The Israeli Diamond Industry
December 8, 2016
A new survey by the Luxury Institute, conducted among the top 10% earners in the US, the UK, France, Germany, Italy, Japan and China, has found that quality and customer service are the two most important attributes that affluent consumers use to define a product’s luxury status. According to Gem Konnect, jewelry and hospitality brands have the best customer service staff, while real estate and designer shoes were rated the worst in that regard.
In addition, customers in the UK and US are more likely to rate customer service as a necessity for luxury than customers in Japan and China. Superior design ranks third in the list of luxury attributes, and it is more important to UK and US customers than in other countries.
59% of US respondents and 33% of respondents across the other six countries ranked superior craftsmanship in fourth place.
Luxury Institute CEO Milton Pedraza said: “Half of the affluent consumers we just surveyed say that luxury sales associates deliver a personalised and relationship-oriented experience, which is encouraging, but it also suggests plenty of room for improvement when it comes to delivering a superior customer experience”.
Travel experiences are proving to be dramatically more important to affluent millennials, with most interested in hotel accommodations and flight tickets rather than luxury goods.
A recent report from Agility showed that across the globe the majority of prosperous millennials are likely to travel abroad in the next year. Percentages in China, India, Singapore, Malaysia, Hong Kong, South Korea and Taiwan are all above 71 percent for those interested in abroad travel over the next 12 months.
“Millionaires in Asia are young and many of them in our study are in the millennials age group,” said Amrita Banta, managing director at Agility Research & Strategy. “Travel is the new luxury in Asia amongst this profile of consumers and we see that the appetite for travel has increased this year from the last year but the appetite to buy luxury goods has definitely decreased in our sample.”
The study interviewed 922 affluent millennials from China, India, Singapore, Hong Kong, Malaysia, South Korea and Taiwan.
Agility’s Asian Millennial and Millionaire Research Results shows there will likely be a decline in luxury retail in Singapore in the upcoming new year, as there has been a 15 percent drop in millennial interest in spending more with luxury goods.
Luxury hospitality brands might have an opportunity to expand into luxury lodges and winter apparel and accessories in Asia. Findings are showing an increase interest in skiing.
Other hobbies such as wine tasting and fine dining are making an impression on affluent Chinese consumers. More than 51 percent were interested in wine tasting and 48 percent in fine dining.
However, while passion for spending more on luxury goods is dropping, interest in shopping in general is still strong. More than 69 percent of Chinese consumers are interested in shopping as a hobby.
Behaviors in luxury
Another study noted that millionaires from the X generation held onto traditional luxury events while millionaire millennials are straying away from happenings such as fashion shows and auto races, according to a new report from Shullman Research Center.
While there are vast differences in culture, behavior and values between lower income consumers versus millionaires, this also holds true for differing generations. For instance, family is the top priority in millionaire Gen-Xers’ lives with 89 percent believing so, but only 67 percent of millionaire millennials say the same (see more).
Also, quality tops attributes such as craftsmanship and service as the number one defining attribute affluent consumers use to discern a good’s luxury status, according to other research by the Luxury Institute.
Behind quality comes customer service, which more than half of consumers mentioned as a characteristic they associate with luxury. Despite global trends, residents of individual nations have varied priorities when it comes to luxury goods, with differing sentiments towards the value of products (see more).
“Asian millionaires are now discovering new interests like fine dining and wine tasting – this year we see activities like Skiing in the slopes of Japan becoming popular with the Singaporean millionaires for instance,” Ms. Banta said.
Millionaires from the X generation hold onto traditional luxury events while millionaire millennials are straying away from happenings such as fashion shows and auto races, according to a new report from Shullman Research Center.
While there are vast differences in culture, behavior and values between lower income consumers versus millionaires, this also holds true for differing generations. For instance, family is the top priority in millionaire Gen-Xers’ lives with 89 percent believing so, but only 67 percent of millionaire millennials say the same.
“When luxury marketers and their agencies think about how to reach and potentially communicate their messages to millionaires in ways beyond the traditional and digital media channels, they need to realize that millionaires are a materially different breed of consumer— different not only from those with fewer financial resources, but also from one another generationally,” said Bob Shullman, CEO of Shullman Research Center. “Marketers of luxury products and services who are not knowledgeable about these differences do so at their own and their company’s peril.
“Notably, from our perspective, it is surprising how different millionaire Gen-Xers are in their sporting, lifestyle and cultural interests compared with millennial and boomer millionaires,” he said.
The research was conducted online that surveyed 1,690 respondents with household incomes of at least $75,000.
The differences between millionaire millennials and Gen-Xers are also displayed in their varying interests in sports. Millennials are more interested in adventure-like sports such as snorkeling, jogging and rollerblading while Gen-Xers are interested in traditional affluent sports such as tennis and golf.
