Luxury Institute News

January 11, 2018

Data Feed: December 15, 2017

Key stats you need to know about today

eMarketer
By: Rahul Chadh
December 15, 2017

 

Net Neutrality Nixed: The US Federal Communications Commission (FCC) voted to end net neutrality regulations that prevented businesses from charging higher prices for better quality content and services delivered over the internet. The action will also end the designation of high-speed internet as a utility. The change was protested by consumer advocates and heralded by those opposed to government regulation.

Social Disconnect: A new report by Common Sense and SurveyMonkey polled parents and teens in the US about the use of social media. It found that more than half of parents thought they were well-versed in their teens’ social media behavior, but only 30% of teens thought their parents were up to speed. In addition, more than one-quarter of parents said they used a tracking or other type of monitoring device to keep tabs on their teens’ online behavior.

Year in Search: Google has released its year-end review of search, reporting that Hurricane Irma was the top trending query in 2017. The iPhone 8 and iPhone X finished second and third, respectively, underscoring the strong hold Apple still has on the collective consciousness. The top 5 was rounded out by former TV host Matt Lauer and soon-to-be royal bride Meghan Markle.

Down with OTT: Video ad serving platform SpotX reported that 26% of ad spending on its platform in October 2017 was dedicated to over-the-top (OTT) video. That was up from just 8% a year ago. SpotX also expects OTT video to command around 30% of ad dollars spent on its platform by the end of the year.

Premium Plays: According to Freewheel, ad views for premium video content in the US increased by 24% year over year in Q3 2017. Video content featuring full show episodes saw the largest bump, while ad views for live streaming of linear broadcasts posted a smaller gain.

State of Luxury: A survey of affluent consumers across the world from Luxury Institute found that more than nine in 10 respondents expect to purchase luxury services or items in the coming year. And more than one-quarter think they’ll spend more on luxury in 2018 than they did in 2017. Only 9% expected to shrink their luxury spending next year.

 

Source: https://www.emarketer.com/content/data-feed-december-15-2017

 

November 27, 2017

Multichannel and Millennial Tastes will Shape Luxury in 2018

The Luxury Institute’s annual list of the “Top 10 Luxury Trends for 2018″ found that millennials are opting for high-end services which provide experiences over purchasing luxury goods.

Luxury Society by Digital Luxury Group
By: Danny Parisi
November 14, 2017

While luxury goods are likely to see a bit of a slump in 2018, high-end services will witness solid growth at the behest of millennials who value experiences over things.

This trend is one of the 10 collected in the Luxury Institute‘s “Top 10 Luxury Trends for 2018,” an annual list of the biggest trends, challenges and predictions for the upcoming year. In addition to the primacy of experiences over goods, luxury brands are focusing more on the emotional benefits their products can have for customers over the material benefits.

Luxury trends

In the coming year the luxury world will be facing some major challenges as well as some major opportunities.

According to Luxury Institute’s Top 10 Trends, growth has been uneven for luxury goods but luxury services are faring much better.

This can be attributed to the growing presence of millennials in the luxury consumer base, who are more prone to purchase services and ephemeral experiences over objects and goods.

Millennials make up a much larger segment of consumers than baby boomers, 92 million to 77 million to be exact, but it will still be a while before millennials fully come into their spending power. For now, they do not have quite as much impact on the market as boomers.

Along those lines, Luxury Institute notes that the impending transfer of wealth from boomers to millennials may still be a ways off, and that when it happens it may not be the windfall many are expecting it to be.

One of the more surprising trends is that shopping centers are becoming more important to the luxury industry.

Shopping malls are not usually considered centers of luxury retail, but recent research shows that mall owners are pouring money into redesigns and renovations to be more accommodating to different types of consumers and communities.

Over the last three years, malls in the United States have poured more than $8 billion into renovations with an eye on turning the mall experience into something more upscale with options beyond the usual shopping mall fare. This research comes from real estate management and investment firm JLL in a report outlining the future of the new U.S. mall.

Relying on data

Other trends on the list focus on the ways the luxury industry is connecting online to offline.

While ecommerce accounted for almost 12 percent of all retail last year, there are signs that a plateau may be on the horizon. In response to this, luxury brands will begin to focus on the in-store experience as well as the online experience, bringing those two together for good.

This theme is continued in another trend where brands will begin to seamlessly integrate the various channels that make up their business in order to allow customers to navigate and complete transactions in whatever way they choose.

