Luxury Institute News

October 12, 2015

Luxury retailers facing slowing growth

By: Nova Safo
October 12, 2015

Luxury brand giant LVMH reports third-quarter earnings Monday, amid concerns of a slowdown in China taking its toll on luxury brands.

LVMH has had a good year. It reported 19 percent revenue growth in the first half of 2015.

The company owns 70 luxury brands ranging from wine and perfume, to clothing and watches, including Louis Vuiton, Donna Karan, Tag Heuer, Moet and Marc Jacobs. It has almost as many stores in Asia as it does in Europe. And that has exposed the company to the economic slowdown in China.

“Luxury growth trends are slowing down,” said industry consultant Milton Pedraza of the Luxury Institute.

A lot of that slowdown has been attributed to China. But, Pedraza said U.S. sanctions on Russia and Brazil’s economic slowdown are also responsible.

As for Chinese consumers, they are still buying luxury items, just not in China, said luxury retail analyst Paul Swinand of Morningstar. The Chinese are going to Europe, he said, where “prices are actually 30, 40 even 50 percent lower.”

And that has meant increases in sales in some European markets, he said, while Asian markets have seen declines. Even in the U.S., luxury brand CEOs have reported slowing traffic in stores, Pedraza said. A lot of this has to do with currency valuations, he said.

As a counter move, luxury brands have been investing in e-commerce. LVMH recently hired an Apple executive to lead its digital operation.

“If you’ve only got so many Cartier, or Omega, or Rolex watches made in the world, then it really doesn’t matter where you sell them,” Swinand said, predicting that, eventually, e-commerce sales could add up to as much as 20 percent of a luxury retailer’s revenues.


September 23, 2014

Luxury Institute Survey Of High-Income Travelers from Europe, China and Japan Reveals Brand Status Ranking Of World’s Top Luxury Hotels

NEW YORK) September 23, 2014 – The New York-based Luxury Institute has released findings of its 2014 Luxury Hotels Brand Status Index (LBSI) survey of affluent overseas travelers who shared detailed impressions and evaluations of 37 global luxury hotel brands.

LBSI scores (1-10) are based on each brand’s perceived quality, exclusivity, social status and overall guest experience. In addition, affluent consumers weigh in on whether a hotel deserves premium pricing, if they would recommend it to people close to them and how likely they are to stay at a brand’s property on their next trip.

Here are the top five brands as rated by wealthy consumers from each region, with Europe including the U.K., Germany, France and Italy.

Europe:Small Luxury Hotels of the World (7.96), The Ritz-Carlton (7.95),Armani Hotels (7.88), Mandarin Oriental (7.86), Leading Hotels of the World (7.77)

China: Leading Hotels of the World (8.62), Oberoi (8.57), The Luxury Collection (8.54), Firmdale Hotels (8.53), Raffles Hotels and Resorts (8.50)

Japan:Aman Resorts (8.19), Oberoi (7.83), Waldorf Astoria Hotels and Resorts (7.80), The Ritz-Carlton (7.73), Orient-Express Hotels (7.68)

“The luxury hotel industry is growing in potential, but also in the dramatic number of brands that have top tier offerings,” says Luxury Institute CEO Milton Pedraza. “The winners are those who can consistently provide remarkable guest experiences, as rated by the clients.”

Respondents reviewed the following hotel brands: Aman Resorts, Armani Hotels, Banyan Tree, Club Med, Como Hotels and Resorts, Conrad Hotels and Resorts, Fairmont Hotels and Resorts, Firmdale Hotels, Four Seasons, Grand Hyatt, InterContinental, Jumeirah, JW Marriott, Kempinski Hotels, Le Meridien, Langham, Leading Hotels of the World, Loews Hotels, The Luxury Collection, Mandarin Oriental, Oberoi, Orient-Express Hotels, Pan Pacific, Park Hyatt, The Peninsula Hotels, Raffles Hotels and Resorts, Regent, The Ritz-Carlton, The Rocco Forte Collection, Rosewood, Shangri-La Hotels & Resorts, Small Luxury Hotels of the World, Sofitel, St. Regis, Taj Hotels Resorts and Palaces, W Hotels and Resorts, and Waldorf Astoria Hotels and Resorts.

Contact the Luxury Institute for more details and complete rankings.

Visit us at and contact us with any questions or for more information.