Affluent Gen-Xers value tennis
Only 19 percent of millionaire millennials plan to play tennis in the next year, whereas 45 percent of Gen-Xers are likely to play. However, 24 percent of affluent millennials claim to be planning to snorkel in the next year while only 2 percent of Gen-Xers are likely to.
Millennials who are millionaires are also more interested in painting and the arts compared to their predecessors. About 26 percent of millennials are interested in painting and drawing compared to 13 percent of Gen-Xers.
However, baby boomers are almost as interested in painting as millennials, with 24 percent.
Interest in museums is completely disconnected throughout generations. Forty-two percent of baby boomers are interested in museums, but only 9 percent of generation X and 10 percent of millennials are interested.
Quality over price is exceedingly important when it comes to millionaires and affluent Americans. For instance, 83 percent of all generations value quality over price when deciding on purchases.
This is also true for 96 percent of millennials, 81 percent of Gen-Xers and 75 percent of baby boomers.
Other research by the Luxury Institute showed that quality tops attributes such as craftsmanship and service as the number one defining attribute affluent consumers use to discern a good’s luxury status.
Behind quality comes customer service, which more than half of consumers mentioned as a characteristic they associate with luxury. Despite global trends, residents of individual nations have varied priorities when it comes to luxury goods, with differing sentiments towards the value of products (see more).
The drastic shift in consumer behavior from the rapid evolution of technology has resulted in a 20 percent drop in customer spend with luxury brands, according to another Luxury Institute.
Luxury Institute’s “2016 State of the Luxury Industry” report shows that consumers are spending much less in the luxury market compared to two years ago, but luxury marketers will have an uphill battle to determine how to combat this. While digital and mobile avenues are vital to success for any retailer or brand, it seems that affluent consumers are interested more in shopping with luxury brands at bricks-and-mortar locations (see more).
“We were very surprised by how much more millionaire Gen-Xers are into attending fashion and trunk shows and auto races compared with millennial millionaires (for example, 35 percent of Gen-Xer millionaires are into attending auto races compared with 1 percent of millennials while 36 percent of the Gen-Xers attend fashion and trunk shows while only 7 percent ofmMillennials attend these shows),” Mr. Shullman said.
Of all the unlikely collaborations out there, the latest one that boggles my mind is the recently launched Prabal Gurung x Pokémon Capsule Collection at Jeffrey’s NYC Boutique.
Inspired by the vibrant colors, textures, silhouettes and spirit of five iconic Pokémon: Pikachu, Jigglypuff, Squirtle, Bulbasaur and Charmander, this exclusive nine-piece collection combines “the playfulness of the Pokémon brand [with] the style and sophistication of Prabal Gurung,” noted in the press release. For instance, there’s a blue knit and pencil skirt inspired by Squirtle (the water-type Pokemon), with the chiffon insert made to feel like a wave, and piping details made to look like Squirtle’s curved shape.
As someone raised in Nepal and grew up traveling across Asia, Gurung considers Pokémon a key part of his childhood, and the perpetually happy Jigglypuff his spirit animal. So when he was invited to design this capsule collection at Jeffrey’s, the designer thought that it was exciting to engage with the characters in this new way.
“The essence of the characters, not just their aesthetic, are captured and highlighted in the elevated details such as character-inspired zipper pulls and the Prabal Gurung signature draped back detail,” he said.
Much as this collaboration sounds interesting, but at $325 for a White Viscose Jigglypuff Printed T-Shirt to $1,795 for a Navy/Red Silk 4-Ply Crepe Short Sleeve Colorblocked Tunic Dress with Embroidered Cording, will die-hard Pokemon fans really think, “Gotta shop ’em all?” And like Karen Eggleston, Senior Manager of Licensing at The Pokémon Company International said, “The pieces are not necessarily “timeless” so it will require a woman who has a fashion passion and the wallet to afford to buy a product that may or may not fit into her wardrobe next year.”
The celebrated designer certainly thinks so. He believes his clientele has an appreciation for humor and sharp wit, qualities that are cleverly represented in this collection.
Milton Pedraza, CEO of Luxury Institute agrees. “Although this collection isn’t particularly affordable for all, it can certainly appeal to affluent women on the younger side (25 to 45 years old) who like playful clothes could find the products appealing,” he said.
While it seems like forever since the Pokémon Go craze, the luxury expert still considers this collaboration to be quite timely. In his perspective, Gurung has successfully reinvigorated the Pokémon excitement and makes it wearable “in this highly cohesive and coherent collection of playful, unique and high quality, everyday outfits,” noted Pedraza.
Clearly, this collaboration could help the designer reach out to a younger audience while The Pokémon Company build its fashion program. But insofar as the larger implications, the luxury expert believes we are in the middle of a fashion and retail revolution.