While digital is a vital aspect of retail, in-store associates are not useless and are proving to be an essential part of the customer experience, according to consumers.

A report from Astound Commerce shows that 52 percent of consumers think it is vital for store associates to be able to place an order and 46 percent believe they should have access to inventory information. However, online shoppers are having extremely positive experiences as well, with 86 percent claim their customer service interactions were great, and 42 percent saying excellent.

Finally, the next year will likely see new developments in the way brands collect and use data, bringing in new tech such as artificial intelligence to help intelligently sort through and make the best use of valuable data that will help brands market and sell better.

 

Article originally posted on Luxury Daily.

Sourcehttps://www.luxurysociety.com/en/articles/2017/11/multichannel-and-millennial-tastes-will-shape-luxury-2018-luxury-institute/?utm_source=Luxury+Society+Newsletter&utm_campaign=6fa6d0ff3c-EMAIL_CAMPAIGN_2017_11_20&utm_medium=email&utm_term=0_d63682bcfa-6fa6d0ff3c-61061965

Top 10 Luxury Brands in the World

Stock Talk Review
By: Maria Mancic
November 22, 2017

Photo Source: Pixabay/Public Domain

When someone mentions top 10 luxury brands in the world, what is the first name that crosses your mind?

There is something very appealing about luxury brand items. It might be the fact that they are unreachable for some people or, for some others, the fact that, unlike other mortals, they can afford them. The problem with the most luxury brand items is that the price doesn’t always match the quality, which means that a person is giving a fortune for something that can be bought for, in some cases, less than $200 and it lasts shorter than the one that they would buy for the more reasonable price. But the one thing is certain: as long as there are people who would give that kind of money, the prices will be that high.

Just in one year, in 2016, the global luxury market grew by 3% to extraordinary $240.47 billion. Do you still breathe? Great, let’s continue. Luxury Institute CEO suggests that this growth is caused by an economic slowdown in China, but you will read about that a bit later.

The majority of these top 10 luxury brands in the world are located in Europe. At the beginning of 2017, experts suggested that the luxury market will grow by 4%-6% more by the end of the year and reach incredible $268 billion value. But there are several factors that might slow down this process. One of them is the increasing market awareness and changing conditions that will force luxury brands to open low-cost stores in Asia and it is predicted that, in the next 5 to 10 years, the prominent luxury customer base will come from Africa. The other thing that will affect the luxury market is Trump’s new rules, especially the one regarding making all luxury brand owners to pull their offices from other parts of the world and concentrate on the US only. This will bring the prices up in no time and decrease the owner’s monthly income. Next, it will lead to closing down many stores and firing a lot of people. But, that’s the politics, and people were the ones who chose Trump as their leader.

To clear it up more and find out which luxury brands are on the list, click on top 10 luxury brands in the world.

 

Sourcehttps://www.stocktalkreview.com/top-10-luxury-brands-in-the-world/23357/

September 14, 2017

Nordstrom’s plan to attract shoppers: Wine, manicures — but no merchandise

The Washington Post
September 12, 2017
By: Abha Bhattarai

 


The first Nordstrom Local is scheduled to open next month in Los Angeles. (Courtesy of Nordstrom)

Nordstrom’s newest store will have personal stylists, manicurists, a tailor and plenty of wine.

But there won’t be any merchandise for sale. No clothing, no shoes, no accessories.

Instead, Nordstrom Local will serve as a gathering ground for customers to chat with employees, pick up online orders and drop off returns. Stylists will be available to put together personalized recommendations — outfits for a Caribbean vacation, say, or a job interview — that customers can view on their mobile phones and buy directly from Nordstrom.com.

The experiment, which begins with a 3,000-square-foot store in Los Angeles next month, comes as retailers around the country look for ways to blur the line between shopping online and in stores. Analysts say it is also a way for Nordstrom to open smaller locations in more urban areas to keep up with changing customer preferences. (A typical Nordstrom store is about 140,000-square-feet — or nearly 50 times the size of the new concept.)

“As retail continues to transform at an unprecedented pace, the one thing we know is that customers value great service, speed and convenience,” Shea Jensen, senior vice president of customer experience for Nordstrom, said in a statement. “Finding new ways to engage with customers on their terms is more important to us now than ever.”

