Luxury Institute News

March 19, 2015

Weak Euro Undermines Chanel’s China Strategy

Marketplace World
By: Adam Allington
March 18th, 2015

If you’re thinking about planning a vacation to Europe, now would be a good time. The American dollar is worth more now against the Euro than at any point over the past decade.

While the exchange rate may be welcome news for some tourists, the same may not be said for luxury European brands like Chanel or Gucci. Chanel handbags are so much cheaper in Paris than in China that Chinese tourists are flooding Paris shops for luxury bargains. Chanel want them to buy its handbags in China, expanding its market there.

So Chanel will increase prices in Europe and cut them in Asia.

“I think the Chinese consumer will benefit from this, because they will get lower prices and they won’t have to go shop in New York, London or Paris in order to get the benefit of those relatively lower prices,” says Milton Pedraza of the Luxury Institute.

But high-end brands in particular need to think long and hard about changing prices from country to country.

“One of the keys to running a luxury business is that the customers understand that the prices don’t move all that often, and that you’re not waiting for products to go on sale,” says Stifel analyst David Schick.

Schick says long-term profitability for companies like Chanel or Louis Vuitton won’t hinge on exchange rates, but rather on how they are able to compete in a market that is increasingly crowed with competitors — many of whom are perfectly willing to sell you a handbag online, instead of through a shop on the Champs-Élysées.

March 10, 2015

Generational shift to luxury digital

Data sourced from Luxury Daily; additional content by Warc staff
March 10, 2015

NEW YORK: Affluent consumers in the US prefer to buy luxury goods in store but there is a discernible generational shift taking place as fewer millennials are concerned to shop this way with more inclined to explore options via an app.

A report from The Luxury Institute surveyed wealthy consumers in the US with a minimum household income of $150,000 per year and found that only 40% of millennials wanted especially to shop in store, while 72% would download a branded luxury app.

“There are clear generational differences where the boomers are less digital and millennials are extremely digital,” Milton Pedraza, CEO of The Luxury Institute told Luxury Daily.

“There is no one size all client experience,” he added, “and we have to understand the consumer not as a segment but as one individual, as a human being, in order to build a long-term relationship.”

That said, the differences leapt out in a number of statistics. Overall, 53% of luxury consumers did not download apps, while 47% did so, with most of these being in the younger generations.

Another instance came in social media, where almost two thirds (64%) of wealthy consumers didn’t follow any brands. But among millennials a similar proportion (68%) followed at least one brand and among Gen X the figure was 58%.

But more than one third (38%) of baby boomers also claimed to have downloaded branded luxury apps.

“Boomers are behind in digitalisation, [but] they are by no means not digital,” said Pedraza, “especially the highly educated global traveller.”

The Luxury Institute drew attention to the role of fashion bloggers in reaching and influencing the younger generation.

It found only 15% of boomers followed a fashion blogger compared to 62% of millennials. And followers had made an average of 4.2 purchases from blogger suggestions.

Even if these bloggers can find it difficult to maintain a leading edge position, Luxury Daily observed that their followings can compare favourably with magazines, the traditional influencer in luxury fashion.

The influence of technology is inexorably influencing purchase decisions in some way: 61% of all affluent consumers said it allowed them to make more purchases, while 65% said it was changing the way they shop with luxury brands.

March 9, 2015

68pc of millennials follow luxury brands on social media: report

Luxury Daily
By: Nancy Buckley
March 9, 2015

Consumers are split on their willingness to download luxury brand applications, but when dispersed into generations, 72 percent of millennials are inclined to download a branded app, according to a report from The Luxury Institute.

Digitization of the luxury world is slowly evolving as younger generations grow into being affluent consumers. Luxury clients differ across more than just generations, but understanding the prime and upcoming consumer can prepare marketing teams for the future.

“There is no one size all client experience and we have to understand the consumer not as a segment but as one individual, as a human being, in order to build a long term relationship,” said Milton Pedraza, CEO of Luxury Institute, New York.

“There are clear generational differences where the boomers are less digital and millennials are extremely digital,” he said. “If you want to look to the people with the most money, you want to cater to the older individual, who are not digital, but as you cater to the digital and the millennials.”