“Creativity and innovation is a must for designers and brands. Take the unique match up of BMW and Louis Vuitton in “The Art of Travel,” or Apple and Hermes in the iWatch, I foresee this Prabal Gurung x Pokémon Capsule Collection to have a reasonable chance of success,” said Pedraza.
Who knows, maybe this could inspire future crossovers between Star Wars and some young top fashion brand, or Minecraft x Abercrombie and Fitch?
By: Brett Berk
November 15, 2016
Luxury automotive brands including Mercedes, Porsche, and Pininfarina (the Italian design house whose core client is Ferrari) have all announced or opened branded residential towers. Now bespoke British manufacturer Aston Martin has followed suit, announcing its participation, in partnership with G and G Business Developments and Revuelta Architecture, in a high-end high-rise tower—the Aston Martin Residences—on the last remaining waterfront site along Miami’s Biscayne Bay.
Aston Martin chief creative officer and design head Marek Reichman will be responsible for the public spaces, including two lobbies, a fitness center, and a spa, using finishes and sensibilities in line with the 104-year-old automaker’s exquisite, clubby vehicles. “And if some of the customers say, we would love for you to design our interior,” Reichman says, “we will be happy to do that, too.”
As an independent company that produces exclusive low-volume, high-reputation, high-cost cars for an international clientele, Aston Martin brings to the project a wealth of knowledge of what elite customers desire. Apparently, part of this is the striking and unconventional, like interior switch trim matched to an owner’s favorite platinum jewelry or a hood ornament made of lacquered beetle wings—both projects Aston has completed in its cars. “The materials we use are very exotic—we are living in an exotic world, even compared to a lot of luxury apartments,” Reichman says. “And you sometimes wouldn’t necessarily think about those materials in your home, but actually, they’re very applicable.”
Despite the building’s name, Reichman notes that the branding exercise is “everything but literal.” There will not be any automotive amenities such as drive-in elevators or car concierges. Neither will the apartments reflect the proportions or shape of car designs. Rather, the connection will be experiential. “What you will get is exactly what you will get sitting in an Aston Martin DB11 on a long journey, and that is a sense of involvement and comfort,” Reichman says. “The most amazing thing about the DB11 for me is that it’s an incredibly powerful sports car, but you can sit in that car for a long time and still remain motivated and enjoy your environment. Which is just how you want to feel at home.”
Why would a luxury automaker enter into a residential partnership like this? The answer is, in part, to foster a deeper connection to the brand, one that transcends the vehicular. To retain consumers long-term, brands such as Aston Martin feel they need to create a holistic lifestyle multiverse, one that brand ownership allows customers to access and inhabit fully, wherever they are.
This quest for ubiquity seems a bit at odds with the kind of exclusivity that luxury manufacturers attempt to instill, but brand extensions have become a big business for automakers. Jaguar, Bentley, Mercedes, and others offer branded leather goods, branded custom tour packages, branded yachts and cruises, and branded helicopters, allowing their customers to remain connected to their logo even while they’re away from their car. The goal is to make consumers feel like they’re part of a special club whose membership and amenities follow them everywhere.
In talking about the apartment project, Reichman reflects on this insider nature. “I think this building is for people who appreciate luxury, who love the feeling of something which is timeless, and especially those who love the fact that if you’re part of the world of Aston Martin, you get a great thumbs-up from the product you drive, and you walk away with a kind of pride in ownership and a sense that the car is beautiful, a kind of wow,” he says. “I think the customer is going to be wanting that same feeling when they come to look at an apartment.”
Whether the proximity of the residential projects will enhance or undermine the sense of exclusivity these automakers and developers desire remains to be seen. The Porsche, Pininfarina, and Aston Martin towers are all in Miami, a confluence that seems to approach oversaturation.
“While it is not a perfectly logical complement, luxury automotive branding on real-estate assets can create greater awareness for both brands and elevate the offerings of each,” says Milton Pedraza, CEO of lifestyle research and consulting firm the Luxury Institute. “As the luxury industry remains challenged, we will see more brand partnerships and experimentation,” he says. “Many of the experiments may not succeed, but that is the nature of innovation.” The sales office for the Aston Martin Residences is slated to open next spring, with groundbreaking expected in the summer.
For some heavy hitters in Silicon Valley, any old private jet just won’t do. Leather seats? Basic. A Bloody Mary after launch? Boring. But one luxury air-travel company is introducing more personalized, high-end amenities, with everything from cashmere eye masks to mixologist-approved cocktail menus.
The Swiss company VistaJet offers amenities that go beyond the luxury norm: The cabin crew is decked out in designer Moncler uniforms and trained by the British Butler Institute. Passengers can browse a library curated by the London-based bookstore Heywood Hill, and there’s even a custom aircraft fragrance, designed by perfumier Le Labo.
Food and drink options include VistaJet’s own branded caviar, a Nobu menu, and renowned mixologist Simone Caporale’s global-inspired cocktail collection. When customers order a classic gin and tonic, it comes “with an essence of Indian spice.”