It’s a model others are trying, too. Apple executives on Tuesday said the company’s newest stores have outdoor plazas, boardrooms, forums and workshops, all with one goal in mind: getting people to linger.

“We don’t call them stores anymore, we call them Town Squares,” Angela Ahrendts, head of Apple Retail, said at a company event Tuesday. “They are gathering places.”

It’s a similar idea at Nordstrom, which in 2014 spent $350 million on Trunk Club, the online personal styling service. The company was also an early investor in Bonobos, the men’s e-commerce company that was acquired by Walmart for $310 million earlier this year.

“Nordstrom has never been afraid to try new things, and that’s become especially important in an environment where bricks and mortar is becoming obsolete,” said Ivan Feinseth, an analyst for Tigress Financial Partners. “Most retailers are struggling because they have no identity and can’t connect with customers. Nordstrom is the opposite: It has always been known for a high level of customer service, and now they’re moving further in that direction.”

But some said it’s not immediately clear whether Nordstrom’s new concept will be successful. Among the challenges the company could face: higher shipping costs as it mails more items to customers’ homes, and difficulty winning over shoppers who have become accustomed to shopping from home.

“It’s a mixed bag,” said Milton Pedraza, chief executive of the Luxury Institute, a market research firm. “There are people who like the instant gratification of going to a store, and there are others who like the convenience of ordering from home. This model — well, it kind of gives them neither.”

Nordstrom has been a rare bright spot in the retail industry, as longtime department stores chains like Macy’s, Kohl’s, Sears and J.C. Penney report declining sales and profits, and announce plans to close hundreds of stores. Seattle-based Nordstrom, however, reported that both revenue and same-store sales — a measure of sales at locations open more than a year — were up during the most recent quarter, as more people shopped online and in its stores.

But the company is also facing competition from Amazon.com, which this year is expected to surpass Macy’s as the country’s largest seller of apparel. Amazon has been aggressively building up its clothing and shoes businesses with its own private-label brands and last month completed its $13.7 billion purchase of Whole Foods Market, giving it a network of nearly 500 stores around the country. (Jeffrey P. Bezos, the chief executive and founder of Amazon, owns The Washington Post.)

“That’s the big question on everybody’s minds: How do you create a hybrid between shopping online and in store?” Pedraza said. “Nobody has figured it out just yet, so the stakes are very high.”

“It’s not a slam dunk — it’s not like anybody is saying, ‘Oh my God, what a great idea.’ They should’ve done this years ago,’” Pedraza said. “But it’s an interesting idea. And who knows? Maybe it will work.”

Source: https://www.washingtonpost.com/news/business/wp/2017/09/12/nordstroms-plan-to-attract-shoppers-wine-manicures-but-no-merchandise/?utm_term=.18b4f737fdb9 

August 9, 2017

Luxury camping, complete with lobster dinner delivery

CBS Money Watch
By: Irina Ivanova
August 9, 2017

Come August, many families leave the house for camping in the woods or on a beach. But those leery of leaving behind the air conditioning need not forego the natural experience. A newly opened campground in Maine might have just the thing.

Sandy Pines Campground in Kennebunkport has been open less than two months, but its 12 professionally decorated, luxury tents are pretty solidly booked through mid-October, according to a spokeswoman. Those come in addition to the campground’s 320 acres of campsites, lodges and RV hookups.

Each tent measures 450 square feet and comes with heating, air conditioning and a mini-fridge. Travelers also can choose from individualized quirky amenities, like mid-century furniture in one tent and a painting set in another. Rates start at $149 a night before taxes.

Would-be campers should note that dogs are not allowed in the luxury tents, although pets are welcome elsewhere in the park. The glam tents also don’t permit individual barbecuing, but they do offer delivery of a fully cooked lobster dinner right to your tent flap.

sandypines-blixensoasis-bynicolashome.jpg

Blixen’s Oasis, a safari-themed tent designed by Nicola’s Home.

 SANDY PINES CAMPGROUND

 

Glamorous camping, or glamping, has taken off in recent years as the travel industry tries to come up with novel attractions for well-heeled travelers who prefer experiences to things.

“When you have the money, you want to splurge,” said Milton Pedraza, CEO of the Luxury Institute. “Yes, you’ll go out and hike, but you’re going to want to have those luxuries when you come back and when you wake up.”

