Luxury Institute News

January 19, 2009

Ten Last-A-Lifetime Luxury Buys

Forbes.com
Jeanine Poggi
01.13.09, 04:00 PM EST

Now is a great time to invest in classic, well-made clothing. Some of the best buys in this dicey economy can be found on racks lined with high-end fashions.

Take Saks (nyse: SKS – news -people ) Fifth Avenue. A Dolce & Gabbana tailored blazer and Chanel trench coat are more than 60% off at the store’s flagship.

Henri Bendel in New York is currently holding an “Almost-Free Sale” with up to 80% off select merchandise. This week shoppers can save up to 70% on both men and women’s apparel and accessories at Bergdorf Goodman.

Versace’s and Gucci’s New York City boutiques both carved out sections for discounted merchandise.

Goes to show that although many consumers are cutting back on luxury apparel and accessories–43% of luxury customers with an annual income over $150,000 surveyed this month by the Luxury Institute, a market research firm, said they have become more practical in their purchases–it is actually the ideal time to pick up classic items like a Chanel suit, Burberry trench coat and Gucci sunglasses.

Not only are they timeless and long lasting, but with high-end department stores offering deep discounts, many designer name brands like these can often be found at reduced prices.

In some cases, though, these markdowns are not advertised. That’s because individual designers are being more discrete than department stores in discounting to avoid tarnishing their brand image.

“It is hard to measure precisely which designers are slashing prices, since it is not being broadcasted,” says Milton Pedraza, CEO at the Luxury Institute. “But we are definitely seeing a difference.”

Many industry experts say that designers’ ticket prices are lower than last year and mark-ups are at a smaller percentage.

Wardrobe Winners
Even with less money to put toward new clothes, it is possible to take advantage of retailers’ largesse and build a wardrobe if you invest in some classics. “Once you have well-made quality basics, you can always mix and match with more ephemeral fashion pieces of the moment,” says Linda Fargo, senior vice president, Fashion Office and Store Presentation, Bergdorf Goodman Cynthia O’Connor, founder and CEO of Cynthia O’Connor + Co., a fashion and accessories showroom in New York and Los Angeles, says she bought a Chanel suit on sale at Bergdorf Goodman 14 years ago and still wears it constantly.

“The trick is finding the right combination of luxury and style,” says Simon Doonan, creative director at Barneys. “If the item is too trendy, it is more vulnerable to becoming obsolete. Look for items that have an elegant simplicity and ooze quality.” Men should invest in a well-fitting suit and custom-made dress shirts. Brioni and Hamilton make exceptional menswear. “Custom shirts fit much better,” says Doonan. “You don’t want to be able to see through the dress shirt to the undershirt or have any frayed edges.”

Aside from the Chanel suit, women should also have a trench coat. This classic jacket can go over jeans, suits, skirts or dresses. Burberry’s is double-breasted, fully lined with a traditional silhouette and has the company’s signature check pattern.

“These brands have impeccable credentials,” says Pedraza, “haven’t oversold themselves and are more discrete than other luxury brands.” But if you can’t afford to splurge on high-end apparel, a designer accessory like a Valextra handbag, Dior pumps, wellmade English or Italian shoes, a Rolex watch or a Hermes scarf will provide a better value for the buck, says Sass Brown, associate professor of fashion design at the Fashion Institute of Technology.

These items can be mixed and matched into your wardrobe and generally get more use than just one dress or shirt.  Sunglasses are also a great way to update your look and make you appear polished without spending a ton of money, O’Connor says. At Saks, shoppers can find sunglasses from Dolce & Gabbana, Gucci and Valentino, among others, for $150. These items normally retail for over $300.

“Creative destruction is all about the fittest surviving,” Pedraza says. “These classics are going to prevail and gain market share. It may be a smaller pie, but they will be getting a bigger chunk of business.”

January 15, 2009

Sales of megayachts slow as millionaires scale down conspicuous consumption

By Arlene Satchell
South Florida Sun-Sentinel
January 9, 2009

Market for megayachts suffers as rich scale back conspicuous consumption

As the wealthy cut lavish spending, several South Florida yacht brokers had declining sales last year and some of them saw business dive sharply the past three months as the economic slump deepened.  With local yacht sales sinking 25 percent to 50 percent in 2008, some say a rebound isn’t likely until midyear or early 2010.

That could mean bleak sales during the crucial winter boat show season that runs through March. The stock market turmoil has prospective buyers “distracted with managing their own assets,” said Tim Davey, chairman of the U.S. Superyacht Association in Fort Lauderdale.