Then there’s the sleep preparation program, where clients receive special pajamas and relaxing herbal teas prior to resting on Egyptian cotton linens, feather duvets, and cashmere blankets.
As VistaJet Creative Director Nina Flohr says, the company is trying to distinguish itself by being “simple yet out of the ordinary.” While other private aviation providers might only offer the standard Bloody Mary out of a premixed can, VistaJet believes it’s the details that make all the difference: Nobu sake, for instance, complemented with organic black cherries or whatever the passenger prefers. The cabin crew is trained to discreetly keep tabs on each customer and update their files with details of their preferences. VistaJet wants to personalize the experience of flying private.
“They’re busy people, they’re always on the go, so what we’re trying to capture with our cabin experience is that home away from home,” Flohr says. For example, if the crew notices that a customer prefers Moroccan mint tea, they will ensure that there is mint tea available on the passenger’s next flight. The crew will even note how the passenger likes it served: with sugar or without? “These are little things that are not spoken about, but are noticed and used to build that customer’s profile.”
VistaJet, which flies to 182 countries, claims to be the fastest-growing worldwide jet company. Its global flight traffic grew 20% year over year for the last three years, with over 400% growth since it entered the U.S. market in 2013. It currently has over 70 super-mid to ultra-long-range business jets, but plans to expand to 100 aircraft in the coming years to further compete with more established companies like NetJets.
VistaJet is popular with startup founders and VCs who can book flights with the company’s app within 24 hours of the desired departure. It’s already embedded in the industry’s culture: It was the first business aviation provider to use Facebook At Work, the social network’s new internal communications platform.
VistaJet’s success is partially due to its unique structuring. The company only charges clients for the leg they fly (roughly $15,000 an hour), versus traditional charter companies, which bill for the return leg, landing costs, or base resting. That means you only pay one way for the actual hours in the air—an attractive offer for those accustomed to the sharing economy.
“We are finding that most in the tech industry would prefer to have access to a fleet of aircraft, rather than own one or two planes,” says Thomas Frye, VistaJet’s marketing director. “Our business model of an asset-free flight solution is very appealing.”
Starting with the 2008 recession, more and more American businesses sought to offload company jets—often a $50 million responsibility. “A lot of boards and stockholders no longer like to see a private jet on the books,” VistaJet President Ronald M. Silverman says.
With VistaJet, executives can receive virtually identical perks for substantially less money and without the burden of maintaining and storing an expensive asset. It’s an alternative to the fractional market—in which you essentially own a piece of a private plane, somewhat like the timeshare market—which is increasingly hurt by the residual value of owning a private plane. Depreciation can go down by as much as 40% in five years.
VistaJet owns its entire fleet. Ten planes are based in the U.S. and 70 worldwide; their average age is 18 months. After five years, they are replaced with newer models. “We are truly the only company that can offer consistent new aircrafts,” Silverman says.
This is crucial, since today’s business leaders are more demanding than ever before. Since the hotel and restaurant industry raised the level of premium service, customers expect the same of every market. Silverman likens VistaJet to the Four Seasons: No matter which location a guest checks into, they will receive excellent treatment.
“The general public who flies in private airplanes these days are much more educated and aviation savvy than they were 10 years ago,” Silverman says. “They want to fly in the newest, most sophisticated airplanes, and they want to receive the highest level of service.”
Sheree Ladove Funsch is a founder of both established and up-and-coming beauty brands, including Bed Head and Rikoko. She prefers VistaJet for her globetrotting business trips because of the flexibility and cabin experience.
“With businesses around the world, my husband and I need a global solution that accommodates many different types of trips, so owning one aircraft or a fraction of one doesn’t work for us,” she says via email. “We pay for occupied hours only, give very little notice when we are ready to depart, and everything is included, from a cabin hostess to catering from the best restaurants and hotels in the world.”
In recent years, the industry has seen an influx of startups aiming to disrupt the private aviation industry, which is worth $14 billion. JetBlue just invested in JetSuite, which currently flies to seven U.S. destinations. There’s also the on-demand jet-hire company Victor, which boasts a popular booking app.
But innovating in the private jet space is much more difficult than disrupting the taxi industry. As Milton Pedraza, CEO of the Luxury Institute says, this is a market with rather flat growth and a laundry list of complexities. “Everyone is trying to be the Uber of the private aviation industry, and it’s not that simple,” he says. “This industry is extremely hard to quantify between charter and all the different players that exist.”
Unpredictable weather, pilot unions, airport regulations, and jet maintenance are just a few of the costly obstacles plaguing private aviation. Generally, charter planes are not owned by their management company, which means brokers must check with the owners for any new changes or modifications. With numerous variables, the market still depends on the traditional travel agent to piece together all the moving parts: The client might want to stop off in a random city, or bring a few friends, or cancel last minute.