The Oxford English Dictionary, which added “glamping” in December, defines it as an activity with “accommodation and facilities more luxurious than those associated with traditional camping.”

But the experiences range widely between having a slightly more comfortable sleeping floor and ordering lobster delivered to the tent. Pedraza predicts the less-than-rugged segment of glamping, rather than full-on luxury, will grow the fastest in the coming year. Young families in particular might appreciate camping facilities that are set up with basic amenities, he said.

“They’re pretty spectacular,” camper Katie Latulip told CBS affiliate WGME. “The fact that they’re all equipped with all the amenities that a camper would need to essentially just show up and you know, have a great weekend, is pretty phenomenal.”

sandypines-nauticalnights-ext-bychatfielddesign.jpg

Nautical Nights, a tent by Chattfield Designs, at Sandy Pines.

 DOUGLAS MERRIAM FOR SANDY PINES CAMPGROUND

 

Sandy Pines originally intended to rent two of the tents and sell the other 10, but after “overwhelming interest in the glamping experience,” it’s renting all 12 of them, a co-founder of of the site told Boston.com. For those interested in a more permanent camping experience, the campground also offers mini-cabins for sale, which measure about 650 square feet and sell from $71,000 to $98,000.

The concept of traveling in luxury, of course, is nearly as old as luxury itself. A famous example from medieval Europe is the Field of the Cloth of Gold, a summit in Northern France in 1520 between Henry VIII of England and Francis I of France and their respective retinues. They gathered, ostensibly, to celebrate peace between the two countries, but in reality to see which monarch could throw the more impressive party.

An actual wrestling contest during the summit ended with King Henry as the winner, according to Vice, but the question of who was the more successful glamper remains shrouded in the mists of history. © 2017 CBS Interactive Inc.. All Rights Reserved.

Source: http://www.cbsnews.com/news/glamping-kennebunkport-maine-luxury-camping/

July 28, 2017

THE ROLLS-ROYCE PHANTOM PERSONALIZES OPULENCE

Wired
By: Brett Berk
July 27, 2017

 

 

ROLLS-ROYCE

 

FOR MORE THAN 90 years, the rich, famous, and beautiful have been ferried to their special occasions inside Rolls-Royce Phantoms. The car epitomizes imposing elegance, a status symbol that signals, “I’m loaded, but I’m also very classy.” On Thursday, Rolls-Royce unveiled its newest version of the Phantom, a four-door, $500,000-dollar sedan. The car’s design illustrates the balance Rolls-Royce must strike to make the vehicle feel new, innovative, and personalized—worthy of its half-million-dollar price tag—while also maintaining connection to its storied eight-generation lineage.

The general state of the luxury goods market further complicates things. “Wealthy buyers are placing a strong premium on more emotional and personal priorities: travel, food, adventure, and family,” says Milton Pedraza, CEO of the Luxury Institute, which tracks high-end spenders. The challenge for Rolls is to incorporate those spending behaviors into the car’s design.

Making the vehicle stand out is a matter of throwing wide the suicide doors. “If you said to me, ‘What finally defines this Phantom?’ I’d say, ‘Please step inside,’” says Giles Taylor, Rolls-Royce design director.

The feel is “slightly edgy of its time, but not beholden to its time,” says Taylor. That rules out a Tesla-style giant touchscreen. And the Rolls interior has to feel exclusive, so no replicating the health and wellness monitors that respond to drivers’ moods, which Mercedes installs in top-end models.

Rather, Rolls’ approach is to install something called the “Gallery.” That the feature’s term borrows from museum nomenclature is no accident. The Gallery covers the entire central expanse of the upper dashboard with toughened glass, and carves out a three-dimensional display shelf behind it—72-inches wide and 6-inches in tall. The perfect place to install, well, anything you want. You can’t get much more personalized than that.

The Rolls Royce design team and craftspeople at the company’s British headquarters are standing by with some posh ideas for buyers, should they need them—or they’re happy to create installations from scratch. For instance, the company’s most dignified customers might choose to festoon their Gallery with a family crest laser-etched in platinum; a miniature landscape of an ancestral manse fashioned from Austrian porcelain; an abstract wing rendered in feathers and laser light; or a burst of precious gemstones refracting the aurora borealis.

