Luxury Institute News

February 5, 2014

Wealthy Shoppers Tell Brands How They Want Technology Integrated Into The Shopping Experience

(NEW YORK) February 5, 2014 – The New York-based Luxury Institute asked consumers 21 years of age and older from U.S. households with minimum annual income of $250,000 about their views on incorporating technology in the shopping experience.

Nearly half (47%) of wealthy consumers say that a sales professional providing live chat or video assistance online would help them understand more product details, and 58% appreciate the convenience of instant answers.  Only 15% of shoppers say that they have tried chat or video and refuse to do it again.

Wealthy shoppers do not mind companies collecting personal data and using it for customized marketing, but they do show strong distaste for clandestine data gathering via mobile phones, facial recognition software and GPS tracking; 69% say information collected in this manner is a privacy violation.  Just 24% approve of retailers using facial recognition software to identify them and observe shopping habits.

Using technology in-stores to accelerate checkout is popular, but many affluent shoppers shy away from self-checkout.  Almost three-fourths (73%) say that they appreciate the time savings of checking out via mobile devices instead of standing in line at cash registers.  Although 45% say that self-checkout is more efficient, 44% prefer transactions with help from staff.

Technology has little to do with what wealthy shoppers desire most: free shipping and returns, cited by 92% of respondents.

“Habits of today’s wealthy consumer have increased the desire to browse, reserve and purchase using a mix of channels,” says Luxury Institute CEO Milton Pedraza. “Technology allows brands to leverage customer data and shopping habits, however salespeople still play a vital role into creating unique and engaging experiences.”

June 11, 2013

Wealthy to spend less on luxury items they don’t need

By Angela Johnson
CNN Money
June 10, 2013

NEW YORK (CNNMoney) — The improving economy isn’t going to spur a mad dash to luxury stores among the U.S.’s wealthiest shoppers, a new survey shows.

Wealthy consumers are expected to cut back on spending on non-essential items during the second half of the year; seeking products and experiences that hold more value instead, according to a survey released Wednesday by the Luxury Institute.

Of the more than 500 “pentamillionaires” — those with a net worth of $5 million or more — surveyed, more than 80% say luxury goods, such as jewelry, watches, and handbags, have declined in significance.

“Even among the wealthiest customers, luxury goods and services are considered less important in today’s economy,” said Luxury Institute CEO Milton Pedraza in a statement.

Click the link to read the entire article which includes multiple quotes from Milton Pedraza, CEO of Luxury Institute: http://wtkr.com/2013/06/10/wealthy-to-spend-less-on-luxury-items-they-dont-need/

Wealthy to cut back on pricey stuff, spend more on experiences

By Shan Li
Los Angeles Times
June 10, 2013

Wealthy shoppers will refrain from scooping up expensive handbags, shoes and other discretionary items even as the economy recovers and the stock market soars, a study found.

In the second half of 2013, the rich will rein in their spending on material things and seek out experiences that may garner more satisfaction, according to a Luxury Institute survey.

“People are less interested in watches and more interested in building lasting memories,” said Milton Pedraza, chief executive of the Luxury Institute. “Even among the wealthiest customers, luxury goods and services are considered less important in today’s economy.”

Click the link to read the entire article which includes several quotes from Milton Pedraza, CEO of Luxury Institute:
http://www.latimes.com/business/money/la-fi-mo-wealthy-spending-20130610,0,5516627.story

June 4, 2013

Better Economy Spurs Ultra-Wealthy To Spend More On Travel, Dining And Wine, But Appetite Cools For Jewelry And Handbags

(NEW YORK) June 4, 2013 – For its 2013 State Of The Luxury Industry report, the Luxury Institute surveyed pentamillionaire consumers with net worth of at least $5 million and minimum annual household income of $200,000 to learn about current preferences and future spending on luxury goods and services for the remainder of 2013. Respondents also shared evaluations of the overall luxury market.