“The complexity of the business demands relationships and exceptions and all kinds of requirements,” Pedraza says. “Because [clients’] lives are far more complex, they’re demanding more exceptions.”
There’s a heavy push to expand the market, says Doug Gollan, founder and editor-in-chief of Elite Traveler, a weekly travel and lifestyle e-newsletter for private jet owners. But newcomers need to understand the psychology of their customer base. “The market for people who can afford private aviation is fairly finite,” he says. “You’re not talking about the top 1%; you’re really talking about the top 10% of the top 1%.”
Gollan points to the last century, in which entrepreneurs were keen to start commercial airlines, until they realized how difficult a market it can be. “Now the hot, trendy thing to do is get some investment money and start a private jet company,” he laughs.
Gollan points to many of the startups attempting to simplify and lower the cost of the charter experience: JetSuiteX converts non-brand-new regional jets into charter planes, then operates them out of private jet terminals, while “ride-share” startups such as JetSmarter connect passengers to chartered flights on various planes for membership fees. Both models tie the client to additional guests’ schedules. That means you can’t depart whenever you want. And in that case, some travelers might still prefer to pay an agent to find a schedule that matches their specific needs. That suggests some degree of professional security for travel agents, as long as they can adapt to industry changes and startups cultivate relationships with them.
“This is one of the toughest industries, and because it’s one of the toughest, a lot of the pretenders go out of business quickly,” says Pedraza, noting that charter agents aren’t going anywhere anytime soon. “The innovation is the relationships.”
A company such as VistaJet, which Gollan calls the “Tiffany of private jet providers,” has crafted a unique position in the market: Targeting luxury consumers and Silicon Valley executives who crave dependability and personalization. That in itself might be the new way of building lasting relationships. “You know what you’re getting each time,” he says. Not every CEO values a Nobu menu or designer slippers, he admits, but a good many do.
Flohr, however, sees the personalization trend only growing stronger within the luxury sector. “You can relate this to any industry: People want to have a voice and they want to be someone,” she says. “They don’t just want to be a number.”
Unless, of course, that number corresponds to how many organic sugar cubes you take in your tea.
The drastic shift in consumer behavior from the rapid evolution of technology has resulted in a 20 percent drop in customer spend with luxury brands, according to the Luxury Institute.
Luxury Institute’s “2016 State of the Luxury Industry” report shows that consumers are spending much less in the luxury market compared to two years ago, but luxury marketers will have an uphill battle to determine how to combat this. While digital and mobile avenues are vital to success for any retailer or brand, it seems that affluent consumers are interested more in shopping with luxury brands at bricks-and-mortar locations.
“The key takeaway of the report is that the luxury industry is going through a downturn and a revolution globally due to a set of macroeconomic and consumer habit changes, plus the effects of rapid technological innovations,” said Milton Pedraza, CEO of the Luxury Institute.
The report surveyed 3,900 affluent consumers from the U.S., U.K., Europe, Japan and China, all of which made higher than $150,000 USD, £60,000, EUR50,000, 1 million CNY and Japan ¥150 million.
Luxury spending in the United States is ahead of many other countries, but the United Kingdom and Italy are leading the pack. The average spend within the luxury market in Italy is expected to be $17,660, $16,715 in the U.K. and $16,360 in the U.S.
Brands must now focus on how to properly balance ecommerce initiatives and in-store strategy to appeal to the modern affluent U.S. consumer. Bricks-and-mortar are making a slight comeback with 54 percent of high-net-worth individuals preferring to shop in store for luxury brands, compared to only 49 percent two years ago.
Social media is now the main avenue luxury fashion brands are using to communicate with consumers for customer service, with 58 percent leveraging Facebook Messenger, according to another report from L2.
Traditional customer service communication platforms are tired and outdated, and consumers now expect a more modern method for reaching out to brands and retailers. Many brands are taking note and launching communication methods on mobile messaging platforms such as Facebook Messenger, with 71 percent of watch and jewelry brands following suit (see more).
The growth of the luxury market is slowing, with only 19 percent of high-income individuals planning to spend more within the next year, compared to the 30 percent from two years ago.
While growth will slow, many U.S. consumers are still planning to spend on luxury goods and services. For instance, 92 percent of affluent consumers in the U.S. plan to spend money on luxury brands within the next 12 months.
The average anticipated spend per consumer is estimated to be $16,360, dropping almost $4,000 from $20,085 in 2014.
Watches, fine art, handbags, home appliances and jewelry are likely to be the areas hurt the most from the cut back. About 33 percent of consumers claiming to cutback on spend with watches, 28 percent on art, 24 percent on handbags and home appliances and 23 percent on jewelry.
However, travel remains as the dominating sector in which U.S. consumers with high incomes will be spending with luxury brands.
