Luxury Institute News

September 22, 2016

Top Luxury Hotels Remain Leaders Despite Drop In Global Travel

www.luxurydaily.com
By: Brielle Jaekel
September 22, 2016

Hilton-owned Waldorf Astoria Hotels & Resorts is climbing the ranks in terms of international brand awareness, despite consumers spending less time traveling, according to the Luxury Institute.

JW Marriott, InterContinental, Four Seasons, Grand Hyatt and The Ritz-Carlton have maintained their places as the most visited hotel brands, reported last year and this year in the LBSI Global Hotel study. However, affluent consumers are cutting down on hotel stays with modest decrease in number of nights stayed.

“While the top scoring brands continue to do very well year-over-year, the Waldorf Astoria has done phenomenally well in improving international brand awareness of their properties over the last several years,” said Milton Pedraza, CEO of the Luxury Institute.

“There are no real surprises. We expected that consumers may travel less, and the research shows that affluent consumers spent two nights less on average than they did last year,” he said.

“As occurred, we expected a slight pullback in nights spent and that can be attributed to macro-economic factors that have negatively effected global tourism.”

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Travel insights

As the top hotels remain in their places as the leaders, JW Marriott saw a significant increase in visitors from the United States and China. However, affluent travelers from France visited Club Med, Le Meridien and Sofitel the most, and Kempinski Hotels was frequented by German consumers.

There has been a slight drop in the nights stayed due to economic influences, which coincides with insight revealing that most affluent consumers are staying in the hotel brands for vacation and leisure. On average, total night stays dropped from 19 to 17 in one year.

However, U.S. consumers were the only demographic that has seen an increase in the number of nights in luxury hotels. Europe had the biggest impact with German consumers dropping down to an average 19 nights from 26, and French travelers from 23 to 19.

Another report from the China Outboard Tourism Research Institute revealed that international markets saw a 16 percent increase in Chinese outbound travelers, but closer to home, in Greater China, there was a 7 percent decline in tourism for the first half of 2016.

COTRI found that there were 64 million border crossings from Mainland China between January and June of 2016, resulting in a growth rate of 3.4 percent. Much of the luxury market relies on Chinese outbound travelers who visit brand stores and duty free shops to make high-end purchases as a method to avoid the high tax at home (see more).

Affluent customers traveling for leisure for one week or more make up more than 31 percent of global travelers. About 62 percent travel with their spouses, only 16 percent travel alone and 11 percent are with business companions.

 

Winning consumers

Hotel brands that create the ultimate luxury experience by tapping into on-site associates win out. Employees that go above and beyond for guests can make or break the brand.

However for ski resorts, the opulence and amenities available are helpful but do not protect the sector from customers’ hunting for a deal, with buyers appreciating a good value, according to a separate report by Knight Frank.

Affluent customers who enjoy homes in the mountains and ski resorts as second residences still want to be sure that they are getting a good deal, with interest in locations that offer great values such as Chamonix and Saint Gervais, France, both near the base of Mont Blanc in the Swiss Alps, strengthening. Customers want worth and appeal for their purchases and investments, making villages such as Val d’Isere Verbier, Switzerland and Chamonix best-in-class considerations (see more).

“As we see from the five top-rated hotel brands, achieving a high LBSI score strongly correlates with the ability to charge a premium price,” Mr. Pedraza said. “One thing we know from other Luxury Institute research is that while the locations, facilities and amenities are important they do not provide the ultimate competitive advantage.

“The ultimate advantage is the experience with the brand ambassadors in how well they develop a personal emotional connection with guests during their stay,” he said.

Source: https://www.luxurydaily.com/top-luxury-hotels-remain-leaders-despite-drop-in-global-travel/?

September 19, 2016

The Big Business Of Red Carpet Bling

www.fastmagazine.com
By: Rina Raphael
September 18, 2016

Jewelry companies of all sizes compete to get their baubles on the right celebrities at the right time—including the Emmys.

Actress Cate Blanchett is celebrated for her unconventional, avant-garde awards-show fashion. But at the 2015 Oscars, it was her jewelry that stole the red carpet show: She paired a long, simple black Maison Margiela gown with a Tiffany & Co. turquoise and diamond necklace. It dominated fashion headlines and soon thereafter, inspired knock-offs and Etsy reimaginings. Us Weeklypromoted a $75 Blanchett-inspired jewelry giveaway.

“We didn’t plan on it,” says Blanchett’s stylist, Elizabeth Stewart. “But it worked.”

When it comes to Hollywood baubles, the motto is generally, “Go big or go home.” To compete with couture gowns and Cinderella moments, top jewelers such as Bulgari, Chopard, and Forevermark go all out to secure their celebrity endorsements. It’s a lengthy, complicated loaning process, and a chance at worldwide brand recognition.

Sometimes celebrities or stylists are paid to wear the accessories, with compensation potentially hovering in the hundreds of thousands. Sometimes the jeweler will “thank” the star by “gifting” them jewelry. Sometimes the generous one-night loan is the sum total. It varies, and those involved are historically mum on the transaction specifics.

[Photo: Flickr user Kyle Garrity]

[Photo: Flickr user Kyle Garrity]

A PRICEY PROCESS

It starts with the stylist, the unsung maestro of all Hollywood red carpets. Stewart, whose clients also include Julia Roberts, Sandra Bullock, and January Jones, starts with the dress, then moves her way to accessories. “Often, the jewelry comes last,” she says, but stresses that it is “very important” to create a full look.

The next step is the insurance companies. Jewelers might provide the insurance, but most commonly, stars already have existing relationships with insurance agents and a policy that seamlessly weaves in additional loans.

“Individuals of some level of wealth normally have some kind of jewelry coverage in place,” explains Janece White, vice president, North American underwriting and jewelry specialist of Chubb Personal Risk Services, which counts high-profile celebrities as clients. Even if it’s just for what she calls “the basics”—their engagement rings or earrings—deep-pocketed celebrities often get covered.

If the client is a “good customer” who has had a relationship with the agent for years, Chubb will offer the additional coverage, but they need the specifics of the loaned pieces and how they will be stored, transported, and secured. “It’s usually not just one piece of jewelry,” White says. “The stylist brings back a number of pieces—sometimes a couple million dollars worth.”

White and her associates are available throughout the days leading up to awards shows, waiting on frantic last-minute calls from clients who might need to insure a $5 million diamond choker. It’s a frenzy. They also act as consultants, offering recommendations on services such as security firms that can provide armored trucks and guards, which could run well over $20,000.

“Would it be acceptable to throw [the jewelry] in the back of a cab? No,” White says. “Would it be acceptable to have [the client] come with someone very secure to take the items back by personal car? Yes.” Most clients, says White, take good care of their loans, because “they want to borrow something again the next award season.”

With all that prep work, there is still no guarantee the star will wear a specific item. A stylist has multiple looks on hold in the dressing room hours prior to an event, and sometimes last-minute decisions occur.

“I can’t tell you how many times the backup dress becomes the dress,” said Stewart. “You really don’t know until it’s all put together.” And if the gown changes, so too will the accessories. Stewart cites a number of reasons why one or both might not make the final cut: hair, makeup, and even just one’s mood.

THE BRAND NAME GAME

For many companies, the goal is to tie themselves to the right star whose name signifies aspirational wealth and glamour.

“There’s a lot that goes on behind the scenes in terms of determining who that million-dollar actor is going to be walking down the red carpet,” says style expert Anna De Souza. “It’s not about selling that particular piece—it’s about brand recognition.” Celebrities are repeatedly asked, “Who are you wearing?” with designer names appearing in celebrity and fashion magazines for weeks thereafter.