One-third of pentamillionaires plan to step up spending on leisure travel in the second half of 2013, making hotels, airlines and cruise operators big beneficiaries of additional spending by America’s wealthiest shoppers. Restaurants are poised for a pick-up, too, with 20% of ultra-wealthy consumers planning to spend “more” or “much more” on dining out in the final six months of the year, and 19% also pouring more dollars into wine.

Additional categories seeing significant upcoming spending interest are health & fitness (17%) and vacation real estate (17%).

Rebounding home values and the surging stock market are not spreading cheer or riches universally. More than 80% of pentamillionaires say luxury goods are less important in the current economic environment. Jewelry sales especially may be under some pressure, with 25% of the ultra-wealthy saying they will spend less or much less through the remainder of 2013. Handbags are the focus of planned spending cutbacks by 20% of those surveyed.

“Even among the wealthiest consumers, luxury goods and services are considered less important in today’s economy,” says Luxury Institute CEO Milton Pedraza. “Luxury brands can capture these increasingly discerning ultra-wealthy consumers by providing unrivaled quality, craftsmanship and service.”

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

May 16, 2013

Wealthy Shoppers Focus On Quality And Price As Brands Blur Lines Between Luxury And Mainstream

(NEW YORK) May 16, 2013 – What specific factors differentiate luxury brands from mainstream brands? What would happen if one type of brand expands into the other’s market? These are among the questions answered by wealthy shoppers with minimum household incomes of $150,000 surveyed by the Luxury Institute.

For 60% of wealthy consumers, particularly those with higher levels of wealth, quality is the overriding differentiator between luxury and mainstream goods and services. Price (55%) is cited as the second biggest point of differentiation. Craftsmanship (48%), prestige (47%) and design (38%) are also critical.  Older wealthy shoppers are notably more selective (51% vs. 43%) on craftsmanship than their younger peers.

Launching an extension into mainstream retail does not appear to be the kiss of death for luxury brands because there is little brand prejudice on the part of wealthy shoppers. If a luxury name branches out into mass-market, 84% of wealthy women and 78% of men would continue shopping with that company. In the case of a mainstream brand migrating up-market, 88% of wealthy women and 79% of men would remain customers.

Of the challenges facing the mainstream offshoot of a luxury brand, 24% of wealthy shoppers say the biggest risk is damage to the luxury brand’s image or reputation; 17% cited perceptions of inferior quality at the lower-priced stores.

“Luxury brands can leverage their edge in quality and craftsmanship with current offerings by communicating these attributes clearly with consumers,” says Luxury Institute CEO Milton Pedraza.  “This enhances perceived value and alleviates price sensitivity.”

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

May 9, 2013

High-Income Shoppers Embrace Online Commerce, but Stores Also Benefit From Web Browsing

NEW YORK, NY–(Marketwired – May 9, 2013) – The Luxury Institute surveyed wealthy consumers earning at least $150,000 a year about their usage of the Internet and mobile devices, and how these technologies affect their interaction with brands across platforms.

High-earners are about as likely to have bought something at a store (78%) in the past 12 months or ordered it online via computer (77%). Despite the growing popularity of mobile and tablet shopping, research done on a traditional computer still feeds foot traffic into brick-and-mortar stores, and led to in-store purchases among 45% of the consumers surveyed. Only 25% of wealthy shoppers buy online after checking out merchandise and gaining insights at a store.

Using a tablet’s Web browser has officially entered the mainstream as another shopping channel. In the past year, 20% of wealthy consumers reported using these devices to make a purchase. Web-enabled tablet usage is more popular for transactions than catalog purchases (17%), telephone orders (15%), or buying via smart phone Web access (14%). Retailers still send out catalogs because they’re effective drivers of sales in other channels: 20% were motivated by a catalog to make an in-store purchase; 16% of respondents say they bought something online in the past 12 months after seeing it in a catalog. Downloaded apps for phones (12%) and tablets (11%) are also gaining in popularity as distinct retail channels where wealthy consumers shop.