Hilton-owned Waldorf Astoria Hotels & Resorts climbed the ranks in terms of international brand awareness, despite consumers spending less time traveling, according to another report from Luxury Institute.
JW Marriott, InterContinental, Four Seasons, Grand Hyatt and The Ritz-Carlton 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 (see more).
“The biggest surprise is that while ecommerce is critical to success in luxury, slightly more consumers still prefer the store experience,” Mr. Pedraza said. “Additionally luxury consumers are following less, not more, luxury brands on social media.
“As millennials mature they are recognizing that they have to focus on careers and relationships, not just social media,” he said.
The Washington Post
October 20, 2016
By: Abha Bhattara
What do you get the man or woman who has everything?
Neiman Marcus has a few suggestions, starting with a $1.5 million Cobalt Valkyrie-X private plane in rose gold. There’s also a $93,000 ruby-and-diamond-encrusted Chanel watch or a $100,000 collection of classic children’s books. Or you could buy yourself a walk-on role in the Broadway show “Waitress” (price tag: $30,000).
The newly released Neiman Marcus Christmas Book, an annual exercise in all things excessive, includes more than 700 items, ranging in price from $10 (for a package of six snowflake-shaped marshmallows) to the $1.5 million private plane.
In the mood for a vacation? There’s a weeklong stay at three estates in the English countryside — which also comes with a helicopter trip to a castle — for $700,000. Or a slumber party for 12 at the company’s flagship store in Dallas for $120,000.
Or perhaps you’re feeling a bit distrustful. The luxury retailer says it has you covered, with a $25,000 mattress with a built-in fireproof lockbox.
Extravagances aside, the company says about 40 percent of the catalogue’s offerings are priced under $250. There’s a bracelet made of paper beads for $25 and a stainless steel beer growler for $60.
Milton Pedraza, chief executive of the Luxury Institute, says those lower-priced items are particularly important this year as high-end retailers struggle to stay afloat. Neiman Marcus has battled slipping sales for four quarters in a row. In September, the Dallas-based company posted a quarterly loss of $407.2 million.
“This is the most democratic Neiman Marcus catalogue I’ve ever seen,” Pedraza said, citing a $35 tube of Dior lipstick. “They know they need to appeal to millennials if they’re going to survive two decades from now.”
The uncertainty of the upcoming presidential election, combined with fears about the effect of Brexit on the European economy, are contributing to general unease, he said.
“Luxury is in a very challenging spot right now,” Pedraza said. “The world economy is flat and young customers are struggling. When millennials as a group have $1.3 trillion in student debt, it’s hard to splurge.”
But that doesn’t mean Neiman Marcus is completely holding back.
The company — which sifts through thousands of submissions in the spring — is offering 12 “fantasy gifts” in all, including “quarterback fundamentals” lessons with four-time Super Bowl winner Joe Montana ($65,000), his-and-hers island cars designed by Lilly Pulitzer ($130,000) and a trip to the Grammy Awards ($500,000).
The Christmas Book began in 1926, when the retailer released a 16-page Christmas booklet to its most loyal customers. Neiman Marcus offered its first “fantasy gift” in 1959: a black angus steer, either on the hoof ($1,925) or cut into steaks ($2,230). It was purchased by a customer in South Africa.
In the years since, Neiman Marcus has served up a steady — if jaw-dropping — selection of offerings, including his-and-hers mummy cases (one with an actual mummy), and his-and-hers camels (a customer in Texas bought the female camel, which boarded an American Airlines flight on Christmas Eve to arrive in Fort Worth on Christmas morning).
The most expensive item offered to date: A $33 million Boeing Business Jet. It didn’t sell. A $6.7 million helicopter with built-in entertainment system, however, did.
For the majority of Americans, though, Neiman Marcus’s “fantasy gifts” will be just that. Americans on average last year spent $800 on all of their holiday shopping, according to the National Retail Federation. That’s enough to buy an orange hippo figurine from the Neiman Marcus Christmas Book.
Or if that seems too pricey, you could just buy a copy of the catalogue — for $15.
The brand let Marvel use six of its flagship supercars while filming, and at least one was wrecked in a key scene. With a mostly young audience watching these movies, is this smart product placement?
In the latest Marvel Comics film, Doctor Strange, the titular character is a wealthy neurosurgeon who loses the use of his hands in a car crash and who, in his quest to regain their function, gains the mystical powers that make him a superhero. The crash is therefore a key plot point. And thus an important product placement opportunity.
The Agents of S.H.I.E.L.D. have their Acuras, Iron Man has his Audi R8. So what does Steven Vincent Strange (Benedict Cumberbatch) drive during his harrowing and life-altering wreck? A 10-cylinder, wedge-shaped, screaming hunk of menace: the $237,250 Lamborghini Huracán LP610-4.