Automakers love this level of personalization because—surprise!—they command hefty price tags. Rolls expects each new Phantom owner to spend almost $100,000 on individual details alone. The company offers Rolls-Royce staples like book-matched burl walnut veneers and preternaturally smooth animal hides, but also novel options like black pear and grey oak woods, outrageous carpet color palettes, even satin and silk seats. The company sees its Gallery as a new way to enhance its up-sell.

THE INSIDE THAT COUNTS

  • The Real Auto Revolution Is Already Happening—Inside the Car

  • Tomorrow’s Cars Won’t Just Drive Themselves. They’ll Feel Different

  • Prepare Yourself for the Sweet, Sweet Luxury of Riding in a Robocar

Now, personalization isn’t a new concept for cars. Pre-war Rolls-Royces were delivered as a rolling chassis to a coach builder, to fit a custom body. The intro of assembly lines standardized things, but now technology means cars can be given bespoke touches with relative ease. “With the digital production we have now, we can make it very individual, but produced in a high industrial quality,” says Thorsten Franck, an industrial designer commissioned to build Gallery concepts. Well into the 21st century, that process gives the Phantom some continuity.

Here’s the best news for those who can’t drop half-a-mil on a car: In the automotive world, what starts as a high-end option often trickles down to the mass market. Watch out for 3D-printed, dash-adorning, family crests at a dealership near you.

July 25, 2017

Wine as Beethoven … or pop tunes

In Daily
By: Philip White
July 25, 2017

 

Last summer I visited a winery tasting and sales room with a mate from New Orleans. Dr Robert DeBellevue is a music fiend as much as a top-flight wino and obsessive bird-watcher; he’s been to Australia more than 30 times pursuing such delights.

We were under deep cover: plain clothes. It was fascinating to watch the staff trying to discover the level of our vinous expertise, especially that of the tall unassuming dude with the gentle Louisiana accent.

“What do you usually drink at home?” the vendor sensibly enquired.

Dr Bob answered, in all honesty: “Grange.”

Once the staff realised he was fair dinkum – he’s one of the biggest collectors in the USA – everything changed. We got what we’d come for: a leap-frog to the top shelf.

Dr Bob’s story of discovering Grange by accident at a Queensland medical conference in 1978 is a lesson in how such passionate addictions can occur. The big door prize was a bottle of Grange. He didn’t win it, but he heard it was Australia’s greatest wine. So on his way home he called in at Len Evans’ Bulletin Place wine shop in Sydney and bought a dozen mixed vintages from the ’50s and ’60s for $6 a bottle.

The lads on duty that day obviously had no more idea of their value – or price – than the Doc, who knows all too well that price is what you pay but value, good or bad, is what you get.

Once home, he went to a restaurant with a wine merchant mate, and opened his first, the 1965. Value? He couldn’t believe his luck. He was a goner. Gone for all money.

Just as political journalists get free politics to grease the gears of their knowledge, the wine critic is exposed to great volumes of wine. One becomes very aware of the gap between top and bottom shelves, in both value and price, and remains confounded by the discrepancies in both measures.

These kidneys have processed wines of prices so far up the scale one daren’t usually admit to drinking them, much less gratuitously boast of it. One could never possibly afford to buy them. Very few can.

Probably just as well in many instances: I’ve had very famous wines at ridiculous prices that given a glass, many of our winemakers would never get to within thousands of the wine’s true price if asked to make an estimate.

Similarly, I’ve wallowed in legendary bottles whose brands, regions, or even varieties would rarely be recognised by the same crew if presented blind.

Nevertheless most who have never had the readies to risk in those nether regions above, say, the price of current Grange, have favourites they treasure and fondly recall that might cost 1 or 2 per cent of such enormous spends. What obsesses me is the mystery of how different folk measure these fluffy calibrations of true quality and fair charge.

There was a fascinating discussion around the cobweb last week when Peter Martin, the brilliant economics editor at Fairfax, reviewed and considered The Memory of Music, a new book by composer Andrew Ford, who hosts the cognoscenti Radio National program The Music Show.

Most wine drinkers have one or two easy chart-toppers they recall as fondly as a favourite ehrwurm

Andy has written about how a mighty Beethoven symphony can invite the listener into its confounding, mysterious world, while a simple formularised pop song moves instead into us.

“It is small wonder, then, that we associate pop songs with the time and place in which we most vividly encountered them, the girlfriend we had at the time, the summer holiday we were on, the college we were at,” Andy writes.