“Successful brands turn shopping and browsing into a seamless experience across traditional websites, apps for smart phones and tablets, and within brick-and-mortar stores,” says Luxury Institute CEO Milton Pedraza. “Wealthy consumers are eager users of the latest technologies and brands need to be, too.”

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

March 22, 2013

Affluent women control 68pc of household purchases: Luxury Institute

By Erin Shea
Luxury Daily
March 21, 2013

Affluent female consumers are making 68 percent of their household’s purchases, while more women are becoming the bread winners of their families, according to a new survey from the Luxury Institute.

Women are now more involved in purchasing and financial decisions for the family than ever before. Since this trend is likely to continue, luxury marketers should look to target affluent women to drive sales.

“This means that [marketers] need to pay more attention to how they are marketing to women in a respective and relative way,” said Milton Pedraza, CEO of the Luxury Institute, New York.

“A lot of companies are doing a good job of marketing to women, but we will see more companies and more services that will begin to market to women,” he said.

The Luxury Institute’s WealthSurvey: Marketing to Wealthy U.S. Women study surveyed 800 U.S. women who are 21 years or older and have a minimum gross annual income of $150,000. The survey took place in the last quarter of 2012.

The bread winners

Two-thirds of women surveyed earn at least $150,000 per year from their own salaries. This group of women has a median annual income of $181,000 per year.

More than 40 percent of working women in married or coupled households report being responsible for the majority of their total household income.

Seventeen percent of women surveyed said they provide support for additional familiar members other than their spouse or children. A quarter of these women said they spend at least $100,000 per year on providing support.

In addition, approximately 25 percent of working women are owners or partners in organizations. These women say that the flexibility in schedule and desire to “be my own boss” drove them to this situation.

The number of women in high-leadership roles and entrepreneurial positions will continue to increase.

This could mean an overall shift in corporate atmosphere, which could help marketers reach female consumers.

“We see a growth in women in the highest level in entrepreneurial and leadership positions that will make corporations more collaborative internally and externally,” Mr. Pedraza said.

“Most women understand the needs of other women, women consumers and other consumers.”

Purchasing power

Affluent women are most likely to control the food and clothing – such as apparel, shoes and accessories – purchase decisions for their household.

This group makes approximately 68 percent of the purchases on behalf of their household.

When purchasing, these women have a decided preference for products that are made by established and well-known brands.

Many luxury marketers target this group of affluent women because of their buying power, but some industry sectors are sending a stronger message than others.

The survey found that fragrances and cosmetics, clothing, shampoo and conditioner, shoes, department stores and jewelry and watches are categories that most effectively market to women.

Also, 65 percent of women in married or coupled households are making investment decisions jointly or in consultation with their spouse or partner.

Twelve percent of affluent women surveyed said that someone else makes these decisions for them, so there will likely be more financial services and similar companies that will begin to market to female consumers.

“We’ll see a lot of brands in the financial services and brands that are at the bottom try to understand how to develop and brand products to women,” Mr. Pedraza said.

http://www.luxurydaily.com/women-control-68pc-of-household-purchases-luxury-institute/

March 18, 2013

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

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

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

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

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

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

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

March 14, 2013

63pc of affluent consumers want to opt out of online tracking: Luxury Institute

By Erin Shea
Luxury Daily
March 13, 2013

Sixty-three percent of affluent consumers would choose to keep their online history and Internet activities private through an opt-out tracking policy, according to a new survey from the Luxury Institute.

Affluent consumers do not want their personal information used for other purposes and many consumers do not trust the safety of their information when giving it to a brand. This means that luxury marketers need to earn the trust of their consumers before asking for their participation in online tracking.

“We underestimate the fact that consumers are concerned about their privacy,” said Milton Pedraza, CEO of the Luxury Institute, New York.

“Unfortunately, if brands do not earn consumer’s trust and use their data in a trustworthy way, then consumers will opt out if there is privacy legislation passed,” he said.

“Brands then have to shift to earn the trust of consumers.”