This makes perfect sense for the character. “I do believe that there are a lot of characteristics of Doctor Strange that are connected with the Lamborghini philosophy,” says Lamborghini’s chief executive officer, Stefano Domenicali. “Doctor Strange is a special guy, because he discovers when he was so young that he had a super power. He’s a leading guy in the world of technology. He is of course very ambitious—he wants to be seen as a top performer. He’s basically pure, and cutting edge, and visionary. These are the values that we have at Lamborghini.”
It’s thus seemingly logical to see Doctor Strange in a Lamborghini. But is it similarly sensible to see a Lamborghini in Doctor Strange? Especially since the car’s crash is such a key moment in the film?
Short answer: yes.
In an increasingly segmented marketplace, contemporary ultra-luxury and super-performance marques such as Bugatti, Aston Martin, Bentley, and McLaren have been turning away from attending mass-market events, placing their emphasis on more elite and focused opportunities where they’re more likely to encounter actual buyers. To this end, all these brands—Lamborghini included—forwent hosting a display stand at the September Paris Motor Show, the kickoff to the annual globetrotting car convention circuit, but they were all immensely present at the August Pebble Beach Concours d’Elegance, one of the premier gatherings of high-net-worth/automotive-immersed consumers in the world.
“Ultra-auto brands taking the super exclusive approach and going where the real customers are,” explains Milton Pedraza, CEO of market research and consulting group Luxury Institute.
So why would a recherché and exotic brand such as Lamborghini, with limited marketing budget and footprint, choose to invest its energies in a blockbuster superhero movie aimed mostly at kids?
“In a world where young people are not so interested in buying cars, they are very interested in, and indeed attracted by, our cars. Because they are different,” says Domenicali. “They see our cars to be super, which is a key differentiator in terms of being seen as special.”
A Bigger Lamborghini
To reach these aspirational consumers better, the boutique brand is planning for significant growth. With the release of the forthcoming Urus SUV in 2018, the automaker is hoping to double its global sales. “Remember that Lamborghini is trying to expand its volume base with an SUV so it may be that they desire significant brand awareness right now,” Pedraza says. “The Huracán can create a design-plus-performance halo for the entire brand, and the movie route is a great fit for communicating that message.” (Lest you think this expansion is going to turn Lamborghini into Ford, know that total annual global production is projected to increase from just 3,500 to 7,000 vehicles each year, or about the number of F-150 pickups sold every few days in the U.S.)
Also, it turns out action movies and entertainments like them are a pretty good means to reach high net-worth individuals. According to the massive emotional and lifestyle survey data set assembled by automotive research firm Strategic Vision, while elite car buyers may enjoy hosting parties and world travel twice as much as mainstream (BMW, Mercedes) luxury buyers, they enjoy going to the movies at rates similar to those who end up in mass-market vehicles, and they’re almost three times more likely to enjoy playing an action video game on a PS4 or Xbox. “In short, please don’t discriminate against the supercar customer simply because they have money,” says Strategic Vision’s president, Alexander Edwards. “They want to be a superhero too.”
How Movies Speak to Us
Some of the deeper reasoning behind this desire is revealed more deeply in Edwards’s data. “When we escape into the stories of movies, we look for versions of our ‘Ideal Self,’” he says. “Although it doesn’t usually happen at a conscious level, we often compare our self-perception to that of our ideal self. The gaps that emerge, we try to fill with things that can help us obtain the ideal. A vehicle often fills that gap. So while I may not be a superhero, when I drive my Audi, I can be Tony Stark. In essence, these vehicles are more than a sidekick, but something that completes the hero.”
Of course, this doesn’t exactly explain the desirability, from a marketing perspective, of the seemingly disastrous correlation between the Huracán and its key plot point in the film, which involves the vehicle being totaled in a wreck. Lamborghini CEO Domenicali has an interesting spin on that. “Despite the fact that the crash was so massive, two main things: First, Doctor Strange was able to be alive after—certainly we don’t forget the safety of the car. And secondly, it was able, for him, to be the turning point of his life. So therefore we can connect to the fact that we are also on his side in a life-changing moment.”
The seemingly infinite nature of the Marvel franchises suggest that this life-altering relationship could potentially continue beyond this one appearance. When asked if Dr. Strange might drive another Lambo in a sequel, Domenicali responds enthusiastically.
“He’s a visionary man, he has to drive a Lamborghini in the future,” he says. “Maybe an Urus?”
Luxury brands all know that maintaining a high level of personalized service for their discriminating and well-heeled clients is an imperative.
Often referred to as “clienteling,” high-end retailers rely on data about customer preferences, behavior and purchases to establish long-term relationships with their top customers.
But, according to Bain & Company (2016), there is declining growth in the United States luxury market and slower overall global growth. So, luxury retailers are under pressure to up their game and take every measure to meet the high expectations of its top customers.