For stars, borrowing baubles is a mark of success. And consumers understand that the bigger the star, the bigger the bauble.

“Beyond the event itself, media will cover different celebrity looks—i.e., who wore what, not to mention a huge social media audience weighing in on each celebrity look, garnering mentions for brands,” says Crosby Noricks, a fashion brand strategist and founder of PR Couture. “When a company like Tiffany’s or Bulgari does a product-placement deal with a celebrity, if they get the right star, it can certainly add a valuable spotlight to their product, image, and brand.” It can also bolster a certain campaign. Cate Blanchett’s turquoise homerun served to promote Tiffany & Co.’s Blue Book collection.

Snagging an international star is paramount. This is especially true for smaller jewelry companies trying to secure placement in bigger retailers or to enter a new market, like Dubai. Being able to approach new opportunities with the claim that “Jennifer Lopez wears our jewelry” can be the ticket in.

Labels have their own specific needs and who they want to reach. For publicly traded companies like Tiffany & Co., which boasts over 300 stores and sells high and more modestly priced collections, it makes sense for them to place their products on a wide range of stars, ranging from Oscar winners to TV actresses, at various industry events. Chopard wants to master the red carpet, so you might see their products at movie premieres, in addition to awards shows.

Anna Hu Haute Joaillerie sells colorful jewelry with whimsical, intricate imagery like flowers and butterflies. Price points range from $100,000 to $7 million. The brand was relatively unknown until Madonna wore an Anna Hu Haute Joaillerie diamond cross pendant necklace to the 2009 Met Gala. “That put Anna on the global map,” says Carineh Martin, the company’s chief marketing officer.

Today, Hu’s styles adorn A-listers such as Gwyneth Paltrow and Emily Blunt—but only at the three high-profile events: the Oscars, the Met Gala, and the Cannes Film Festival. The designer takes the rare approach of relying on a select few celebrities to foster an image of exclusivity.

“It has to be the top event, the top actress, with the top jewels, otherwise it’s just not interesting for us,” Martin says. “If that means only one or two a year, that’s all we’re interested in.”

It makes sense, considering the brand has only one store, and most sales are private custom orders. That’s precisely what a certain clientele wants—the sense that they’re wearing something rare and special. “How can you be exclusive when you have 600 stores worldwide?” Martin says.

“We are about being private jewelers to a very small echelon of clientele, so everything we do is with that in mind, including our red carpet approach,” she says. “We could dress a lot more people and have a lot more awareness, but when you’re not readily available all over the world, what’s all that awareness going to do for you? We’d rather be known by fewer people, but the type of people who respond to our jewels.”

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AS SEEN ON . . .

There are those who want exactly what the stars are wearing. Fine jewelry designer Irene Neuwirth has been contacted while celebrities were still modeling her designs on the red carpet. She sold two emerald cuffs, each at $150,000, while they were still on Julianne Moore’s wrist at the 2013 Met Gala.

Iconic moments can immediately help sell a style. Gwyneth Paltrow went down in fashion history following her 1999 Oscar win, when she clutched her gold statue in a pink Ralph Lauren gown and a 40-carat Harry Winston diamond necklace. The jewelry house immediately sold a few necklaces in the same style, reportedly at over $100,000 each. One buyer was Paltrow’s own father, who gave his daughter the jewels as a gift.

As for how this visibility affects companies’ bottom lines, that’s a complicated equation. According to Milton Pedraza, CEO of the Luxury Institute, a consulting firm serving more than 1,000 luxury and premium goods, what consumers consider the most prestigious and what consumers actually buy don’t always align. In a recent study, the Luxury Institute found that households earning over $200,000 were most familiar with the following brands, in descending order: Tiffany & Co., Cartier, Bulgari, Gucci, Chanel, Harry Winston, De Beers, Van Cleef & Arpels, Mikimoto, and David Yurman.

And here’s where they spent their money: Tiffany & Co., Cartier, Alexis Bittar, David Yurman, Gucci, Bulgari, Chanel, Boucheron, Mikimoto, and Judith Ripka. The two categories diverge, since consumers can’t always afford what they’re familiar with, but they still want designer.

Consumers with household incomes under $75,000 tend to own items from Tiffany (76%), Bulgari (32%), and David Yurman (21%).

“Millennials are very aspirational,” Pedraza says, noting their constant media intake of celebrity fashion and culture. They’re attuned to researching a product or a celebrity they want to emulate. “They are now in the know.” They might only buy a pendant necklace or bracelet, but they’re still buying.

The majority of Americans don’t have the means to even consider buying a pricey piece of jewelry that was seen on the red carpet, but there are other opportunities to partake in the luxury sector.

“The average TV viewer isn’t going to go out and purchase [the exact item], but they might pick up a pair of sunglasses, perfume, or wallet in order to align themselves with an aspirational brand worn by their favorite celebrity,” Noricks says.

Buying the jewelry isn’t necessarily the point of these celebrity endorsements. It’s to get the brand on your mind—for future purchases. They’re in this for the long haul.

As style expert Anna De Souza says, “It goes way beyond the 10-minute walk down the red carpet for these brands.”

Source: https://www.fastcompany.com/3063093/fashion-forward/the-big-business-of-red-carpet-bling

High-End Shopping In The Sharing Economy: Now We Can All Have Couture

www.fastcompany.com
By: Rina Raphael
September 15, 2016

Between consignment e-tailers and luxury-label rental sites, consumers are approaching designer fashion with a whole new mentality.

The Kardashians don’t exemplify thriftiness, so it was surprising when Khloé, Kendall, and Kylie partnered with the luxury consignment site The RealReal in August. The sisters listed 200 pieces from their personal closets, ranging from Chanel purses to Christian Louboutin heels, at nearly 80% off retail value. “Now you can own pieces from my closet!” Khloé Kardashian proudly tweeted to her 21 million followers.

The entire collection sold out within 24 hours, a rep for The RealReal confirmed.

The reality TV stars’ participation confirmed the site as a destination for all incomes and demographics, including celebrities. Today, luxury rental e-retailers, consignment shops, and loan services are destigmatizing what was once considered the domain of aspirational shoppers. More than that, it’s democratizing high fashion and shifting how we buy (and keep) designer clothing.

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EVEN DISNEY STARS WEAR DESIGNER

The constant influx of celebrity news, celebrity stylists, and brand participation on social media means we know everyone’s fashion tastes. Whereas previous generations may have only been familiar with a few design houses—Chanel, Oscar de la Renta, Yves Saint Laurent, for instance—today’s woman is familiar with dozens more, ranging from big (Balmain, thanks to Kim Kardashian) to emerging (Jason Wu, thanks to the Michelle Obama).

Many women once dreamed of emulating Elizabeth Taylor’s wardrobe—and it remained just that: a dream. But today, a savvy shopper could potentially wear whatever Julia Roberts donned for the Oscars. The shopper might only rent the gown for a night, but the Cinderella moment is no longer a fairy-tale fantasy.

“Luxury is changing—and changing for the more value-centric consumers who are much greater in number than pure luxury [products],” says Marshal Cohen, chief industry analyst of the market research company The NPD Group.

“Something that used to be attainable purely for the elite is now becoming more accessible to those who are willing to splurge,” says style expert Jacqui Stafford. “It’s still a splurge, there’s no question about it. You’re still going to be spending at least $500 [to rent] a gown that you might have to pay $5,000 to buy.”