South Florida brokers play a key role in the $10 billion global megayacht market. One of every two megayachts listed for sale worldwide has a local connection, according to the Marine Industries Association of South Florida. Even if these luxury boats 80 feet or more in length aren’t sold or built here, 1,500 of them sail here  annually for recreation or maintenance.That adds an average of nearly $500,000 per visit to the local economy, said Frank Herhold, executive director of the Fort Lauderdale-based marine trade group.

A prolonged slump in the yachting sector might mean fewer yachts in local marinas and boatyards, many of which recently expanded and upgraded to cater to these big boats.  At Fort Lauderdale’s International Yacht Collection, sales slowed dramatically in November, broker Jim Eden said. “There’s a stigma to [the wealthy] spending millions on a boat when people are being laid off,” he said. Last year, the firm’s sales of used megayachts fell 30 to 35 percent, compared with 2007. One of those the International Yacht Collection has for sale is a 2007 Trinity yacht, the 161-foot Lohengrin priced at $37.5 million.

At Palm Beach Yachts International in West Palm Beach, yacht sales fell roughly 50 percent in the second half of last year. “Everyone thinks it’s going to be cheaper tomorrow and are playing a waiting game,” owner Duane MacPhail said. While used megayacht sales hit a snag last year, new yachts, for which contracts are signed with deposits years in advance, fared well.

MacPhail recently signed a deal with an English yacht maker to build a $30 million, 150-foot yacht for delivery December 2010. “For the next four years, our order book is pretty full,” said Buddy Haack, a Fort Lauderdale representative for Lurssen, a German yacht builder specializing in vessels 197 feet and longer.

Nationwide, sales of new megayachts fell an estimated 10 to 15 percent in the fourth quarter, said Milton Pedraza, chief executive of the Luxury Institute in New York. Pedraza said the slowdown was partly driven by the superwealthy’s curtailment of conspicuous consumption. “It’s not that they don’t have the money … they’re being conservative right now,” he said. People with more than $10 million in net worth began scaling back sharply in September, while single-digit millionaires pulled back as early as last March.

Recent sluggish yacht sales trends might be the harbinger of even leaner times. Haack said his sales office hasn’t made a sale in eight months, which wasn’t typical. The office will make a push for new orders later this year or early 2010. Lazzara Yachts’ new boat sales in the U.S. declined in 2008, while international sales rose significantly and accounted for 50 percent of overall sales, said Rich Lazzara, vice president of sales.
Tampa-based Lazzara, with offices in Fort Lauderdale, delivered its first boats to Australia, Dubai and Venezuela and is targeting emerging yachting markets such as Greece, India, Israel and Turkey.

At Gilman Yachts, sales of new and used yachts slipped 25 percent last year, managing partner Jeff Stanley said. Despite declining sales, Gilman, with locations in Fort Lauderdale, North Palm Beach and Dunedin, recently signed a contract for a new 130-foot Horizon yacht valued about $16 million. It’s scheduled for delivery in 2010. “Most of our customers aren’t suffering from a cash crisis, but [rather] a crisis of confidence,” Stanley said. Arlene Satchell can be reached at asatchell@SunSentinel.com or 954-356-4209.

Megayachts 3,800 Approximate total of megayachts worldwide
1,500 Megayacht visits to South Florida annually
918 New megayachts that were expected to launch in 2008
18 Percentage increase in new yacht orders worldwide in June 2008 vs. previous year

Source: Superyachting Index 2008/Marine Industries Association of South Florida

Copyright © 2009, South Florida Sun-Sentinel

News Release: Luxury Institute Announces “Toast of the Town” in Prestigious Wine and Spirits Category. High Net-Worth Consumers Rate More Than 100 Brands

MSNBC.com Tues., Jan. 13, 2009

NEW YORK, NY – The independent New York City-based Luxury Institute (www.LuxuryInstitute.com) today released its annual Luxury Brand Status Index (LBSI) for the wine and spirits industry. The results of the LBSI eagerly are awaited each year and are utilized by consumer-centric luxury brand executives to independently monitor how target consumers truly rate their brands in terms of critical luxury metrics. Rankings are derived from a survey of high net-worth consumers who rated more than 100 brands in 10 wine and spirits categories. The top-rated brands in each category are:

– Champagne and Sparkling Wine: Dom Perignon
– Cognac: Courvoisier
– Gin: Hendricks
– Liqueurs: Grand Marnier
– Rum: 10 Cane
– Scotch: Macallan
– Table Wines: Opus One
– Tequila: Patron
– Vodka: Grey Goose
– Whiskey: Woodford Reserve

“We offer our congratulations to the brands chosen as leaders in their category in our impartial survey,” says Milton Pedraza, CEO of the Luxury Institute. “It is a testament to the continued desire by value-minded luxury consumers for ‘true’ premium, luxury qualities in a variety of categories and services from apparel to wealth management. Wines and liquors are no exception. In this Darwinistic Era of Luxury, brands that claim to be prestige will have to deliver the qualities they tout, or perish.”

The proprietary Luxury Brand Status Index (LBSI) is the only measure of the prestige of leading brands amongst wealthy Americans. A national sample of 1,200+ wealthy American consumers was surveyed online by the Luxury Institute. The Institute’s respondents had an average weighted income of $342,000.00 and an average weighted net-worth of $2.9 million.

The LBSI asks respondents to rate the brands along four main “pillars” of brand stature:
– Consistently superior quality
– Uniqueness and exclusivity
– Social status as a product consumed by people who are admired and
respected
– Self enhancement, in that the brand makes the consumer “feel special”
across all aspects of the customer experience

In addition, the survey measures three critical “outcome” metrics, which are compared to the category LBSI:
– Worthiness of a significant price premium
– Willingness to recommend brands to people they care about and why, or why not
– Brand preference as the brand most likely to be considered the next time a purchase is made

“We’ve found that those brands committed to excellence are genuinely interested in where they stand in the mind of the high net-worth consumer,” Pedraza says. “For the rest, we caution that this is not the time to ‘fly blind’ as the final verdict on whether, or not, you qualify as a luxury brand is that of the hard-core luxury consumer.”

Survey results are weighted to match demographic and net-worth profiles of the same audience according to the latest Survey of Consumer Finances from The Federal Reserve.

About the Luxury Institute (www.LuxuryInstitute.com)
The Luxury Institute is the uniquely independent and impartial ratings and research institution that is the trusted and respected voice of the high net-worth consumer. The Institute provides a portfolio of proprietary publications and research and consulting services that guides and educates high net-worth individuals and the companies that cater to them on leading edge trends, high net-worth consumer rankings and ratings of luxury brands, and best practices. The Luxury Institute also operates the Luxury Board (www.LuxuryBoard.com), the world’s first global, membership-based online community for luxury goods and services executives, professionals and entrepreneurs.

For Further Information, Please Contact:

Evins Communications, Ltd.
Dotty J. Giordano, Director
Enid Lewin, Vice President
Phone: (212) 688-8200
E-mail: dotty.giordano@evins.com
E-mail: enid.lewin@evins.com

Luxury Institute, LLC
Martin Swanson
Business Development
Phone: (914) 909-6350
E-mail: mswanson@luxuryinstitute.com

© MarketWire 2009

View article http://www.msnbc.msn.com/id/28634932/

January 5, 2009

New Year’s Resolutions for the Luxury Market

US News & World Report
December 30, 2008 04:14 PM ET | Kimberly Castro
When wealthy consumers feel the need to conceal their lavish purchases in plain paper bags and avoid public shame by attending underground shopping parties, it’s obvious that all is not well for the luxury goods and services market. Once considered well insulated from economic downturns, the luxury market has received a brutal beating this year, with sales plunging 34.5 percent over last year. Here are some ways the ailing industry can resuscitate itself and land firmly on its feet:

1. Reduce inventory.

Smart luxury brands should dramatically reduce their production, says Bob Schwartz, interim CEO of Portero, an online auction-based marketplace for luxury merchandise. “The smart luxury brands have this approach built into their DNA; they know scarcity and brand protection is value,” says Schwartz. “Selling more is not success. The ones who floated up with the market don’t have this in their DNA, nor do they have a lasting brand to stand behind . . . they will thrash around offering deals and wither away.”

2. Become more adept with online strategies.

The luxury industry has been slow to adopt Web 2.0 strategies and make websites the focal point of business. According to the Luxury Institute’s Wealth and Luxury Trends-2009 and Beyond report, “Innovators such as Gilt, Ideeli, A Small World, Portero, Vivre, Couture Lab and several off-the-radar players such as Bespoke Global, are gaining traction online via membership models, global communities, and by aggregating categories of bespoke luxury designers and producers in one-stop-shop destinations.” The report says that the economics of these online marketplaces will become much more compelling as the economic downturn makes opening stores and running traditional advertising economically challenging.