Making A Point
If you are a Gucci, Chanel, Louis Vuitton or Rolex, to name a few, your customers want and expect a VIP buying experience. And no wonder – if someone is spending thousands of dollars, even tens of thousands, on designer watches, haute handbags and bespoke suits, they want to be treated accordingly.
Purchase frequency varies as well, so how can luxury brands engage with their high valued customers to keep brand loyalty and increase their share of wallet?
It is not through traditional methods of discount coupons and loyalty points.
In fact, Michael Kors and Coach both announced in August that they will be limiting distribution of their products and not participating in department store couponing or friends/family discounts – a practice they believe could be eroding their brand’s cachet.
During the company’s quarterly earnings call in August, Michael Kors CEO John D. Idol explained the brand’s decision, saying “We think that this is critical for us … to protect our brand image.”
Enter clienteling, a masterful way for luxury brands to demonstrate their brand image with a first-class customer experience.
Hold A Mobile Tablet With That White Glove
Capturing and leveraging knowledge about your top customers and their preferences is key to providing the kind of white-glove experience that luxury consumers expect.
To deliver meaningful 1:1 personalized service, high-end salespeople need to know not only birthdays and anniversaries, but color and style preference, size, past purchases, wish lists and maybe even the names of their customers’ children or pets.
Some customers want Champagne served as they browse, while others do not care to imbibe.
Successful salespeople recognize opportunities to recommend purchases for key events – a husband’s birthday, perhaps – and also highlight the new handbag in a color/style that fits their client’s preferences.
Traditionally, this kind of information was kept in the salesperson’s “little black book” or customer log.
Fast forward to today and that little black book can be digitized on desktops – and even more accessibly on mobile devices – with easy access to a wealth of information to complement and supplement every customer profile.
Of course, it is not just luxury retail brands who should be getting in the mobile clienteling game.
Luxury hotel chains strive to master this 1:1 VIP experience by maintaining key facts about their top customers so that they can anticipate needs and recreate preferred experiences.
If they like classical music playing in their room on arrival, and a current copy of The Wall Street Journal or the Financial Times with their breakfast, that is what they will get.
Capturing all these guest preferences, attributes and interests and sharing it across all hotel properties, and ensuring that employees have this information at their fingertips at the right time – this is where mobile clienting can make the VIP experience a reality.
In 2013, the Luxury Institute reported that with clienteling, “data collection rates can triple and retention double, especially for the top 20 percent of customers who drive 70 percent of sales.”
And Exane BNP Paribas reports that interactions based on mobile clienteling “are expected to equate to about 40 percent of the luxury market’s growth by 2020.”
Yet where are luxury retailers today – really and truly – on mobile clienteling?
The truth is, not nearly far enough.
There is much greater adoption that needs to happen to reach the tipping point where effective clienteling reaches mass scale.
Evaluate Your Own Mobile Clienteling Readiness
Surprising and delighting your customer is nowhere more critical than in the luxury sector.
What are the key factors for evaluating your mobile clienteling readiness?
Do you have the right underlying technology platform to deliver the right customer information at the right time to the right sales people?
Good clienteling is only as good as the data that fuels it. So, the ability to gather the right data quickly, access it and make it actionable at the point of customer is paramount.
Are you empowering your salespeople to take action that will surprise and delight, such as an on-the-spot upgrade, custom perk or VIP treatment delivered right to the customer’s mobile device?
Are you tying clienteling to loyalty? Think about strategies to empower your sales associates with the ability to recognize and reward your customers in a unique manner.
For example, set up a program with important metrics such as customer spend per year and referrals and track them internally – as an “invisible points” system.
Then when a client reaches a milestone that only the sales associate is aware of, he or she is empowered at that moment to offer the customer an experiential reward, such as VIP access to an event.
How is your clienteling strategy related to the customer’s own mobile experience?
Whether you are considering a native application or responsive Web on the smartphone, a good clienteling strategy should work hand-in-hand with the mobile experience in your customer’s hand.
Whether it is to socially promote a particular purchase or research a product, these experiences should be integrated into your clienteling approach.
Why not have the customer’s mobile phone both greet the customer as well as notify the clienteling app when your valued client enters the store?
There has never been greater urgency than now for luxury brands to adopt mobile clienteling as a way to demonstrate brand value, maintain their reputation and image, and increase customer loyalty.
Doug Stephens, aka “The Retail Prophet,” recently predicted that “a new breed of experiential retailers will use their physical stores to perfect the consumer experience across categories of products. They will define the ideal experiential journey, employ expert ‘product ambassadors’ and technology to deliver something truly unique, remarkable and memorable.”
If luxury retailers do not get on board, they will soon be eclipsed by mainstream retailers – and that is not good for appearances or the bottom line.
Luxury purchases are driven in equal parts by both the quality of the product and customer emotion about the entire buying experience.
Clienteling significantly enhances that experience. The time for mobile clienteling is right now.