It’s not just Oscar winners who inspire the masses. Teen stars also employ celebrity stylists who deck them in Preen and Vetements. “These labels are definitely more accessible now, and we have social media to thank for that,” Stafford says. “Even Disney stars are sitting front row at Paris Fashion Week shows. You’re seeing the younger demographic really embrace couture, bringing it to a new audience.”

That means a growing percentage of teens and millennials now look way beyond what’s available at the neighborhood mall. They want Gucci, Cartier, and Chanel and they’re getting savvier when it comes to acquiring those marquee designer brands. They are not a demographic to ignore: According to a recent study, millennials spend $200 billion annually and are set to outspend baby boomers by 2017.

The Kardashians don’t exemplify thriftiness, so it was surprising when Khloé, Kendall, and Kylie partnered with the luxury consignment site The RealReal in August. The sisters listed 200 pieces from their personal closets, ranging from Chanel purses to Christian Louboutin heels, at nearly 80% off retail value. “Now you can own pieces from my closet!” Khloé Kardashian proudly tweeted to her 21 million followers.

The entire collection sold out within 24 hours, a rep for The RealReal confirmed.

The reality TV stars’ participation confirmed the site as a destination for all incomes and demographics, including celebrities. Today, luxury rental e-retailers, consignment shops, and loan services are destigmatizing what was once considered the domain of aspirational shoppers. More than that, it’s democratizing high fashion and shifting how we buy (and keep) designer clothing.

Many of The RealReal’s customers are millennials with strong brand loyalty. And they tend to adhere to a specific strategy. They start as first-time buyers, enjoying their discounted designer item until they eventually tire of it and resell it. They then take the money earned to the primary market—to, say, Neiman Marcus, where they buy a new high-end item. Once it’s been seen enough times by their social group, they sell it in the consignment space. Then the process repeats itself. In a way, they’re learning about investment, depreciation, and retaining value, but in the context of designer fashion.

“They’re saving their money for that special Celine bag, and when they’re done with it, they’re consigning it,” says Rati Sahi, chief merchant for The RealReal. “You see them think differently about their purchases. They’re calculating [whether] they can get 60% back with the resale value.”

They’re willing to pay, up to a point. “Millennials are interested in high fashion but not willing to pay those high prices,” Cohen says. “So discount sites, secondhand sites, and stores, as well as auction sites, do well for the luxe millennial.”

If Selena Gomez’s fans are wearing Chanel in greater numbers, how does that affect the label’s mystique? “Ease of access to luxe helps, but also hurts,” Cohen says. “The luxe market is also so accessible it loses some of the panache.”

Former interior designer Sallie Giordano was surrounded by professional women in New York City who complained of the increasing cost of maintaining their wardrobes. They had full social calendars: speaking engagements, conferences, galas. With designer retailer sales so frequent, consumers “felt stupid” if they purchased full price, Giordano says.

In April 2015, Giordano launched Couture Collective, a luxury clothing rental membership club. It’s like a “timeshare” of seasonal designer apparel. Members pay an annual fee of $250, then each season, they can borrow up to five dresses from, say, Valentino and Christian Dior, after they’ve purchased a one-fifth share in an item, at 20% of the retail price. “If you look at the statistics, people will wear a dress three or four times and then they consider it an old dress,” says Giordano, who says she sees lots of women who will only wear current season styles.

Couture Collective’s clientele ranges from wealthy women to upper-middle-class aspirational shoppers, all looking to showcase a well-kept designer closet.

“I think the average person is interested in wearing these [designer] styles because honestly, they’re better styles,” Giordano says, noting how high-end garments are well made with quality fabrics and flattering cuts. “When you wear these dresses, there’s a huge difference. You just feel special and confident.”

For Couture Collective’s clientele, there’s an appealing ease to the idea of renting: No need to store or care for items they intend to wear once. “It’s not about ownership anymore,” Giordano says. “It’s about being able to do something without all the responsibilities of ownership … This allows them to wear the trends of the designers and not feel ridiculous then they’re sitting unworn in their closet the next season.”

Social media has certainly changed the amount of times we wear an article of clothing. Couture Collective’s clients don’t want to repeat an outfit, especially if their event is photographed for publication on Instagram or Facebook.

The Instagramming of outfits was a consideration for Armarium, an on-demand luxury rental site that launched in November 2015. It is a true high-fashion lover’s dream, featuring selections from the top design houses as well as emerging international labels. While the options on Rent the Runway can feel a bit sartorially safe, Armarium caters to those looking to get noticed in fashion-forward garments. Some offerings are exclusive to Armarium, which directly negotiates with fashion houses.

“Social media has drastically changed the game of how we access products, particularly with statement pieces,” Armarium cofounder and CEO Trisha Gregory says. Her business works in tandem with retail and e-commerce, with the goal of serving as a complement to full-price investment staples like black pants or a white shirt. Armarium partnered with Net-a-Porter to assist customers in putting together an ensemble that’s part rented, part purchased. For example, you can rent a statement Sonia Rykiel tunic from Armarium, then link out to Net-a-Porter to finish the look with a splurge trouser or investment stiletto.

“This is a smart way to complement [a customer's] existing wardrobe and the pieces she will buy for the season,” says Gregory, whose clientele is made up primarily of women aged 28-34. Helping customers discover new items is a big aspect of the service; the full range of offerings are visible on the site and there are also showrooms with experienced stylists on hand. “We want to give them access to shopping in an innovative way,” Gregory says.

Armarium sees two types of renters. The first is the busy, high-net-worth individual who values convenience. She’s on the move, attending multiple conferences or vacationing in St. Barts. “We’re packing her bags and getting her out the door, easing her schedule,” Gregory says. “We’re seeing the stigma [around renting] debunked with what the high-net-worth individual thought about the concept of renting…. For them, this is about access to statement pieces that aren’t in the market most times.”

Then there’s what they call the “HENRY,” the high-earner-but-not-rich-yet aspirational shopper. She’s social media-savvy and cares about brand identity. In Gregory’s words, it’s “very hard” for her to re-wear pieces. Both types are return customers, on average 28% of the time. Business is booming: Sales have tripled since Armarium launched its mobile app in April, with a 40% month-over-month growth of app downloads and site visits.

“Women are starting to shop in a different way,” Gregory says. “People want an experience, and that’s what we strive to give them. This is basically a celebrity offering.”

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LESS IS NOW MORE

One thing celebrities have easy access to that the average woman does not: bling.

Flont is a jewelry loan service set to launch this fall. It plans to do for bling what Couture Collective does for fashion. Flont lets customers borrow a certain amount of designer jewelry at different membership rates. For $199 a month, you get $60,000 worth of jewelry a year. Up your monthly fee to $1,999 and you’re entitled to $100,000 worth of jewelry over 12 months. Designers include red carpet favorites like Irene Neuwirth and Paige Novick.

But why would the well-to-do woman rent when she could buy? Flont’s founder Cormac Kinney points to the private-jet industry as a comparison.

“Certainly, if you can afford a NetJets membership, you can afford a jet—but that’s not the point. The point is convenience,” he says. “It’s much more convenient to let someone maintain it and you just use it when you need it.”

The company commissioned a survey sampling U.S. women with a minimum household income of $65,000 who had purchased $2,000 or more in fine 18K gold jewelry in the last 12 months. They found that 88% said they would buy a piece they loved even if it was worn by someone else before, and 75% were interested in jewelry sharing.