February 28, 2014

Buying into bling

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

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

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

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

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

October 10, 2013

Wealthy Travelers From China, Japan and Europe Rank Quality And Experience At Global Luxury Hotel Brands

(NEW YORK) October 10, 2013 – Wealthy travelers from Europe and Asia revealed their top luxury hotel picks in recent research conducted by the independent and objective New York-based Luxury Institute. Three new Luxury Brand Status Index (LBSI) reports examine the attitudes and preferences of affluent Chinese, Japanese, and European consumers as they relate to leading hotel brands.

On a 1-10 scale, wealthy respondents rated hotels on quality, exclusivity, social status, and self-enhancement. They also shared which brands are worth a luxury price tag, the hotels they would recommend, and their preferred brand for an upcoming stay.

New this year, the Luxury Institute asked consumers who recently visited a luxury hotel if their stay was for work, vacation, or both.

“Luxury hotels serve a dual purpose as destinations for both business and pleasure,” says Luxury Institute CEO Milton Pedraza. “Brands have an opportunity to deliver personalized experiences so guests will return for their next trip, regardless of the occasion.”

Affluent respondents ranked the following number of luxury hotel brands in the regions below:

Europe (U.K., Germany, France and Italy)

  • Brands rated: 31
  • Consumers surveyed: 1,516
  • Median annual HHI: £79,000 (U.K.), €69,000 (Germany), €63,000 (France), and €71,000 (Italy)
  • Median age: 47 (U.K.), 43 (Germany), 46 (France), and 42 (Italy)


  • Brands rated: 31
  • Consumers surveyed: 717
  • Median annual HHI: 2.5 million CNY
  • Median age: 32


  • Brands rated: 23
  • Consumers surveyed: 602
  • Median annual HHI: 20 million JPY
  • Median age: 51

To learn about the specific brands rated in each region, please contact Luxury Institute directly.

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

August 10, 2013

Luxury Landgrab

By Russ Banham
Washington Post
August 9, 2013

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

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

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

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

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

May 28, 2013

Insight: Luxury brands position for U.S. boom

By Astrid Wendlandt & Phil Wahba
May 24, 2013

Most men might balk at spending $600 on a pair of Dior sneakers but for U.S. shoppers like Ephraim, an upbeat 30-year-old, such indulgences are becoming increasingly commonplace.

Ephraim is the kind of man who gives luxury goods makers high hopes that the U.S. market can fuel future growth, as China runs out of steam and demand in Europe sags.

“There is a cultural shift,” Ephraim says while browsing at Saks Inc’s New York City flagship. “Men are becoming more fashion forward.” The growing appeal of luxury goods to men and increased confidence among affluent spenders as the U.S. economy and asset prices recover have boosted sales and encouraged luxury brands to step up their investments in the United States.

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

May 20, 2013

Richemont’s Asia focus drives full-year sales up 14pc

By Erin Shea
Luxury Daily
May 17, 2013

Richemont is attributing its full-year sales increase to demand in China and Asia-Pacific, contributions from currencies and exchange rates and the broad growth from its brands across all regions.

Luxury conglomerate Richemont reported a 14 percent increase in annual sales to approximately $13 billion in 2012, compared to last year’s sales of $11.4 billion.

Richemont also reported that its profits for the year are up 30 percent to $2.6 billion from $2 billion in the previous year, much of which can be attributed to the sales in Asia-Pacific. The conglomerate released its results May 16 for the fiscal year that ended March 31.

“The Chinese and the Asians have a very healthy appetite for jewelry,” said Milton Pedraza, CEO of The Luxury Institute, New York.

“I think that ready-to-wear products may be oversaturated [in Asia], and handbags may be oversaturated, so watches and jewelry tend to be valuable,” he said.

“There are some companies in luxury that continue to grow, despite the global economy.”

Mr. Pedraza is not affiliated with Richemont, but agreed to comment as an industry expert.

Richemont, which was not able to comment directly, owns a number of luxury brands including Vacheron Constantin, Jaeger-LeCoultre, Baume & Mercier, A. Lange & Söhne, Cartier, IWC, Piaget, Alfred Dunhill, Van Cleef & Arpels, Montblanc, Chloé and Roger Dubuis.

Asian expansion
Richemont attributes its sales results to an increased demand in China and Asia-Pacific, contributions from currencies and exchange rates and the broad growth from its brands across all regions.