The Luxury Institute has conducted research on consumer attitudes and behaviors by surveying wealthy consumers in the United States with a minimum household income of $150,000 per year.

Technology changes all
Adapting to changes in technology can be difficult, but when looking at statistics, over half of affluents prefer to buy luxury products in-store. However, this number is about 40 percent when it comes to millennials and generation X.

Millennials also change the numbers when it comes to following brands on social media. Sixty-eight percent say they follow one or more brands on social media, while 64 percent of wealthy consumers follow zero brands.

Generation X also follows brands, with 58 percent reporting to follow at least one.

When it comes to brand apps, luxury consumers are about even among those who download and those who do not. Fifty-three percent do not download apps, but 47 percent do. The majority of these consumers are in the younger generations, but 38 percent of baby boomers claim to download branded luxury apps.

“As boomers are behind in digitalization, they are by no means not digital,” Mr. Pedraza said. “Especially the highly educated global traveler.”

When it comes to fashion bloggers, baby boomers are even more separated from the younger population. Fifteen percent of boomers follow a fashion blogger whereas 62 percent of millennials say the same.

These bloggers are having influence upon the luxury consumer with the average of 4.2 purchases made from blogger suggestions among those followers.

Overall, technology is influencing decisions. Sixty-one percent of all affluent consumers believe that technology allows them to make more purchases, and 65 percent report technology changing the way they shop with luxury brands.

Blogging influencers
Since fashion bloggers arrived on the scene about a decade ago, they have gained influence and grown to be leaders in the industry, says a report by Fashionbi.

As these bloggers gained an audience, brands began to partner with them for advertising campaigns, events and other marketing efforts. While it may seem that fashion bloggers are losing their luster, they still have large followings that can rival magazines, creating an opportunity for luxury brands to reach a large, fashion-focused audience (see story).

Department store chains increasingly partner with fashion bloggers to promote new initiatives and publicize their stores.

Fashion bloggers often have a large degree of influence and many followers, making them the ideal spokespeople for high profile marketing campaigns and events. Retailers such as Bergdorf Goodman, Harrods and Bloomingdale’s have recently partnered with a variety of bloggers to promote their products (see story).

Digital is slowly immersing into luxury, and eventually it will alter the consumer’s experience entirely.

“[In the future,] there will be digital aspects that help the sales associate be a far more effective relationship builder,” Mr. Pedraza said.

January 22, 2015

Luxury Institute Analysis Shows Strong Potential for Firms Serving Wealthy Consumers as Ranks of High-Income Americans Swell to All-Time High

Marketwired
January 21, 2015
By: Luxury Institute

A surge in the number of high-income households signals a source of potential strength for firms selling high-end goods and services, according to a metadata analysis of the Federal Reserve’s 2013 Survey of Consumer Finances by the New York-based Luxury Institute. The number of U.S. families earning at least $150,000 has grown 25% from 10.6 million households in 2010 to 12.8 million 2013, but even as more Americans achieve “high-income” status, luxury merchants still face challenges in turning these high-earners into loyal customers.

Favorable trends in household finances, since 2010, have thus far failed to produce a broad-based rebound in luxury on par with the boom before the Great Recession. Despite rising levels of income, wealth, and recoveries in stocks and real estate to pre-recession levels, many providers of high-end goods and services continue to struggle with sales growth more than six years after the financial crisis that devastated asset values and consumer confidence.

Long memories of the crisis are partly to blame for restrained spending: 30% of consumers from households with at least $150,000 in annual income say that they spend more when their assets appreciate in value, but the wealth effect cuts both ways, and even more deeply when asset values decline. Two-thirds of high-income Americans say that when the value of what they own goes down so does their spending.

In addition, luxury marketers are also facing fundamental shifts in consumer shopping habits brought on by the ubiquity of tablets and smart phones, and the influence of social media.

“Compelling products and extraordinary experiences lead to long-term client relationships in luxury,” says Luxury Institute CEO Milton Pedraza. “Firms thriving today are those with systems and personnel in place to leverage new technologies into smarter ways of communicating and doing business with customers that reflect the new reality.”