Which triggered me to write this. Consider, say, the new Domaine de la Romanee-Conti La Tâche 2011, whose 6 hectares of Pinot noir in Burgundy produced 18,196 bottles which sell around the world at between $3000 and $4500 each. This is such a disinterested, remote and easily misunderstood wine it could just invite you in like Beethoven if you’re very, very lucky.

And you listen.

On the other end of the scale, most wine drinkers have one or two easy chart-toppers they recall as fondly as a favourite ehrwurm.

“Songs are like elevators between floors of our lives,” Peter Martin wrote. “They transport us to where we were when we first heard them: the faces, the places, even the smells …

“We share our love of special songs with others who grew up loving them, but not necessarily because they are objectively special. Mostly it’s because they’ve been made special … They are precious, but not necessarily because they are good.”

And so it goes with much wine. Unless you’re feeling exceptionally carefree and bearish, it might pay to forget the Beethoven/La Tâche/Grange world and pursue more bottles of that affordable, unforgettable hit single you had with a lover at the beach, on the grave of a brother, by the campfire in the desert … learn your old favourites; their sources; their makers.

Then comes the tricky bit. In a recent white paper on the future of retail, Milton Pedraza, CEO of the New York-based consultancy The Luxury Institute, wrote: “Today, consumers are at their best. They are educated, informed, and they have a mindset that is light years ahead of retailers. Retail will have to reinvent itself in order to become flexible and constantly adapt to keep up with the consumer.”

While he referred of course to the buyers of Louis Vuitton, Ferrari, Dior and the like, this observation can be applied to retail liquor outlets: there are some wine sales people who know their field inside-out, but most are part-timer Shoppies working to pay for shoes for their kids or their own education and rent, who have bugger-all knowledge of the products they pump.

At which point it’s pertinent to go back to Peter Martin explaining that a lot of hit singles become so only when the record company pays to get songs played on the radio, citing CBS routinely paying $10 million a year to radio stations in the 1980s.

This happens, too, in wine retailing. The maker of that pallet of discount stuff inside the front door has often paid handsome rent for the floor space. That’ll be what the staff are pumping hardest.

So you have to quite literally shop about until you find somebody you can trust, who knows what you like, and can reliably recommend other wines of the type and price of that favourite that’s stuck in your brain like that catchy ehrwurm pop tune. Once you find such a vendor, be they in a shop or a cellar-door, culture them. Nurture them. Teach them about you as they teach you.

Regardless of your budget, you can save a great deal of money and have a helluva lot more fun. I’ll do my best with fairly priced recommendations.

As for the luxury goods shopper, or the aspirant, try the analogy I made reading the shiny magazine for collectible car perves, Octane:

“I had no interest in something fashionable,” wrote Winston Goodfellow, who was looking for a collectible supercar on a limited budget, “I wanted a car with desirable characteristics at a price less than those same attributes would cost elsewhere. Landmark design, history, performance, rarity, potential capital preservation/appreciation … [providing] a memorable, lingering experience that couldn’t be found anywhere else … Like stepping onto the dance floor with the most perfect partner.”

As Dr Bob discovered, sometimes, if you’re diligent and determined, you can find that most perfect partner for $6. So maybe there is something to be said for the wine retailer with such scant knowledge they don’t even know what Grange is, much less recognise a new wine likely to achieve similar glory.

If you have such luck, proceed realising this love affair is likely to end up costing you a lot more than $6 per bottle. In which case you’ll need more than ever that retailer who does know their business and who you know you can trust.

Nurture them. As the robots march in and internet shopping takes over and outlets become self-serve caverns full of muck, such caring professionals are precious indeed.

Source: http://indaily.com.au/eat-drink-explore/wine/2017/07/25/wine-beethoven-pop-tunes/

Is Tiffany & Co. Amazon-proof?

CBS MoneyWatch
By: Jillian Harding
July 24, 2017

Though many major American retailers have had their foundations shaken by Amazon (AMZN) and the wider explosion in e-commerce, Tiffany & Co. (TIF) appears to be a rare diamond in the rough of brick-and-mortar retail.

Exhibit A: The company’s stock price has jumped nearly 30 percent over the last year, even as department stores like Macy’s (M), J.C. Penney (JCP) and Sears struggle with shrinking growth.

Analysts point to several reasons why Tiffany’s, despite a recent dip in sales, remains in favor among investors. Those include the touch-and-feel experience of shopping for fine jewelry, the company’s potent brand, and a global, and well-heeled, customer base.