The Luxury Institute’s Luxury Brand WealthSurvey surveyed 1,232 U.S. consumers in December 2012 about sharing their contact details in-store and online as well as their tracking preferences.

Respondents were at least 21 years of age and had a minimum annual income of $150,000.

Respecting the consumer

Although 68 percent of affluent shoppers are willing to give personal information to online retailers, 75 percent say this is because of purchase requirements to complete an online transaction, per the Luxury Brand WealthSurvey.

Women feel more pressured in-store to provide personal information during the checkout process. But only 24 percent shared their personal information during a recent in-store transaction.

Also, 66 percent of consumers feel comfortable sharing email in-store, compared to 78 percent feeling comfortable sharing it online.

Once consumers provide their information to a company, 60 percent feel little to no control over it, while 30 percent think that the security of their information is extremely likely to be compromised.

Luxury marketers need to make sure they are being transparent on their intentions when gathering consumers’ information and need to earn their trust before asking for personal data.

“Brands cannot take data collection for granted,” Mr. Pedraza said. “You need to earn that right to get that data and then use it in a trustworthy manner.”

Do not track

Recent U.S. legislation proves that consumers are seeking more control over their contact information and online activities.

If passed, the Do Not Track Act will let consumers stop companies from gathering their personal information online, but experts agree that there is most cause for concern among mainstream brands rather than those in the luxury sector.

Sen. John D. Rockerfeller IV (D-WV) introduced the “Do-Not-Track Online Act of 2013” in the United States Senate Feb. 28 to help consumers keep their online habits private, which is a reintroduction of a 2011 bill.

The legislation will limit the availability of information that marketers use to place digital and mobile ads.

Many affluent consumers would opt-out of online tracking if this legislation passed, according to Luxury Institute’s survey.

Eighty-two percent of affluent customers have already placed their phone numbers on do-not-call lists and the majority reported that they would do the same if there was a similar online option for blocking their Internet activities.

However, luxury marketers can overcome this negative mindset on information sharing by establishing relationships with customers, since 46 percent of respondents said that knowing a specific sales associate makes them more likely to give out contact information while shopping in-store.

“The way to do this is to have sales associates contact the customers directly,” Mr. Pedraza said. “Establish the communication with real humans and that will customize the experience.

“Relationship building is paramount when privacy is a concern,” he said.

http://www.luxurydaily.com/63pc-of-affluent-consumers-want-to-opt-out-of-online-tracking-luxury-institute/

March 11, 2013

Wealthy Shoppers Careful About Surrendering Personal Data; Awareness of dangers drives caution

(NEW YORK) March 11, 2013 – The independent and objective New York-based Luxury Institute surveyed U.S. consumers with minimum household income of $150,000 about their attitudes on privacy and their experiences with companies collecting and handling their personal data.

The majority of wealthy shoppers (68%) are inclined to divulge personal data to merchants online, although 75% report this is due to requirements for completing their transaction. Only 24% indicate sharing their contact information during a recent in-store experience, with women feeling more pressure by brands to provide personal details during purchasing experiences. Email is the type of personal data consumers feel most comfortable sharing both in-store (66%) and online (78%). In addition, 46% of customers say that knowing an individual salesperson makes them more likely to divulge contact details while shopping in-store.

Wealthy customers show a penchant for being left alone: 82% have placed their phone numbers on do-not-call lists, and 63% say they would do the same if there were a similar online registry for blocking the tracking of their Web activities. Half of consumers have already fully disabled or edited tracking on their browsers.

Almost 60% of wealthy shoppers feel little or no control over their personal data once a company has it, and 30% say that the security of their data is extremely likely to be compromised.

“Luxury firms must optimize respecting privacy while earning trust in order to collect valuable customer data and use it to create value for customers,” says Luxury Institute CEO Milton Pedraza. “Should privacy legislation be enacted, the brands that will be superbly successful will be those that have built genuine, trusted, long-term human relationships with their customers.”

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

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