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: http://online.wsj.com/news/articles/SB10001424052702304585004579415110604829016?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304585004579415110604829016.html

 

February 28, 2014

Buying into bling

By Daina Lawrence
Special to The Globe and Mail
February 27, 2014

Affluent individuals around the world bucked the depressed market norms of the last few years and managed to keep the luxury goods market bustling by investing in alternatives such as art, wine and supercars.

Companies such as Hermès SA, Michael Kors Holdings Ltd. and LVMH Moët Hennessy Louis Vuitton SA are gaining new customers daily, with 10 million new buyers wading into the market each year.

Many of these companies have given good news to shareholders recently, including luxury goods dynamo Michael Kors – known for its footwear, watches and clothing – whose shares soared 17.3 per cent to $89.91 (U.S.) in early February, after the company’s report of higher-than-expected profits.

Click the link to read the entire article which includes quotes from Milton Pedraza, CEO of Luxury Institute: http://www.theglobeandmail.com/globe-investor/investment-ideas/buying-into-bling/article17132730/

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.”

October 23, 2013

Neiman Marcus Outshines the Competition For Online And In-Store Experiences Among the Wealthy

(NEW YORK) October 23, 2013 – As part of its first installment of the Luxury Multichannel Engagement Index (LMEI) survey, the New York-based Luxury Institute asked consumers from households with minimum annual income of $150,000 to share opinions and rankings of online and in-store experiences at leading luxury retailers. Neiman Marcus earns the highest overall score and stands out for garnering top honors in nine out of ten customer criteria used to evaluate both the Web and brick-and-mortar shopping experience.

Wealthy shoppers say that Neiman Marcus stores rank first for attractive displays of exclusive products, easy navigation, accessibility of customer service, personalized shopping experiences, fair prices, and for carrying ample stock and styles. Customers also laud Neiman’s salespersons for making them feel special while serving as trusted fashion advisors.

The Neiman Marcus online experience draws equally extensive praise with the top overall ranking and the highest scores on the same measures of satisfaction.

“Smart retailers realize the value of leveraging data to deliver superior experiences that build lasting customer relationships, regardless of the channel,” says Luxury Institute CEO Milton Pedraza.

Neiman plans to invest $100 million over the next three to five years on technology that will closely align inventory management, logistics and human resources across multiple retail channels.

“Every aspect of our business is being transformed by technological advancements,” said Jim Gold, president of Neiman Marcus Group, at a retailing summit in Dallas. “The lines have completely blurred between brick-and-mortar and e-commerce. The great challenge is to make the experience seamless.”

About the 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 globally 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 Customer 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.

September 3, 2013

Luxury Institute Survey Reveals Risk of Brand Dilution

By Danielle Max
September 2, 2013
International Diamond Exchange (IDEX)

A recent survey by the Luxury Institute discovered that while many affluent shoppers – those with a household income of $150,000 or more – welcome brand partnerships, half of these affluent consumers believe that partnering with another brand – luxury or mainstream – could damage the brand’s image or reputation.

According to the survey, the industries where partnerships are seen as most fruitful are hotels and resorts, travel, fashion and airlines.

The survey revealed that women are far more likely than men to applaud fashion partnerships, as well as those involving jewelry and beauty.

Perhaps unsurprisingly, men are most enthusiastic about partnerships involving automobile companies while affluent shoppers older than 50 are especially interested in airline and cruise collaborations.

Luxury brand collaborations wealthy shoppers would like to see include Michael Kors and Apple, Chanel and Air France, and Lexus and The Ritz-Carlton.

However, brands need to be careful about the sort of partnerships they create. “Brands should partner with companies with similar values and service standards to avoid potential risks of collaboration,” says Luxury Institute CEO Milton Pedraza. “This maintains credibility and helps to ensure a consistently positive customer experience.”

http://www.idexonline.com/portal_FullNews.asp?id=38556

August 15, 2013

Report: Even the wealthy love loyalty programs

Editorial
RetailCustomerExperience.com
August 14, 2013
In a new survey of affluent consumers by the Luxury Institute, wealthy shoppers earning at least $150,000 a year share detailed observations and evaluations of various loyalty and rewards programs, and offer suggestions for improvements to existing frequent shopper initiatives.Overall, 72 percent of wealthy consumers participate in some kind of loyalty program, with the most popular ones connected to credit cards, airlines, hotels and grocery stores. Men are significantly more likely to be members of airline and hotel rewards programs, while women are disproportionately represented in programs sponsored by grocery stores, drugstores and department stores. Previous Luxury Institute research has shown that Sephora, American Express and Amazon are the top three favorite rewards programs among affluent consumers.Very few respondents say that they belong to a luxury brand rewards program. The main perceived benefits of luxury brands’ loyalty programs are special offers and rewards, earning and redeeming points, and free goods and services. Free gifts carry more importance among women, shoppers under 50, and those with net worth less than $1 million.Satisfaction with existing loyalty programs is high and most high-income shoppers say that they have had positive experiences with their memberships. The vast majority of shoppers report that loyalty programs exert a strong influence over purchasing decisions.

http://www.retailcustomerexperience.com/article/217915/Report-Even-the-wealthy-love-loyalty-programs

Bespoke Jewelry, Made With You in Mind

By Shivani Vora,
The New York Times
August 14, 2013

Temple St. Clair, a NoHo jewelry designer, has built her reputation on ready-made yellow gold amulets, which usually cost from $2,000 to $10,000 at places like Saks and Bloomingdale’s.