Many don’t want the complications that come with owning burglar-bait. Jewelry insurance, for example, adds an extra layer of cost, which can run over $10,000 a year. With Flont, insurance is included.

Then there are those who, inspired by the cult decluttering bible The Life-Changing Magic of Tidying Up, simply want less stuff. Excess is no longer chic.

“A lot of young women out there think, ‘I want to have a great dress and great piece of jewelry and I’m willing to spend a few hundred dollars but I don’t want to own it,’” says Milton Pedraza, CEO of the consulting firm Luxury Institute. On the other end, baby boomers now see an alternative to constant consumption: “Many older women want to declutter their closets. They don’t want to be wasteful.”

This mentality inspired VillageLuxe, a community-based fashion borrowing site that connects women’s closets. It extends the age-old “can I borrow that?” philosophy across entire neighborhoods, like an Airbnb for fashion.

“There’s this sense of wastefulness and this big gap between my ability to wear more than three pieces at a time out of my 300 pieces,” says Julia Gudish Krieger, founder and CEO of VillageLuxe. “The [designer rental market] is focused on that aspirational consumer, but I think you polarize and leave out a whole big part of the market of people who don’t need the money—it’s just the sense of wastefulness.”

Krieger launched the site in July 2015 after asking herself, Which of my assets that I don’t use every single day would people want to rent? “After my house and my car, it’s my closet,” she says. (Though, in New York, one’s closet might actually top that list.)

“I’m such a believer in the sharing economy,” says Krieger, a former VC. “I think it’s where the world is heading in general, and it’s not just that people are becoming more efficient with how they monetize things when they’re not using them. The more interesting element is the social barriers between what’s mine and what’s yours have blended so much more in the last five years.”

Village Luxe is currently invite only, with a heavy emphasis on influencers and fashionistas who lend as well as borrow. As of August, more than 10,000 women were on the wait list. Current members are quite active, having already listed over 7,000 pieces. (VillageLuxe intends to open the list once they’ve scaled the company.) For the moment, members include Upper East Side wives with extensive jewelry collections and edgy fashion bloggers like Leandra Medine, i.e.,The Man Repeller.

The startup emphasizes vintage styles as well as current collections. Many of their clothes are garments you can’t find anywhere else, like an Alaïa cocktail dress from the ’90s. “We actually had Vogue start borrowing from us for editorials,” Krieger says.

INVESTING 101

Like The RealReal, Village Luxe is watching customer habits shift in real time.

“Once [our members] find out that VillageLuxe exists, they buy fewer but much more expensive pieces—statement pieces—because you know you can pull value out of them between wears,” Krieger says. “Then you won’t feel bad about that McQueen blazer that you really had your eye on, which you can physically only wear once a month with different groups of people.” This buy-and-share mentality, Krieger hopes, will motivate shoppers to make smarter decisions.

These sites can also alter the calculus of hemming and hawing over a pricey outfit. A customer is more likely to swipe their credit card if they know they can make some of their money back. “Women list things as soon as they buy them—they’ll list the items sometimes before it’s even arrived.”

Krieger says that aspirational shoppers especially are changing their strategies. They’re more likely to go for a few select designer items than whatever is on the shelf at H&M or Zara. They see it will actually pay for itself and even create a revenue stream. “They can justify going higher market,” she said.

A high overlap exists between the renters and the lenders, with over 40% who lend using their earnings as credit to borrow. “There’s circuitry in the market,” Krieger says. Women now think one step ahead when it comes to their wardrobe, debating what’s worth what and where to put their next dollar.

It’s a whole new way of shopping—and experts don’t see the trend waning. As Giordano says, “Once you start wearing designer, it’s really hard to go back.”

Source: https://www.fastcompany.com/3063255/fashion-forward/high-end-shopping-in-the-sharing-economy-now-we-can-all-have-couture 

September 16, 2016

Why ‘Basic’ Is Bad For Starbucks

TheWashingtonPost.com
By: Abha Bhattarai
September 15, 2016

With 24,000 locations across the world, Starbucks has become an everyday stop for millions.

But that ubiquity could now be its problem.

“Starbucks is now competing with chains like Dunkin’ Donuts and McDonald’s,” Business Insider proclaimed this week. “It has gotten, in a sense, too basic.”

“Basic,” according to Urban Dictionary, is a pejorative term used to describe anything “involving obscenely obvious behavior, dress, action.” Other examples of brands deemed basic: Lululemon, Michael Kors and Ugg Australia.

So what’s an overexposed company to do?

Starbucks in recent years has begun looking for ways to restore its luster. In December 2014, it opened a Roastery & Tasting Room in Seattle, where $10 cold brews are the norm. The high-end concept is soon to expand to New York and Shanghai, with nearly a dozen other locations in the works, according to Business Insider:

“The premium coffee experience of the Roasteries is intended to have the trickle-down effect. The chain plans to open roughly 500 Reserve stores, which offers premium Roastery beverages and artisanal Princi food, and 1,500 stores with Reserve bars, which will serve drinks made in a wider variety of styles such as pour-over and siphoning.”

It’s all part of an effort, analysts say, to reinvent itself as a luxury brand.

But can a brand that’s gone mainstream turn high-end again? It’s a quandary that brands like Apple, Michael Kors and Coach have also faced in recent years, as they look to balance widespread popularity with upscale cache.

“I’ll just say this: It’s much harder to go up-market than it is to do the opposite,” said Milton Pedraza, chief executive of the Luxury Institute, a New York-based market research firm. “What Starbucks has to do at a higher level is to be personal, like when you go to Hermes and the salesperson knows your name, or when you buy a Tesla and you’re in a high-street showroom.”

When it was founded in 1971, Starbucks was a premium brand, offering a higher-priced but also a better-quality cup of coffee than most Americans were used to. In the decades since, Americans have taken to it in droves, making the Seattle-based brand a commonplace staple, as ubiquitous as McDonald’s or Wal-Mart.

“They’ve set the bar high, and now they have to keep moving to an even higher level,” Pedraza said.

It’s a phenomenon Pam Danzinger calls “lux-flation”: Our ideas of what constitutes a premium product or experience are always evolving.

“A brand like Starbucks starts at the top, and as it expands, it becomes the new normal,” said Danzinger, author of “Putting the Luxe Back in Luxury.” “Now it’s got to create that mystique once again.”

Need another example? Just look to Apple, Danzinger says. A decade or two ago, the company’s iMacs and MacBooks were seen as coveted novelty items. Today, just about everybody has at least one Apple device, which, she says, is why the company is reinventing its retail locations with free Wi-Fi, ficus trees and weekend concerts.

“They’re putting the human touch back into the equation,” Danzinger said. “That’s one way to regain that luxury edge.”

It’s not always an easy proposition, Pedraza says. Coach had tried for years to win back an air of exclusivity to no avail, as have Michael Kors and Kate Spade.

But, he says, there have been some successes: In the early ’90s, Gucci was almost done for. The Italian fashion company was in financial despair and its creative director was quoted as saying “no one would dream of wearing Gucci.” Then Tom Ford took over, and revived the brand, boosting sales and restoring the company to its previous glory.

“There are examples, but it takes a lot of money and a lot of paring back,” Pedraza said. “And frankly, not every company has the courage to do that. Everything is so grow, grow, grow in today’s world. And before you know it, you have a mainstream brand that isn’t special anymore.”