Another advantage is Tiffany’s small physical footprint of 125 stores in the U.S. and roughly 300 total worldwide. Its stores also are in upscale malls, which have been less affected by the mass department store closings that have affected other malls.

That helps keep Tiffany’s operating costs low and its stores churning out profits, with sales of around $2,600 per square foot in 2016 and a sparkling 62 percent gross profit margin.

Like other retailers, of course, Tiffany must cope with the impact of e-commerce and, as ever, the changing tastes of consumers. To that end, it recently named Alessandro Bogliolo, a veteran of luxury retail who is known for his ability to revamp brands like Bulgari, as its new CEO.

As with many luxury retailers, Tiffany also is looking to add millennial buyers that may be more interested in experiences and paying down student loans than spending on big-ticket jewelry. The trick is to attract younger shoppers while maintaining its core high-end client.

One way to appeal to younger buyers is by offering lower-priced fashion jewelry, which does not include gemstones and carries a lower price tag than fine gemstone jewelry. The fashion jewelry category was responsible for 33 percent of Tiffany’s sales in 2016.

Edward Jones analyst Brian Yarbrough said the company must be cautious about not devaluing its brand. While having different price points opens the door to a different mix of consumers, “You have to be careful — they had this problem in the early 90s… People who are buying $20,000 or $30,000 pieces don’t want teens running around,” he said.

Retail consultant Howard Davidowitz, CEO of Davidowitz & Associates, said that for Tiffany to retain the luxury customer, the company might consider looking to do an offshoot for fashion jewelry or acquire a brand like Pandora to appeal to a different kind of consumer.

“If you have a store and you load the store up with a lot of middle-level merchandise because you are trying to sell to tourists and everyone else, they are going to want to buy a small item and get the Tiffany bag. If you do that, you are a going to lose luxury customers.  I don’t think there’s any way to do it unless you can come up with a store within a store strategy — there is clarity in that.” he told CBS MoneyWatch.

In reporting its first-quarter earnings, the company laid out a new strategy for driving growth, including finding ways to more effectively engage with customers, adding new products, and revamping or even closing some stores.

Yarbrough said Tiffany needs to refresh its product line and improve its marketing, while adding that a greater focus on supply-chain efficiency could boost the retailer’s profit margin. But he also thinks that the company’s core strengths — its allure in overseas markets and high-end jewelry niche, in which customers want to make purchases in person — help buffer it from the competitive ravages of e-commerce.

“We think it’s a brand, as well as a retailer, that is more Amazon-proof,” he said.

Echoing this theme, Cowen senior retail analyst Oliver Chen wrote in a recent note, “In our view, Un-Amazon-Able qualities include… store and vertical integration focus at Super-Premium luxury stocks (Tiffany, LVMH, Sotheby’s),” he said in a recent note.

But Tiffany can’t rest on its diamond-studded laurels, Davidowitz said, noting that high-end clothing retailers with strong brands have been hurt by e-commerce and that Amazon could eventually decide to encroach on the jeweler’s turf.

“They have to have a plan to address the gigantic change taking place… Now is the time to do it. There is no way to say people are not going to buy jewelry online.”

Milton Pedraza, CEO of retail research group the Luxury Institute, said the key for Tiffany is to foster strong relationships with customers built on its compelling products and prestigious brand. 

“I think the world will become a barbell — at the one end it will be Amazon, commoditized products — and then there will be real luxury,” he said. “There are a lot of ‘luxury’ pretenders….Tiffany is no pretender. I think they will continue to survive and thrive.” 

Source: http://www.cbsnews.com/news/is-tiffany-co-amazon-proof/ 

May 9, 2017

High-end bag maker Coach splurges and buys rival Kate Spade

Marketplace
By: Jed Kim
May 8, 2017

Luxury goods maker Coach announced today it’s splurging. It has agreed to buy rival company Kate Spade for $2.4 billion. Coach has already acquired high-end shoe designer Stuart Weitzman, and with the Kate Spade purchase, it seems it’s on a mission to create a stable of luxury brands.