The company said that it works on a long-term basis of benefiting from the prestige and heritage of its brands, which will continue in the future.

However in the short-term, Richemont said that economic troubles may impact consumer confidence in some markets. Overall, the conglomerate is cautiously optimistic about the future.

During this past fiscal year, Richemont reported that Asia-Pacific accounted for the majority of its sales, with 41 percent of the group’s total sales coming from that area. Hong Kong and mainland China are its two largest markets.

Europe, including the Middle East and Africa, was responsible for 36 percent of Richemont’s overall sales.The conglomerate says this area’s growth was a result of demands from tourists.The Americas region had a third consecutive year of double-digit growth. This year, it accounted for 15 percent of group sales.Compared to other regions, Asia-Pacific is the area that is leading Richemont’s growth.

“Asia-Pacific is still a vibrant part of the world and there are some companies that are doing well there,” Mr. Pedraza said.

“Some brands are doing a fantastic job in that area,” he said. “Richemont is doing a fantastic job.”

Retail v. wholesale
Another aspect responsible for Richemont’s growth is its individual brands’ focus on retail over wholesale.

Cartier boutique

For the Asia Pacific and Europe, Richemont reports that its brand’s own boutiques had the highest growth rates.

In Asia, the brand boutiques had higher sales growth than the company’s wholesale partners. This is in part due to the expansion of the boutiques in the region.

“Richemont has set out over the last few years to try to keep its own distribution,” Mr. Pedraza said.

“Retail is outselling wholesale, which can help a company grow faster,” he said. “You can have faster growth when you are de-emphasizing wholesale and emphasizing retail.

“Most luxury brands want to control their own distribution. Watch brands tend to be more retail-oriented.”

April 29, 2013

Now made in China: Taste

5 Things Big in Beijing, Headed for Buffalo

By Quentin Fottrell
April 28, 2013

Despite the ubiquitous “Made in China” label on everything from clothing to toys, China has been slow to export its own products and culture. Most Americans couldn’t name a single Chinese brand, a survey released this month found. Only 6% of could think of one, according to international marketing firm HD Trade Services. Some respondents mistakenly identified Japanese brands like Honda, Sony and Toyota as Chinese. Indeed, Chinese companies often sells products under non-Chinese names. Volvo Car, for instance, is owned by China’s Zhejiang Geely Holding Group.

“Branding was an alien concept in old China,” says Stanley Kwong, managing director of China Business Programs at the School of Management of University of San Francisco. “China had been making products for companies like Wal-Mart and Apple, but has not developed many brands.” It’s been easier for China to make a product than build a brand, experts say. Popular Chinese cosmetic brand Herborist is labeled “Made in Shanghai,” for instance, and the box for Apple’s iPhone — although made in China — is labeled “Designed by Apple in California.”

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

February 14, 2013

What Recession? Americans Regain a Craving for Luxury

By Nadya Masidlover and Christina Passariello
Wall Street Journal
February 13, 2013

PARIS—While all eyes have been focused on luxury-goods growth in China, another market has quietly been bolstering the business of high-end goods purveyors: the U.S.

French silk-scarf maker Hermès International RMS.FR -0.36%SCA said Tuesday that fourth-quarter sales rose 21% in the Americas to €184.6 million ($247.5 million). That comes on top of a slew of strong U.S. performances for its peers, such as LVMH Moët Hennessy Louis Vuitton SA MC.FR -1.20%and Cartier owner Cie. Financière Richemont SA. Gucci parent PPR SA PP.FR -0.44%could confirm the pattern when it reports full-year profits on Friday.

Click the link to read the entire article including a quote from Luxury Institute’s CEO Milton Pedraza:

February 11, 2013

US stores luxuriate in Chinese cash

By Yu Wei
China Daily
February 8, 2013

Yu Yang, from the central China city of Wuhan, was laden with shopping bags and beaming, surprised at the ease of his retail excursion in New York State.

Although Yu doesn’t speak English, Mandarin-speaking store clerks at some of the Woodbury Common outlet mall stores made him comfortable by explaining products and converting international sizing charts to US sizes.

“Our customer-service supervisor at Woodbury Common is Chinese. We have several designer stores that also employ sales personnel who speak various dialects of Chinese,” said Jean Guinup, a marketing executive with Simon Property Group Inc, which operates the outlet mall, about an hour’s drive south.