3. Don’t succumb to slash-and-burn prices.

When a luxury retailer cuts prices too steeply, it threatens its brand’s image of luxury and exclusivity. This couldn’t have been more evident than during this holiday season. Several luxury retailers, including Bergdorf Goodman and Neiman Marcus, slashed prices so severely that they looked more like discount outlets than luxury mavens. There are other ways of selling a luxury product at a slightly lower cost that’s attainable for consumers in today’s rough market.

For example, retailers can sell fragrances in smaller containers, which can help retailers minimize production costs.

4. Embrace corporate social responsibility.

Several luxury hotels in the Washington, D.C., area are offering special packages for the upcoming inauguration. Although they cost a pretty penny-up to $50,000-these packages mix luxury with philanthropy. For example, one of the hotels will give a portion of the proceeds to a charity of the guest’s choice. Another hotel offered an eco-conscious package. The Luxury Institute says that wealthy consumers increased their preference for socially responsible brands from 51 percent in 2006 to 57 percent in 2007, and it sees that figure rising dramatically in 2009. “The global crisis of confidence in governmental, financial, and other institutions will drive luxury consumers to demand that luxury brands serve not just them, but society as a whole,” according to the Luxury Institute’s report. “They will require luxury brands to be ethical with all constituents, charitable in ways that make a difference to their beneficiaries, and ecofriendly in ways that can be documented.”

5. Get consumers to trust your brand again.

Consumers who walked into luxury stores this holiday season may have seen rows of jumbled merchandise with overflowing bins and a smattering of inelegant, blaring sale signs. Have retailers forgotten what luxury means to the consumer? According to the Luxury Institute, consumers will “scrutinize luxury brands far more carefully going forward and will rely on authenticated, validated, and certified ratings to make purchasing decisions.” Consumers still want brands to connect with them on an emotional level, focusing on superior quality and prestige.

6. Provide outstanding customer service.

I stopped by BCBG Max Azria last month and was delightfully surprised by the customer service. I was greeted by a very helpful employee who told me about special sales and promotions. She graciously offered me a flute of champagne. This is just the type of service that will put customers at ease to peruse the store longer than they intended. Luxury retailers should be  welcoming, signaling the right amount of exclusivity without alienating their customers.

January 1, 2009

When High-End Stores Vie to Save the World

Posted in Luxury Market

December 26, 2008, 3:28 pm

Dow Jones Newswires reporters Kristen McNamara and Shelly Banjo on the giving trend among luxury retailers:

How about some charity with your bling?

A number of high-end retailers, including Cartier, Gucci, La Perla and Bliss Spa, are making charitable contributions when customers purchase particular products or spend a certain amount of money.

These offers come as wealthy consumers, sensitive to the financial plight of others, seek to offset some of the guilt they feel about buying nonessential luxury items, consumer researchers say. At the same time, luxury brands are keen to draw shoppers this challenging holiday season.

Wealthy consumers are more likely to feel they should be making charitable contributions than those who are struggling to make ends meet, says Michal Ann Strahilevitz, a marketing professor at Golden Gate University who studies consumer behavior and cause-related marketing.

Large-scale initiatives by the rich and famous have also raised awareness and expectations around philanthropy, says Strahilevitz, citing Bono, Oprah Winfrey, Warren Buffett and Bill and Melinda Gates, among others. “It’s become very fashionable and sexy to do good,” she says.

Consumers prefer to shop at stores that are good corporate citizens – those that take care of the environment, employees and suppliers, and support charitable causes, researchers say. “Everyone understands their own personal brand is attached to how they behave these days,” says Milton Pedraza, chief executive of the Luxury Institute, which researches high-end consumers and brands. “You don’t want to be the poster child for excess. You do want to be the poster child for socially responsible consumption.”

But philanthropic experts say a lack of transparency can make it difficult to distinguish between programs that are helping charitable causes and those that are marketing ploys. Retailers should make it clear how their program works, who the recipients are and how much the charitable organizations will receive.

Donating directly to a charitable organization is still the most effective way to give, says Lucy Bernholz, president of Blueprint Research and Design, a philanthropy advisory firm that publishes a blog on the business of giving. “You know for sure that the money will go where you want it to go,” she says.

http://blogs.wsj.com/wallet/2008/12/26/when-high-end-stores-vie-to-save-the-world/