Source: https://www.washingtonpost.com/news/business/wp/2016/09/15/why-basic-is-bad-for-starbucks/

September 6, 2016

The Hunt for Asia Watch Sales

NYTimes.com
By: Victoria Gomelsky 
September 6, 2016

Even as Swiss watch exports continue to decline, watchmakers are sharply focused on trying to find just the right combination of marketing and retail strategies in Hong Kong and mainland China, the industry’s No.1 and No.4 sales markets.

For the first six months of this year, exports totaled $9.9 billion worldwide, a 10.6 percent slide from the same period in 2015. The steepest drop came in Hong Kong, which underwent a 26.7 percent decrease, with June the region’s 17th consecutive month of decline. Analysts attribute the slump in the city, long a favorite tax-free shopping spot for mainland Chinese and Western tourists alike, to numerous issues, including Beijing’s four-year-old anticorruption crackdown on gifts, changing consumer preferences and global currency challenges, chiefly a soaring Swiss franc and a strong dollar.

“The near term doesn’t look optimistic,” said Milton Pedraza, chief executive of the New York-based Luxury Institute. “No one is willing to bet that in the next 24 months there will be a turnaround.”

What makes this crisis considerably more daunting for the watch industry than the global recession of 2008 is that the Swiss brands now have thoroughly assessed the mainland Chinese market and no longer expect that its demand, which peaked in 2012, will propel a spectacular recovery.

Clockwise, from top left, the Roger Dubuis Excalibur Quatuor featuring the FFF team logo; Hu Ge with a Piaget Polo S; and Li Bingbing with Sascha Moeri, chief executive of the brand Carl F. Bucherer.

Clockwise, from top left, the Roger Dubuis Excalibur Quatuor featuring the FFF team logo; Hu Ge with a Piaget Polo S; and Li Bingbing with Sascha Moeri, chief executive of the brand Carl F. Bucherer.

  • In July, Swiss watch exports to Britain increased 13.4 percent compared with the previous year.
  • Watchmakers attributed the increase to the pound’s decline since the June 23 vote. “We kept our prices unchanged while the GBP went down compared to other major currencies,” said Fabien Dutriaux, vice president of sales for Arnold & Son, a watch company based in La Chaux-de-Fonds, Switzerland. “We believe that this gap attracted some customers and generated this uptick.”
  • One month, however, doesn’t tell the whole story, cautioned Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry. “The growth of July follows a substantial fall in the previous month and is explained in part by a favorable base effect,” he said. “But we cannot exclude that it is also due to the weakening of the pound and the consequent increase of sales. We will see next month if this growth is confirmed.”

Some watchmakers, however, continue to hope. “The state of the market in China is not as bad as what you read about,” said Philippe Léopold-Metzger, chief executive of Piaget.

He acknowledged that a glut in wholesale inventories had pushed many brands to buy back stock from authorized dealers in Hong Kong — an unusual occurrence in the watch world — but, he added, “retail is doing pretty well.”

In its report for the fiscal year that ended March 31, Piaget’s parent company, the Geneva-based luxury group Compagnie Financière Richemont — owner of such high-end brands as Cartier, Panerai and Jaeger-LeCoultre — indicated that its watchmakers’ sales had increased 3 percent year over year but that its operating contribution had declined 29 percent, in part because of “a difficult environment in Hong Kong, Macau and the Americas.”

Mr. Léopold-Metzger said that, with the change in focus from gifts to personal purchases, price had become more important, and the brand had responded by introducing its first collection entirely in steel. The Polo S, a casual men’s watch Piaget unveiled in July, gave it a new entry price of $9,350. “Consumers are young, and they’re going to love the look of the watch,” Mr. Léopold-Metzger said.

Of utmost importance, he added, is that the brand expands its business locally. To that end, Piaget has teamed with Hu Ge, the Chinese actor, singer and social media darling, to appear in Beijing last month for the Polo S collection. Mr. Léopold-Metzger described Mr. Hu as a “game changer” and said that his ambassadorial role would be publicized primarily through digital media.

Piaget isn’t alone in trying to connect with new consumers in new ways.

Swiss watch executives are gradually embracing the idea that to entice young buyers, a “combination of a strong social media strategy with smart celebrity endorsements becomes really powerful,” said David Sadigh, founder and chief executive of the Digital Luxury Group, a Geneva-based digital marketing agency.

The watchmaker Carl F. Bucherer is a believer. With Digital Luxury Group’s help, the brand introduced a repositioning campaign at the Baselworld fair in March featuring a new logo, “Lucerne 1888,” to highlight the brand’s Swiss hometown and its founding year. (That the logo incorporates — and repeats — the number 8, considered a sign of wealth and good fortune in China, is serendipitous, said Sascha Moeri, the brand’s chief executive.)

It also announced Li Bingbing as its ambassador. Western audiences may know her only for recent additions to the “Resident Evil” and “Transformer” franchises, but she is a star in China. “Li Bingbing had 37 million followers on China’s Weibo at the time the partnership was signed,” Mr. Sadigh said.

Alliances also are being sought beyond film and television. In May, the Geneva-based watchmaker Roger Dubuis announced its sponsorship of FFF Racing, a new GT championship automotive racing team founded by Fu Songyang, the 31-year-old Chinese tycoon. And to mark its new role at 15 races across Europe and Asia, the brand created an eight-piece limited edition of its Excalibur Quatuor model in black DLC titanium featuring the FFF logo at 12 o’clock.

Jean-Marc Pontroue, Dubuis’ chief executive, said the FFF partnership was intended to support the brand’s retail strategy in mainland China. A year ago, Roger Dubuis opened a second boutique in Beijing, in the luxury SKP mall, “and that has given visibility, credibility and access to many new customers,” he said. He also noted that moving the company’s Shanghai boutique to a busier retail location in April had “created 10 times more traffic.”

Several watchmakers say the global answer to growth lies in reducing distribution costs while maintaining sales.

“Three to four years ago we were at 500 points of sale globally, and now we’re at 300 and we continue to go down,” said Tim Saylor, chief marketing officer for the Audemars Piguet brand. “Currently we have less than 10 doors in all of China, with only two boutiques. We’re not sitting on a huge number of stores with huge stock and collapsing demand.”

August 30, 2016

Lamborghini Pivots to Target Women and Families

Bloomberg.com
By: Hannah Elliott
August 30, 2016

Forget what you know about raging bulls.

Lamborghini wants to show you a softer side of Italian supercars.

So says Chief Executive Officer Stefano Domenicali, who moved to the company’s top spot in March. Since then, he’s been calling for a change in tone at the Volkswagen Group-owned house. Where the sharp-edged V12 and V10 aggression of the Murcielago, Gallardo, and Aventador reigned supreme for years, Domenicali said, buyers can expect to see something different in the next few years.

“A bull is always aggressive, but I would like to give us a new philosophy toward the future: A bull can be gentle,” he said.

Urus Is Key

Domenicali’s image efforts hinge on the new Urus SUV, due out by late 2018. He said the vehicle will double the company’s annual global output but will remain on limited production at Lamborghini’s new Sant’Agata factory. The brand sold a purposefully few 3,245 units worldwide in 2015.

“The SUV will be a game changer,” he said. “It will make Lamborghini different.”

The goal will be to make Urus immediately identifiable as a Lamborghini, both in how it looks and in how it drives, and to make it immensely “personalizeable” for a young (30-45) target audience whose members view themselves as the “protagonists” of their own lives, Domenicali said. The engine is anticipated to be a 600-horsepower, turbocharged V8 engine, rather than Lamborghini’s signature V12.

