his stake in 12 months, if Slim lets him do it,” the analyst said. “Slim is in the best position to make an offer and might want to regain his status.”

Saks has become a target of takeover talk since last year when it removed a so-called poison pill aimed at averting a potential hostile bid by Slim.

“I think they view (Della Valle) as friendly because he is a vendor,” said Paul Swinand, Chicago-based Morningstar’s analyst.

Slim last reported a higher stake in February, when he had 25.6 million shares. He owns 15.9 percent of Saks, according to Reuters data.


Tod’s, which includes the Fay, Hogan, and Roger Vivier brands, was seen as too small in the United States to justify a major investment there. The U.S. market accounted for around 7 percent of first-half revenue of 377.5 million euros for Tod’s.

“I do not expect Tod’s to grow fivefold in the short term in the U.S.,” Centrobanca analyst Simone Ragazzi told Reuters.

Whatever Della Valle plans are, they will have to suit Saks.

The Italian has raised the possibility of expanding Saks internationally, but Saks’s chief executive Steve Sadove has repeatedly said the retailer would focus on domestic growth.

“(Saks) is a little mecca which everyone visits,” Milton Pedraza, chief executive of consulting firm Luxury Institute, told Reuters. “Della Valle looks at Saks and sees a global brand,” he said.

The company, which operates 48 full line stores and 56 Off 5th outlets, has closed seven stores this year, saying it wanted to focus on its best-performing locations.

Saks shares have been on a tear in recent weeks, at first buoyed by speculation it could be a takeover target by a group of British private equity firms, and then by the spectre of a fight between Della Valle and Slim.

But last month, JP Morgan analyst Charles Grom lowered his price target on the stock to $8, saying luxury spending remained uncertain.

Saks, expected to eke out a small profit for its 2011 fiscal year after two years of losses, has a price-earnings ratio of 54.8 based on 2012 profit forecasts and a stock price of $10.96.

Rival U.S. department store chains Nordstrom (JWN.N) and Macy’s have price-earnings valuations of 12.6 and 10.3 respectively.

(Reporting by Antonella Ciancio and Phil Wahba; Writing by Antonella Ciancio; Editing by Dan Lalor)

June 2, 2010

News Release: Japanese High Net-Worth Consumers Rate the “Best of the Best” Luxury Brands in Five Fashion Categories

(NEW YORK) June 2, 2010 – The objective and independent New York City-based Luxury Institute reported today the results of the “Best of the Best” luxury fashion brands in Japan based on the 2010 Luxury Brand Status Index (LBSI) survey. This survey identifies the top brands that deliver true luxury based solely on the unbiased ratings of wealthy Japanese consumers. The following five luxury categories were rated: Women’s Fashion, Women’s Shoes, Women’s Handbags, Men’s Fashion, and Men’s Shoes.

The LBSI asks high net-worth consumers to rate luxury brands by category across four equally weighted components: Consistently Superior Quality, Uniqueness and Exclusivity, Making the Customer Feel Special Across the Entire Experience and Being Consumed by People Who Are Admired and Respected. 

The “Best of the Best” are: (LBSI score out of 10)

Women’s Fashion (Ready-to-wear)

  • o Hermes-7.28
  • o Chanel-7.27
  • o Giorgio Armani-6.80

Women’s Handbags

  • o Hermes-7.77
  • o Chanel-7.06
  • o Louis Vuitton-7.01

Women’s Shoes

  • o Christian Louboutin-7.39
  • o Hermes-7.20
  • o Ferragamo-7.18

Men’s Fashion (Ready-to-wear)

  • o Ermenegildo Zegna- 7.17
  • o Hermes-7.01
  • o Giorgio Armani-6.89 

Men’s Shoes

  • o John Lobb-7.34
  • o Testoni-7.32
  • o Ferragamo-7.11

“Japan may be a challenging market for luxury, but it is still a huge market compared to most other geographies”, said Milton Pedraza, CEO of the Luxury Institute. “We see major efforts on the part of our luxury brand clients to differentiate themselves by dramatically out-behaving their competition rather than merely outperforming on products. Extraordinary customer experiences will be the drivers of luxury success in Japan’s large, but stagnant market”

The proprietary Luxury Brand Status Index (LBSI) survey is the only unbiased measure of the prestige of leading brands among wealthy Japanese. A national sample of 600 wealthy Japanese consumers, half male/half female, with a minimum household income of 15 million Yen (approximately $165k) was surveyed online. Males rated only the men’s categories and females rated only the women’s categories.

About the Luxury Institute

The Luxury Institute is the uniquely independent and impartial ratings, research and Luxury CRM consulting institution that is the trusted and respected voice of the high net-worth consumer. The Institute provides a portfolio of proprietary publications, research and consulting services that guide and educate high net-worth individuals and the companies that cater to them on leading edge trends, high net-worth consumer rankings and ratings of luxury brands, and best practices. The Luxury Institute also operates, the world’s first global, membership-based online community for luxury goods and services executives, professionals and entrepreneurs.

The Luxury Institute, LLC
Martin Swanson
Vice President Business Development
(914) 909-6350

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