The mall, which opened in 1985 and is filled with more than 200 designer-label stores that sell clothing and housewares at reduced prices, has long attracted busloads of tourists visiting New York City. Now Woodbury Common and its retailers court Chinese shoppers with services in Mandarin and Cantonese, including currency exchange, public-address announcements and other information.

“Last year, we saw increases in the number of Chinese visitors who visited our centers, including during Chinese New Year,” Guinup said.

Based on that experience and inquiries from potential shoppers, Simon is expecting greater numbers this Chinese New Year, to factory outlets such as Woodbury Common and the company’s other properties, including the high-end Mills malls.

“We have been aware of the increased volume of Chinese visitors arriving to the United States over the past several years, as well as the projections for continued increased growth,” Guinup said. “The relationship with our Chinese shoppers is very meaningful and we continue to develop programs to entice and excite this key audience.”

According to a report by Bain & Co, an adviser to the global luxury-goods industry, Chinese consumers now make up half of all luxury purchases in Asia and nearly a third of those in Europe. Globally, one in four purchases of personal luxury goods is made by a Chinese consumer.

Although retailing of luxury brands isn’t new to China, customers there still prefer to buy high-end goods during trips abroad. Research firm McKinsey & Co reports that two-thirds of luxury consumers on the Chinese mainland travel overseas to make purchases, thus avoiding China’s high sales taxes.

Although rich Chinese tourists don’t need to be told what to buy, they do benefit from having someone facilitate their purchases.

At the new Burberry boutique at the landmark Macy’s department store in Manhattan, a sales clerk named Jeniffer, who declined to give her last name, said six or seven Mandarin-speaking assistants are on the staff.

The British brand has put its red-colored products on display in the shop’s most prominent position and will hand out special red envelopes as a gift with purchases during the Chinese New Year.

Montblanc, which sells fine-quality fountain pens and writing accessories, has both red envelopes and window decorations done in a red floral motif with Chinese symbols at its US locations.

“We have a corporate policy to have at least one Chinese-speaking staff member in each of our boutiques,” said Nicole Dabaghian, a spokeswoman for Montblanc North America.

The retailer saw an influx of Chinese shoppers during the last Chinese New Year and is expecting even more this month.

“We most definitely value the Chinese tourist – so far as to have created special products such as a currency holder or wallet specifically for Chinese currency,” Dabaghian said.

China is one of the fastest-growing countries of origin for tourists in the US. A record number of Chinese – nearly 1.1 million – visited the country in 2011, and the US Commerce Department estimates that 1.54 million came in 2012.

“We have seen many Chinese visitors during last year’s Chinese New Year celebration, and we expect to see even more visitors this year,” said Matthew Bauer, president of the Madison Avenue Business Improvement District, a merchants association.

He said three-quarters of luxury stores on Madison Avenue between East 57th and East 86th streets accept China UnionPay, the most widely used card-payment system in the Asian country. Many of the association’s member retailers have special promotions planned for the upcoming holiday.

“To accommodate clients from abroad, Madison Avenue retailers have long maintained sales associates familiar with a variety of languages, and certainly many of our retailers have sales associates who speak Mandarin,” Bauer said.

Italian fashion line Emilio Pucci opened a store on Madison Avenue late last year and the boutique has a full-time Mandarin-speaking associate.

“This will be our first Chinese New Year in the location, and we very much look forward to welcoming Chinese tourists during the celebration,” said Katie Antonucci, the company’s retail director.

She said Pucci’s spring collection has a strong “Indochina influence”. “This collection will be in the store and large dragon tails – a theme used throughout the collection – will be on display in the window of the store,” she said.

The surge of Chinese visitors gives luxury-goods companies a chance to gauge the impact of their business strategies in China itself.

“The luxury brands need to understand that for the future, the purchasing power and discerning taste of the Chinese consumer will be important not just in China, but around the world, in major capitals of tourism and culture, as these highly educated world travelers eagerly discover the world and bring their vast purchasing power along with them,” said Milton Pedraza, CEO of the Luxury Institute, a New York-based research and consulting firm.

“The luxury brands must not only deliver great products,” he said, “but also associates who speak the language and who have the personality and skills to build long-term, mutually beneficial relationships with individuals, not just groups, of Chinese consumers.”

Chinese who travel and shop abroad have captured high-end retailers’ attention because they know what they want, buy in large quantities and are less interested in bargains than high-quality design, craftsmanship, and service, Pedraza said.

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