What Women Want

Even more notable, Domenicali is hoping that a big share of the SUV’s buyers will be women. This will be no small feat, considering that only 5 percent of the company’s global buyers last year were female. That’s roughly the same percentage it held even a decade ago, according to a Lamborghini spokesman. What’s more, most of those vehicles were sold to women in the U.S. and Europe; the first woman to buy a Lamborghini in India did so just three months ago.

“I don’t think anybody has captured the heart and soul of the female luxury buyer” in the supercar arena, said Milton Pedraza, CEO of the Luxury Institute, a Manhattan-based research firm. “It’s not a question of money for women in that segment. The money is not going to be the issue. It’s going to be: ‘Show me you know me.’”

There is plenty of space for Lamborghini to claim. Nationwide, women buy 53 percent of all small SUVs and 48 percent of small premium SUVs, according to J.D. Power & Associates, compared to roughly 40 percent of all new cars.

The Power of Singles

Single women in particular are coveted potential buyers: From 2010 to 2015, premium small SUVs saw a 177-percent jump in sales to single women, according to MaritzCX, a customer-experience research company. More than two-thirds of female buyers reported their 2015 vehicle purchase decision as “entirely up to me,” according to the report. Additional storage and passenger space, a high ride height, and improved fuel economy in new premium SUVs have fed their growing appeal to women buyers.

“Lamborghini is going in the right direction here,” Pedraza said, noting the success of Porsche and its wildly popular Cayenne SUV. “Anybody can be convinced, as long as there is substance to the argument. If Lamborghini puts out a product that is female-friendly, women will definitely flock to it and will change their minds.”

The key to success in this new segment for Lamborghini, Pedraza said, will be to produce a product that women can use comfortably and often. (“If you are going to do an SUV, you better understand that there will likely be children in the back; women transport kids, whether they are working mothers or not.”) The brand will have to get women into the showroom and then communicate the quality of the product: “When women get to the showroom, the people who are ambassadors to the brand and the experience have to be impeccable,” he said. “It all has to be seamless and honest and relevant—and by the way, human. If it can do that, I believe Lamborghini has a great shot.”

Hiring and promoting more women to lead the drive will be essential. Representatives from Lamborghini said on Tuesday that they were unaware of how many, if any, women the company employs in top leadership positions; a quick survey of head executives on the company’s press website offered no female names apart from that of the new American public relations executive.

This will entail revolutionary thinking at the 53-year-old brand, which started out making tractors in an industrial center in rural Italy. Domenicali said he’s more than up to the challenge.

“We have a small company, but we know we can do a good job,” he said. “And we are humble—it’s a different customer, a different car, a different network. We are top with regard to the super sports car, but this will be a different business.”

Keep the Good Stuff

Lamborghini does have some non-negotiable stipulations, even with the new, softer-side efforts. It will always make its signature V12 engine, Domenicali said. And while it will eventually introduce a hybrid Urus, it will never move toward producing vehicles that run on diesel. A totally electric Urus is a “maybe,” Domeniali said, depending on how technology and regulations develop over the coming years.

After all, a bull is still a bull, even if it’s a gentle one.

“Our customers want to feel the car, they want to hear it, they want to feel the vibration of the engine,” Domenicali said. “They are expecting from us to be current with our cars and yes, to invest in technology, but at the right moment—not before and not after.”

Success at Lamborghini will have much to do with having the flexibility to change and grow, he added: “A bull can recognize people with a glimpse of the eye and be smart. He is not always aggressive in a negative way. He’s aggressive because he is very strong animal, but the Lamborghini of the future is an animal that can recognize the beauty of people, can recognize the fact that we are going to a family-oriented business with an SUV.”

Source: http://www.bloomberg.com/news/articles/2016-08-30/lamborghini-pivots-to-target-women-and-families?cmpid=yhoo.hosted

Parisian Luggage Maker for the Truly Rich Seduces Luxury Giants

Bloomberg.com
By: Angeline Benoit
August 29, 2016

Only the really wealthy know Goyard.

Unlike Gucci or Louis Vuitton, the more than 200-year-old Parisian maker of luxury luggage and bags — with one of its 19th-century-style trunks going for 52,380 euros ($59,315) — maintains a studied silence. It doesn’t advertise in glossy magazines, and is among the last of its kind not swallowed up by a larger peer. So far, that is.

Photropher: Edward Berthelot/Getty Images

Photropher: Edward Berthelot/Getty Images

Kering Chief Executive Officer Francois-Henri Pinault wouldn’t be averse to adding it to his company’s stable of brands, a person familiar with the matter said. While neither Kering nor its larger rival LVMH Moet Hennessy Louis Vuitton will officially comment on whether they’re interested in Goyard, industry observers say it’s unlikely they would pass up a chance to consider buying it.

“In the event that Goyard is for sale, LVMH and Kering will surely take a look,” said Mario Ortelli, London-based head of luxury at Sanford C. Bernstein. “The Goyard brand would be compatible with Kering’s portfolio, for example, or LVMH could seek to increase its market share in leather goods rather than let another company build up a competitor to its brands like Louis Vuitton, Fendi and Celine.”

Businessman Jean-Michel Signoles, who bought Goyard in 1998 from its founding family, won’t say if he wants to sell the company he turned around by expanding sales to the new, burgeoning wave of the world’s wealthy.

Aristocrats’ Bags

Luggage maker of aristocrats in the 19th and 20th centuries, Goyard counted the Maharaja of Kapurthala, the Rockefellers, the Romanovs, the Duke and Duchess of Windsor and Karl Lagerfeld among its customers, it says on its website. The company, which boasts a “complete disregard for marketing or mass-production,” also says it doesn’t engage “in any form of e-commerce.” It declined to respond to Bloomberg’s questions.

A visit to Goyard’s flagship Paris store on rue Saint-Honore, across Louis Vuitton and Moynard outlets, is a journey into the past, with trunks hearkening back to a bygone era. The shop also features an array of cases and duffle bags ranging from less than 3,000 euros to close to 6,000 euros, as well as tote bags from 1,560 euros and a red crocodile-skin number for 37,000 euros. Beach bags, towels, pouches, wallets, hangers, belts, dog collars, slippers, umbrellas, pens and pen cases complete the collection.

On a recent day, customers had to wait outside the shop because it could only accommodate a limited number of clients. Assistants in white gloves attended to the shoppers fortunate enough to have entered.

“Goyard has evolved from a very functional brand, and while it remains very classic, it’s technically and aesthetically appealing to people, with its hand-painted initials, seals and images,” said Dana Telsey, founder of Telsey Advisory Group in New York.

Burgundy Touch

The company traces its history back to 1792 when it was founded in Paris by Pierre-Francois Martin as a maker of cases and boxes to transport fragile objects. Childless, Martin passed his company on to one of his workers, Louis-Henri Morel, who hired 17-year-old Francois Goyard in 1845. Goyard took over the company after Morel’s death.

In 1885, the business was taken over by Francois’s son Edmond, who came up with the company’s emblematic Goyardine canvass, a soft and waterproof mixture of linen and cotton inspired by the clothes worn by the family’s water log drivers and their community in the village of Clamecy in Burgundy. The business was then handed down from father to son until it was bought by Signoles, who brought his own sons Alex and Remi on board.

Raking in Profits

For all its claims to “timeless elegance, craftsmanship and exclusivity,” Goyard was accumulating losses when it was taken over by Signoles, the founder of children’s clothes brand Chipie. Signoles pumped in capital, refurbished the Saint-Honore store and opened outlets in Asia and North America as well as a couple in Europe and one in Sao Paulo.