Conducted every three years since 1983, the Survey of Consumer Finances provides detailed demographic profiles and insights into household wealth, income, saving, and spending. Since 2004, the Luxury Institute has mined the survey data to identify emerging trends that can impact companies serving a wealthy clientele.

Source: http://www.marketwired.com/press-release/luxury-institute-analysis-shows-strong-potential-firms-serving-wealthy-consumers-as-1985040.htm

October 30, 2014

October 6, 2014

La Jolla among tops in US for luxury home sales

San Diego Source
Daily Transcript Staff Report
October 6, 2014

San Diego is among the top 10 cities with the highest number of luxury home sales, according to a report by Coldwell Banker, with La Jolla high on the list.

San Diego saw the sale of 927 homes valued at $1 million-plus from July 1, 2013, to June 30, 2014. The Luxury Market Report was prepared by the Coldwell Banker Previews International marketing program.

Topping the list was San Francisco with 2,485 luxury homes sold — up nearly 57 percent from the previous year — followed by Los Angeles with 2,170 and New York with 2,145.

The report included three price points: $1 million, $5 million and $10 million.

Two of San Diego’s ZIP codes saw high sales of luxury homes.

La Jolla’s 92037 ZIP code had closings on 348 homes valued at $1 million or more, the third highest of all ZIP codes in the country at that price tier; 269 homes sold in Carmel Valley and Torrey Pines in the 92130 ZIP code.

Four homes valued over $10 million closed in La Jolla, which ranked 16th, the report said. The most $10 million homes, 58, sold in New York.

The U.S. high-end residential real estate market remains strong, with 48 percent of all wealthy consumers indicating they plan to buy a luxury home within the next 12 months, according to the companion survey of wealthy U.S. consumers with a net worth of at least $5 million, conducted by the Coldwell Banker Previews International program and the Luxury Institute.

Younger buyers are the most motivated to buy; an overwhelming 81 percent of affluent people younger than 35 plan to buy a luxury home in the next year.

Source: http://www.sddt.com/News/article.cfm?SourceCode=20141006cze&_t=La+Jolla+among+tops+in+US+for+luxury+home+sales#.VDQEJSldXDQ

October 3, 2014

Luxury market report reveaks newcomers on list of hottest U.S. citie

New Jersey Hills Media Group
October 3, 2014

Quiet, unassuming areas adjacent to traditional luxury markets have rapidly transformed into hotbeds of luxury real estate in the 12-month period from July 1, 2013 through June 30, 2014. Leading the way and making its debut in the top 5 U.S. luxury markets for homes valued at $1 million+ is San Jose, where high-end home sales are up a staggering 76 percent from this time last year, according to the Luxury Market Report prepared by the Coldwell Banker Previews International® marketing program.

With Silicon Valley luxury real estate on fire, the affluent enclave of Atherton doubled its sales in the $10 million+ range from 2013. Burlingame, located approximately a mile from tony Hillsborough in Northern California emerged in the $10 million+ list for sold homes for the first time, most likely as the result of low inventory in the Bay Area’s most sought-after ZIP codes.

Adjacency is a powerful trend playing out in high-demand luxury cities well beyond Silicon Valley and the Bay Area, notably in Miami. North Miami Beach made its debut among the top 20 cities for $10 million+ homes sold —signaling that luxury buyers are expanding their horizons beyond the typical hotspots of Miami Beach, South Beach and the private communities of Star and Fisher Islands.

Overall, San Francisco led the nation with the highest number of sales in the $1 million+ category—up nearly 57 percent from this time last year.

The U.S. high-end residential real estate market remains strong, with nearly half (48 percent) of all wealthy consumers indicating that they plan to purchase a luxury home within the next 12 months, according to the companion survey of wealthy U.S. consumers with a net worth of at least $5 million (penta-millionaires) conducted by the Coldwell Banker Previews International® program and the Luxury Institute. Younger buyers are by far the most highly motivated to purchase: An overwhelming 81 percent of affluent individuals under 35 plan to buy a luxury home in the next year.

The survey reveals dramatic generational differences:

Penta-millionaires 35 and under reported the highest average purchase price of all age groups – $7.8 million — and have the largest percentage (80 percent) of all age groups paying all-cash.