To hear the fully story, including insights from Milton Pedraza, click the link below to access the Marketplace website for the audio story: https://www.marketplace.org/2017/05/08/business/high-end-bag-maker-coach-splurges-and-buys-rival-kate-spade 

April 21, 2017

Ducati Stretches Its Sex Appeal

Departures
By: Brett Berk
April 20, 2017

Can the exclusive Italian superbike manufacturer change its game without sacrificing its reputation? Necessity suggests the brand has no other choice—if it wants to survive.

It came as a surprise to supercar purists when, in 2012, Lamborghini first hinted that it would release an SUV—a vehicle seemingly antithetical to the brand’s aggressively impractical essence. But what may be experienced by some as a sign of brand suicide is actually an act of survival: The performance-oriented Urus is expected to double Lamborghini’s sales once it hits stores by the end of this year. In the eternal quest for increased market share, the automaker known for its fiendish six- and seven-figure supercars has had no choice but to diversify. And in this competitive market, they’re not the only ones.

The 90 year-old Ducati brand is the Lamborghini of motorcycles: exclusive, expensive, performance oriented, and effusively Italian. The brands’ spirits have only become more kindred since 2012, when the motorcycle marque became a wholly owned subsidiary of Lamborghini (itself owned by German carmaker Audi, and part of the Volkswagen Group). And just like its hyper-potent owner, Ducati has begun to dip its toe into the market beyond the high-speed, high-price racing bikes for which its known.

 

Working on a Ducati Multistrada. Courtesy Ducati

 

This year alone, Ducati plans to release eight new bikes across a number of new, more accessible segments the brand has shied away from in the past. New models include the Multistrada 950, a touring “multibike” (January 2017, $13,995); a suite of Scramblers, as part of the two-year-old sub-brand, including the off-roading Desert Sled (March 2017, $11,395) and a 1960s-inspired Café Racer (April 2017, $11,395); and a versatile, entry-level sport/comfort SuperSport (April 2017, $12,995). The XDiavel, a cruiser intended for an aging buyer (someone over 40 in motorcycle-speak), launched in December 2016 ($23,495).

These additions are a far cry from the developments of previous years, which saw R&D dollars generally go to making their superbikes ever faster and more technically advanced. But those investments have had an unforeseen side effect: As progress has allowed high-end motor vehicles to become incredibly fast, safe, and easy to drive, access to the full experience they offer has become almost impossible to achieve on public roads.

 

The Ducati Scrambler Café Racer. Courtesy Ducati

 

“The risk,” says Jason Chinnock, CEO of Ducati North America, “is that the motorcycles, like supercars, get so far advanced that it limits their actual use.” The brand had to adapt or perish—or at least, start collecting cobwebs in the garage. Already the move seems to be paying off. Global sales are up nearly 25 percent, reaching a record 55,450 bikes purchased in 2016. Part of this can be attributed directly to the new offerings, especially the Scramblers, which immediately became Ducati’s bestseller when the line was introduced in 2015. “It was very important for us to able to expand,” Chinnock says. “Now I can say that we cover about 60 percent of all motorcycle segments, versus in the past where we were around 23 percent [with just superbikes].”

“There are always going to be purists out there,” says Milton Pedraza, CEO of luxury research and consulting firm the Luxury Institute. “But I think most of us are willing to accept a more sedate, or different versions of a brand that is still in the same category. The Ducati brand has a sex appeal, besides the performance appeal.”

 

The Ducati XDiavel. Courtesy Ducati

 

Ducati won’t completely leave its past behind: In May, the brand will debut the 1299 Superleggera ($80,000), the fastest twin-cylinder in history (at 215 horsepower) and first-ever street-legal full-carbon fiber structure superbike. But the marque will continue its expansion into existing and incipient categories moving forward. Chinnock hasn’t ruled out a fully electric motorcycle, which, with its instant power, stealthy silence, and eco-friendly approach, may soon garner significant demand. “It’s something that we’ve continuously looked at, but the technology isn’t at the point yet where we can insure the proper experience for our brand,” he says, citing Ducati’s rousing heritage, founded in part on its aggressive and mechanical sound.

One style Ducati fans likely won’t find any time soon, however, is a self-driving motorcycle. “I think that autonomy has an excellent place in the world of transportation, but why people get on a motorcycle is not necessarily to move from point A to point B,” Chinnock says. “We ride to escape, we ride for sport, we ride to clear our head. That’s the difference between entertainment and transportation.”

Source: https://www.departures.com/lifestyle/automobiles/ducati-dips-into-new-motorcycle-segments

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