“The fact that it’s no longer family-owned, that it’s gained a better-known name, expanded its leather goods assortment and opened new stores, like the one on Madison Avenue in New York, that already says that the brand is aiming for greater reach,” said Telsey.

The strategy has paid off, regulatory filings with Paris’s Commercial Court show. Revenue surged to 41.1 million euros in 2013, the latest available data on the company, from 1.14 million euros in 2000. Profit rose to 12.8 million euros from 18,000 euros as exports accounted for a third of sales from less than 4 percent.

Brilliant Job

“Signoles has done a brilliant job of maintaining the brand heritage while growing it slowly,” said Milton Pedraza, CEO of the Luxury Institute, in New York.

Still, to be all that it can be, Goyard may need some help, he said.

“To reach a critical mass where it can survive and thrive on a larger scale, while remaining unique and exclusive, it will need the larger capital and know-how that larger groups can provide, as happened for Bottega Veneta with Kering, or Vuitton with LVMH,” Pedraza said.

Source: http://www.bloomberg.com/news/articles/2016-08-30/parisian-luggage-maker-for-the-truly-rich-seduces-luxury-giants

August 29, 2016

Bijan property on Rodeo Drive sells for $19,000 a square foot

Los Angeles Times
August 26, 2016
By: Andrew Khouri

The demand for $5,000 handbags and $25,000 suits is slipping amid global turmoil.

But enthusiasm for real estate on Rodeo Drive, where such high-end goods are sold, isn’t hurting. Instead it’s setting records.

The parent company of Louis Vuitton recently paid $122 million, or $19,405 a square foot, for the yellow House of Bijan building at 420 N. Rodeo, long home to a boutique known as “the most expensive store in the world.” The deal, revealed in public records, was the second time in seven months that a record fell on Rodeo.

Late last year, Chanel paid $13,217 a square foot for a store it was leasing nearby at 400 N. Rodeo, the high-water mark for California retail until last month’s Bijan sale.

The eye-popping amounts reflect how few properties there are on the Beverly Hills street, as well as how infrequently they go on sale. And in a struggling market for luxury goods, the deals underscore that high-profile streets such as Rodeo or Manhattan’s upper Fifth Avenue are far more than a place to sell a $10,000 timepiece.

“They are billboards in some places for the brand,” said Milton Pedraza, chief executive of consulting firm Luxury Institute. “The companies can demonstrate power, and their staying power, by buying up these properties.”

Indeed, Marc Schillinger, a director with commercial real estate company HFF who represented the seller Bijan Properties, said “everyone came out of the woodwork when we announced the opportunity to buy this asset.”

“There are only 2½ blocks on Rodeo Drive,” said Schillinger, who declined to confirm the price or buyer. uEvery luxury retailer wants to anchor their brand on Rodeo.”

That’s proving true even as the luxury retail market takes a breather. Sales of luxury goods in the U.S. have fallen around 10% on average over the last year, while traffic in luxury stores is down 20%, Pedraza said.

The downbeat numbers are due to several reasons — similar to ones that have softened ultra-high-end residential real estate markets in places such as Los Angeles, New York and London.

Slowing global economies and a strong U.S. dollar have sapped the buying power of foreigners and dampened tourism. Meanwhile, uncertainty over the economy in the U.S., along with the upcoming presidential election, has caused some wealthy Americans to hit pause on big purchases.

On Friday, Italian retailer Prada said its retail sales in the Americas fell 15% in the first half of the year, explaining that the U.S. market “remains tough.”

“So many factors have converged — unfortunately in a negative way,” Pedraza said.

LVMH Moët Hennessy Louis Vuitton has done better than many retailers though. The Paris-based luxury goods conglomerate reported that U.S. sales climbed 7% during the first half of the year.

A high-profile store, however, isn’t just about selling goods. Even in the age of e-commerce, high-end digs have worth as a place to hold flashy events and market a brand’s cachet across the globe.

Fashion houses are willing to pay a premium to buy such an opportunity. They’d rather do so than rent and risk losing the location if their lease is not renewed, said Robert Cohen, vice chairman of real estate firm RKF.

That’s especially true as fast-fashion companies with far lower prices increasingly compete for such locations, including an H&M that opened on a pricey stretch of Fifth Avenue in Manhattan in 2014.

The highest price per square foot for a U.S. retail space came two years ago when Chanel purchased a shop it was leasing in New York on Madison Avenue for $31,329 a square foot, according to Real Capital Analytics.

“They are protecting their position on the street and in the market,” Cohen said of such purchases.

It’s unclear what LVMH’s plans are for the Bijan building, where the iconic store has operated for 40 years.

The Paris retailer with 70 brands already has multiple stores on Rodeo including Louis Vuitton and Dior locations that it leases and a Celine store that it owns.

A spokesperson for LVMH declined to comment, as did a manager at Bijan.

Iranian American designer Bijan Pakzad opened his appointment-only boutique on Rodeo Drive in 1976. It became known for its ultra luxury goods such as $6,000 suits and $19,000 ostrich vests.

Through the years, House of Bijan counted many high-profile names among his clients, including Michael Eisner, King Juan Carlos of Spain and Presidents Carter, George H.W. Bush, Clinton, George W. Bush and Obama. Pakzad had success to match, with homes across the world he flew to on his own jet.

Pakzad died in 2011 but left a lasting imprint on Rodeo Drive, helping to make it a world-class destination. The store’s manager, who declined to give his name, said the store is now owned by Pakzad’s family.

“Long before Tom Ford and Karl Lagerfeld, Bijan had a keen understanding of the cult of personality in fashion, starring in his own ads and billboards, name-checking countless celebrities and parking exotic cars outside his store, all to stoke his fame,” former Times fashion critic Booth Moore said following Pakzad’s death.

But throughout the decades, as rents soared along with the cachet, Rodeo has lost many of its local boutiques, including Fred Hayman’s famed Giorgio Beverly Hills, with its distinctive white-and-yellow striped awning, which closed in 1998.

The Bijan store is operating under a lease; its expiration has not been disclosed.

Given the sky-high sale to LVMH, the pricey but small House of Bijan is likely to go as well, real estate broker Cohen said.

The French firm may want to bring in a deep-pocketed tenant who would pay more in rent, or give yet another of its brands a foothold on Rodeo.

“It’s one of the greatest luxury streets in the world,” he said. “It’s global branding and global domination.”

Source: http://www.latimes.com/business/la-fi-bijan-sale-20160825-snap-story.html

July 18, 2016

Why luxury retailers are losing their luster

USA Today
Hadley Malcolm and Chris Woodyard
July 18, 2016

NEW YORK — Bling appears to not be as much of a thing.

Luxury retailers, which were flying high as the wealthy thrived, are starting to look more like diamonds in a pretty rough spot.

Threats to global stability — including terrorism, the United Kingdom’s withdrawal from the European Union and China’s slowdown — are rattling international shoppers of high-end goods. At the same time, luxury retailers are losing share to online sellers, an issue bedeviling mainstream chains. They’re also suffering at the hands of discounters and fast-fashion luxury lookalikes.

Investors are taking note. The S&P Global Luxury Index, which tracks the value of the stock of dozens of companies that deal in luxury goods including automakers, has lost 15.06% in the past year, compared to a 2.58% rise in the S&P 500, an index of the 500 largest publicly traded companies.

“If you’re tied to international consumers, you really have not had any sense of relief in the past several quarters,” says Simeon Siegel, equity research analyst with Nomura Securities.