But when she acquired a 10-carat Burmese sapphire earlier this year on a buying trip to Asia, she knew just the client who would want to commission her to transform the rare stone into something unique. It was a woman in her 40s living in TriBeCa who already owned many of Ms. St. Clair’s signature pendants, and had a generous husband who wanted to buy her a gift to mark their 20th wedding anniversary.

After several weeks of discussion with the couple, which involved sending multiple sketches and three-dimensional molds, Ms. St. Clair created a ring for a fee, she said, of approximately $350,000. “I have always been focused on finished pieces, but personalization is a natural evolution of my brand,” she said.

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

http://www.nytimes.com/2013/08/15/fashion/bespoke-jewelry-made-with-you-in-mind.html?_r=0&pagewanted=print

August 10, 2013

Luxury Landgrab

By Russ Banham
Washington Post
August 9, 2013

With the rise of newly affluent consumers in the Asia-Pacific capitals of Hong Kong, Seoul, Shanghai, Mumbai, and other fast-growing metropolises, ultra-luxury brands like Chanel, Louis Vuitton, Cartier, Ferrari, Hermes, BMW, Prada, and Rolex are aggressively expanding their physical footprints and shifting their marketing strategies to reach this new audience.

Most luxury brands have focused on indigenous cultural, demographic, and behavioral differences to craft regional marketing messages that inform neophyte shoppers about their brand’s value proposition, and their long heritage of fine craftsmanship, innovation, and exclusivity. “There is still some confusion regarding the identification of mid-tier brands from top-tier brands,” explains Sandilya Gopalan, vice president and Asia-Pacific practice leader at Cognizant Business Consulting. Unlike the more mature American, European, and Japanese markets, “the Chinese and Indian luxury retail markets are just getting exposed to luxury items and high-level customer service,” he says.

THE POWER OF PRESENCE ON HIGH STREET
All luxury brands leverage a customized mix of print, television, and social media to deliver their unique message to shoppers, but chief among their marketing strategies is having a shop located on the world’s priciest retail streets. “Putting luxurious flagship stores on the high streets of Asia-Pacific is critical,” says Milton Pedraza, CEO of Luxury Institute, the New York-based research and consulting firm.

Madison Avenue in New York and Michigan Avenue in Chicago are the shopping thoroughfares of the wealthy in the United States. Overseas, their counterparts are Queen’s Road Central in Hong Kong, Tokyo’s Ginza-Chuo Street, Orchard Road in Singapore, Mumbai’s Altamont Road, and Nanjing Road West in Shanghai. “The newly affluent travel a lot, and know the luxury brands from their excursions to Europe and the U.S.,” says Pedraza. “A highend store at home demonstrates the power of the brand, and is considered the top form of marketing.”

Click the link to read the entire article which includes several quotes from Milton Pedraza, CEO of Luxury Institute: http://www.washingtonpost.com/sf/brand-connect/wp/2013/08/09/luxury-landgrab/

July 16, 2013

The Luxury Institute survey says Graff Diamonds and Tiffany are stand out brands

By Diamond World News Service
Diamond World
July 15, 2013

A survey conducted in the U.S. by New York based – The Luxury Institute, revealed names of Graff Diamonds and Tiffany & Co. as being ‘stand-out brands’ for the most affluent shoppers in the U.S., reports say. The survey was conducted online in April this year, with 500 consumers who had a net worth of at least $5 million.

Graff Diamonds featured as the most prestigious jewelry brand with a score of 7.98 out of 10, in reference to its products, client experience, reputation and whether the consumers would consider returning to shop at Graff again, reports say.

The survey also collected data based on gender segmentation. The ultra-wealthy women segment ranked Tiffany as the most preferred jewellery brand, with David Yurman and Cartier following next. This segment also noted these brands to be the top three in reference to ‘preferred salesman’. More than half of this female segment was impressed with handwritten thank-you notes, reports say.

http://www.diamondworld.net/contentview.aspx?item=7960″

July 3, 2013

Survey: Wealthy Women Prefer Jewelry From Tiffany & Co.

Tiffany & Co. is the jewelry brand most widely purchased by ultra-wealthy women, according to a study by The Luxury Institute.

By Daniel Ford
JCK Online
July 2, 2013

The institute surveyed ultra-wealthy U.S. consumers with minimum net worth of $5 million about luxury brands they buy and the relationships they have with luxury sales professionals.

David Yurman and Cartier followed Tiffany on the list. The women surveyed said they have a preferred salesperson at all three jewelers. And never underestimate the power of the pen: 
More than half of ultra-wealthy women who purchase from both jewelry and fashion brands say they appreciate handwritten thank-you notes.

“Relationship selling is not something exclusive to markets like high-end automobiles, real estate and wealth management services,” said Luxury Institute CEO Milton Pedraza in a statement. “Even in luxury jewelry and fashion, relationships cultivated by trust and an understanding of customer preferences can help boost both the frequency and size of sales.”

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