By stark contrast, wealthy buyers 45-64 paid an average of $2.7 million for their most recent home purchase while buyers 65 and older spent just $1 million.

The report brought to light strong gender gaps:

Seventy percent of women reported paying all-cash for their most recent property vs. 57 percent of men.

Women reported buying more expensive homes than men:

Twenty-two percent of women spent $10 million or more for their most recent property vs. 13 percent of men in the same wealth bracket.

Forty-six percent of women have plans to buy another home in the coming year, up from 31 percent in 2013.

Location, location, location may no longer be the golden rule of real estate:

With the ability to work remotely now a reality for many, only 25 percent of the under-35 age group indicate that location dominates their search criteria.

Instead, 75 percent say that lifestyle considerations are the No. 1 factor driving their choice of which home to buy.

As evidence of this powerful generational shift, 86 percent of buyers 65 and older say that location remains their top priority.

Hottest In-Demand Amenities:

Nearly one-third of all wealthy buyers under the age of 45 count a “green” or “LEED certified” home as more important than it was 3 years ago.

The trend is also catching on among wealthy buyers of all ages, with 21% saying that they want to buy an eco-friendly home, up from a mere 7 percent in 2013.

As homes become increasingly high-tech, 25 percent now consider a fully automated home a priority.

Thirty-seven percent of respondents under age 35 and 30% of those with a net worth exceeding $10 million will prioritize safe rooms in their next homes.

The full list of the Top 20 Best Performing U.S. Cities in Luxury Real Estate by price points of $1 million+, $5 million+ and $10 million+, and the high-net-worth consumer survey results can be viewed here www.previewslmr.com.

Source: http://newjerseyhills.com/luxury-market-report-reveaks-newcomers-on-list-of-hottest-u/article_44f41eb2-e012-5472-a2fc-1047ab4a0690.html

October 1, 2014

Exclusive: Wealthy Consumer Survey 2014

Previews Inside Out
Coldwell Banker
October 1, 2014

You may picture wealthy Gen Y and Millenials as iPad-toting jetsetters who aren’t anxious to tie up their cash in a home. But they are among the most active players in luxury real estate, according to a new survey of ultra-wealthy consumers by Coldwell Banker Previews International® and the Luxury Institute.

“Young affluents recognize the value of real estate,” said Ginette Wright, vice president of marketing for Previews®/ NRT.  “And they are often bullish when it comes to real estate—they own more properties and tend to spend more on average. Their outlook on long-term appreciation is also more positive.”

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The survey found that 73% of wealthy consumers under the age of 35—the most out of any age group—are considering a purchase of additional residential real estate in the next 12 months for personal use. These buyers also expect their home to appreciate by an average of 16% in the next five years, compared to 13% for buyers ages 45-64 and 11% for buyers 65 and older. Additionally, they are among the biggest spenders, as they paid $7.8 million on average for their last home, compared to $6.8 million for buyers between 35 and 44 years of age, $2.7 million for those between 45 and 64, and $1 million for buyers 65 and older. One reason for the price difference could be due to the kinds of homes they desire. Nearly three-fourths (72%) of respondents younger than 35 said that buying a move-in-ready home is important.

“Our agents in cities like Los Angeles and Miami tell us the same thing: new construction is king right now,” added Wright. “Younger luxury buyers are not looking for a project—they want everything turn-key, right down to the décor and furnishings. All of which, of course, adds to the home’s overall price tag.”

While location and price remain the most important elements in the decision making process for the majority of ultra-wealthy buyers, younger affluents are less inclined to choose a property based on geography. Thanks to convenient travel options and the ability to work from anywhere becoming more widespread, just 25% of the under-35 group reports that location dominates their search criteria, but 75% say that lifestyle considerations drive their choice of which home to buy. At the other extreme, 88% of buyers 65 and older say that location is the most potent driver of their next property search.

Younger affluents are also interested in different home amenities than their seasoned counterparts. Safe rooms (37%), home theaters (36%), pool (34%), outdoor kitchens (33%) and “green” or “eco-friendly” amenities (29%) remain at the top of the wish list for buyers under the age of 35. Compared to the 65+ demographic, those same features ranked far lower: 7% wanted safe rooms, 12% wanted home theaters, 16% wanted a pool, 17% wanted a pool and 10% wanted a “green” home.