As second-quarter earnings reports unfold, purveyors of luxury goods who noted some stress, such as jeweler Tiffany and apparel sellers Ralph Lauren and Burberry, will be watched to see if the trouble they reported in the first quarter is continuing or worsening.

Brexit creates a whole new level of uncertainty for some of the world’s wealthier spenders. It’s another shock that, combined with terror attacks in France, the U.S., Bangladesh and elsewhere, adds up to trouble for luxury firms because it scares off tourists — and tourists are some of the best customers for luxury companies.

“A few years ago, tourists would come buy empty luggage and fill it up and send it back home,” says Arnold Aronson, partner and managing director of retail strategies at consultancy Kurt Salmon. That’s not necessarily happening anymore

The drop in tourism is the biggest reason luxury retail traffic is down 20% from a year ago, says Milton Pedraza, CEO of The Luxury Institute, a consulting firm.

It’s a strange turn for luxury, which looked unstoppable when the world’s wealthy were riding high. Globally, the luxury market is growing. Personal luxury goods purchases have tripled in the past 20 years to more than $270 billion, according to a 2015 report from Bain & Co. North and South America combined have become the largest market for personal luxury goods purchases.

But that growth has slowed in recent years. Last year, sales in the Americas were flat on a constant exchange rate basis, according to Bain.

Besides global economic pressure, even the most tony retailers are feeling the same heat from discounters and online sellers as the mainstream retail industry.

A recession-era boom in outlet and off-price stores had everyone from Coach to Prada hawking their once-coveted goods at a discount, or department store offshoots such as Nordstrom Rack and Saks Off 5th doing it for them. Fast-fashion players such as H&M and Zara churn out luxury lookalikes at a fraction of the price.

When it comes to online, some shoppers are turning to luxury-for-less sites such as Gilt or The Real Real.

“The story with luxury is it’s just not as exclusive and it doesn’t justify the price like it used to,” Pedraza says. “Too many of them are discounting, and there’s not enough consumer demand.”

Source: http://www.usatoday.com/story/money/2016/07/18/luxury-retail-hurting-from-over-distribution-lack-of-tourist-spending/85872502/

May 5, 2016

Denver’s Inspirato booming as interest in luxury destination clubs grow

Inspirato, a Denver-based luxury destination club, plans to hire its 500th employee by year’s end.
The Denver Post
By: Emilie Rusch
May 5, 2016

Inspirato, a Denver-based destination club that caters to luxury travelers, is in the midst of a major growth spurt, set to reach 500 employees by year’s end and more than double its office footprint in Lower Downtown.

Launched in 2011 by Exclusive Resorts co-founder Brent Handler, Inspirato now counts more than 12,000 members taking advantage of its private network of multimillion-dollar vacation homes, travel experiences and special relationships with upscale hotels worldwide. Initiation fees for the club start at $7,500, with monthly dues of $325. Members then pay per night for accommodations they book.

“The reason we came up with the company is because we knew there was a really large market of people who were looking for a better way to vacation in a safe manner, for options in homes, hotels and experiences, all with an adviser to help them put it all together,” Handler said. “We’re continuing to grow very aggressively in terms of selling memberships, revenue and employees.”

That growth has meant adding jobs and square footage to its Denver headquarters.

Since the beginning of the year, Inspirato has increased its workforce by 66 employees, bringing the total to 428. Plans call for the company to reach 500 workers by the end of 2016.

To house that growth, Inspirato has signed a lease for three floors of the  historic Sugar Building, located at 16th and Wazee streets.

Once renovations are complete later this year, the addition will bring the company’s total footprint to about 68,000 square feet, making the travel company one of the largest office tenants in LoDo.

The company will continue to occupy all 36,000 square feet of the historic  Peters Paper Co. Warehouse building at 1637 Wazee St., less than a block away.

Handler said while it might have been more efficient to move the entire operation into a larger, more traditional office building, the company never seriously considered leaving LoDo.

“We knew early on that would mean a campus. Frankly, this building won’t be enough for our growth plans, either,” Handler said. “We plan on being a long-term part of the community in this small sector of LoDo.”

Since the beginning of the year, Inspirato has increased its workforce by 66 employees, bringing the total to 428.

Since the beginning of the year, Inspirato has increased its workforce by 66 employees, bringing the total to 428.

Beyond any emotional attachment to the area, though, Inspirato is also betting on the recruiting advantage that being in LoDo provides, he said. Most of the new positions will be in tech, sales and what the company calls “travel advisers,” employees who work directly with club members to plan vacations.

“We’re hiring just out of college — or a few years out of college — smart, motivated employees, and they do not want to work in the Tech Center,” Handler said. “They want to work at the center of the action.”

Nationwide, the “shared economy model” has been experiencing a resurgence in recent years in the luxury travel world, said Milton Pedraza, CEO of New York-based research firm Luxury Institute.

“The idea is popular because who wouldn’t want multiple home availability at the right time, with a great concierge and pay a fraction of the cost?” Pedraza said. 

“But it’s how you actually deliver that promise that really matters,” he said. “I’ve seen a lot of players go down. They think they’re in the business of selling memberships, but they’re really not.”

Inspirato’s model “really hits the sweet spot of where the consumer is going,” said Richard Ragatz, president of Ragatz Associates, an Oregon-based resort real estate industry consulting firm. “Inspirato is a very innovative, creative concept that’s doing very well.”

In 2015, the shared-ownership industry — which includes timeshare properties and destination clubs — booked $505 million in sales. Sixty-two percent of that came from destination clubs, such as Inspirato, according to a  report from Ragatz Associates.

Inspirato has distinguished itself from other timeshare and destination-club players with its lower cost of entry and no long-term commitment, he said. Younger travelers, in particular, like the variety, convenience and flexibility the clubs can offer.

“Millennials are much less enthusiastic about purchasing real estate with a deed in perpetuity, and they don’t want all the burdens that go along with ownership,” Ragatz said. “They don’t want to put all their discretionary income into one home.”

Unlike many of its competitors, Inspirato operates the vacation residences through long-term lease arrangements, instead of purchasing them. This allows the company to avoid the six-figure initiation fees that some other clubs charge.

“We essentially tried to take the best parts of renting a vacation home, which was becoming popular with  Airbnb and HomeAway and VRBO,” Handler said. “We came up with a concept where we could have a club structure — people pay a fee to join, but then they get these homes taken care of as if you were in a hotel. They’re fully serviced, there’s housekeeping, there’s a concierge.”

As far as their new offices in the Sugar Building, plans call for exposing as much of the original 1906 structure as possible, said Mark Sheldon, Inspirato’s vice president of asset operations.

Work on the three floors will be done in phases and be completed by the end of the year.

“The first thing I did was tear out the walls,” Sheldon said. “Now, when you walk up into the space, instead of seeing hallways, you see every window.”

In a separate project, the design details of which were approved by the Lower Downtown Design Review Board late last year, the property owner plans to build a four-story addition with a glass facade where now a narrow parking lot sits behind the building on Wazee.

Inspirato will take three of the floors, with the ground floor serving as the travel company’s main entrance. The addition, expected to be completed by the end of the second quarter of 2017, will increase Inspirato’s footprint by another 12,000 square feet.

“These commitments to the people and the places we occupy are all part and parcel to what we’re building here,” Sheldon said.

Source: http://www.denverpost.com/business/ci_29851815/denvers-inspirato-booming-interest-luxury-destination-clubs-grow

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