To find more interesting comparisons between the age groups, download the complete Wealthy Consumer Survey: http://www.previewsinsideout.com/2014/10/exclusive-wealthy-consumer-survey-2014/

August 18, 2014

Convergent Wealth Advisors Shines as Luxury Wealth Manager

PRWeb
August 18, 2014

The Luxury Institute has announced Convergent Wealth Advisors as third out of 39 leading national wealth management companies and private wealth managers in their 2014 LBSI Wealth Management Survey. The survey asked affluent respondents nationwide to evaluate each firm based on such factors as service quality, exclusivity, social status, and the ability to deliver special client experiences.

Convergent’s expanding presence in the wealth management space comes at a time where investors demand more personalized attention. According to Luxury Institute CEO Milton Pedraza, affluent individuals and families place expertise, trustworthiness, and generosity high on their list of attributes needed in order to build strong client relationships. Convergent embraces these attributes as part of its core values and corporate vision that underpin each client relationship.

“We believe that living well is the ultimate goal of investing well,” says Convergent President and COO Douglas Wolford. “The modern notion of luxury is defined by a sense of ease, confidence, and authenticity. Wealthy families want an experience tailored to their individual needs and goals—and one that allows them to enjoy more of the benefits and avoid many of the burdens of wealth.”

Dave Zier, CEO, adds, “People want to be associated with a luxury brand. Convergent strives to provide our clients with an experience that money alone can’t buy—an experience in living well. Being highly ranked by the Luxury Institute only reinforces our commitment to offering what we believe is the finest in wealth management.”

For the entire article click the link:http://www.prweb.com/releases/2014/08/prweb12082567.htm

 

July 22, 2014

Luxury Institute Wealth Management Survey Shows Multimillionaires Favor Boutique Money Managers for Client Experience

(NEW YORK) July 22, 2014 – In the latest edition of its Luxury Brand Status Index Wealth Management (LBSI) survey, the independent and objective New York-based Luxury Institute asked investors with an average net worth of $15 million and annual average income of $800,000 to share detailed opinions of 39 leading firms in the wealth management business. LBSI scores (1-10) comprise respondents’ evaluations of each firm’s product quality, exclusivity, social status and ability to deliver special client experiences.

Set up in 1882 as the Rockefeller family office, New York-based Rockefeller & Co. earns the highest overall LBSI score of 7.94. Ranking closely behind Rockefeller & Co. are Atlanta-based Atlantic Trust Private Wealth Management (7.93), and Convergent Wealth Advisors (7.92). First Republic Private Wealth Management (7.82), Bessemer Trust (7.68) round out the top five.

“Wealthy clients tell us that expertise, trustworthiness and generosity are the critical elements in building strong client relationships in wealth management,” Luxury Institute CEO Milton Pedraza. “Successful wealth managers are relationship builders first, and, since few can beat the markets in the long run, money managers second.”

Additional firms evaluated include Ameriprise Financial, Bank of America, Barclays Wealth Management, BB&T Wealth Management, Bernstein Global Wealth Management, BMO Harris Private Banking, BNY Mellon Wealth Management, Boston Private Bank and Trust, Brown Brothers Harriman, Charles Schwab, Citi Private Bank, Credit Suisse Private Banking, Deutsche Asset & Wealth Management, Deutsche Bank Alex. Brown, Fidelity Investments, Fifth Third Private Bank, Goldman Sachs, HSBC Private Bank, J.P. Morgan Private Bank, J.P. Morgan Private Wealth Management, Merrill Lynch, Merrill Lynch Private Banking & Investment Group, Morgan Stanley Smith Barney Wealth Management, National City Private Client Group, Neuberger Berman, Northern Trust, PNC Wealth Management, SunTrust Private Wealth Management, U.S. Bank Private Client Group, U.S. Trust, UBS Private Wealth Management, Vanguard Personal Investors, Wells Fargo Private Bank and Wilmington Trust Wealth Advisory Services.

Please visit www.LuxuryInstitute.com and contact us with any questions, or for detailed information about specific brand rankings.

The Luxury Institute, LLC

luxinfo@luxuryinstitute.com

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