Luxury Institute News

May 31, 2009

Sub-Zero Keeps Its Cool in a Value-Obsessed Economy

Michele Bedard of Sub-Zero Wolf, who is also a Luxury Institute client, shares her thoughts on how consumer insights drive the company’s marketing.

Marketing VP Says Consumers Now Seek ‘Luxuries With Substance’

by Beth Snyder Bulik
Published: May 25, 2009

YORK, Pa. (AdAge.com) — Think you’re having a tough time pushing product right now? Try marketing a $12,500 refrigerator.

That’s what Michele Bedard is tasked with. As VP-marketing at Sub-Zero Wolf, maker of high-end Sub-Zero refrigerators and Wolf cooking appliances, her responsibility is not only developing brand, media and marketing strategy in the midst of a severe recession, but doing so for products that cost anywhere from $1,600 — for under-counter, smaller refrigerators — to upwards of $12,000 — for its specialty Pro-48 model, with stainless-steel interior.

But despite the seemingly near-impossible charge, Ms. Bedard is unfazed. And while luxury goods have been one of the worst casualties of this recession — sales dropped by double digits at the end of last year, and Bain & Co. recently predicted as much as a 20% drop in sales of luxury goods for the first half of this year — the company continues to market and advertise. Ms. Bedard would not disclose the company’s marketing budget, but said that while it has shifted money from traditional media to more direct, CRM and digital efforts, the company has not cut its budget. 

“There’s a good, firm belief at this company that marketing is really driving sales,” she said.

Consumer insights drive the company’s marketing. Sub-Zero Wolf relies on extensive market research from product owners, as well as kitchen designers, architects and retailers who plan for and sell their products, to design new products for the residential market. Sending a value message is key, she said.

“It’s all about building terrifically designed products with great quality throughout,” she said.

Ms. Bedard, 48, came to the family-owned, Madison, Wis., company eight years ago with a background that includes brand-managing stints at Volkswagen and Energizer.

At Sub-Zero, she reports directly to President-CEO Jim Bakke, grandson of founder Westye Bakke. Ms. Bedard said his long view of the company, as well as the close-knit, nimble staff, is what’s guiding the company through this time.

Ad Age: Give us the CliffsNotes on the category. How would you characterize it?

Ms. Bedard: It’s a huge category with major brands that we all know — Whirlpool, Samsung and the other big guys. Sub-Zero is definitely in the niche, in the high end. Sometimes we’re called the luxury appliance category. And in the last 15 years, that category has become more crowded because of the growth in the marketplace.

Ad Age: How do you deal with that added competition coming into a territory you really owned?

Ms. Bedard: We need to make sure we look ahead, not behind, and don’t spend too much time looking at who’s producing me-too products and strategies. Just give our audience what they need and ask for.

Ad Age: Sub-Zero, by any measure, is an aggressive marketer. What’s the thinking about marketing inside the company? Do you report to the CEO? Is there a straight line to the top?

Ms. Bedard: Yes, I report to the CEO. We value the consumer, and we feel the consumer is very wise and they know what they want. Our target is homeowners who have really high standards of performance and design. They really cherish their home, and they have a passion for good-quality products that will give them fresh and delicious foods and wine. … We also target a very important group of influencers: the architects, the designers, the remodelers, the interior decorators.

Ad Age: What functions fall under marketing at Sub-Zero?

Ms. Bedard: It’s global marketing, brand communications and everything else. And we’re very involved in product development. Product development is really at the core of the company, so the product engineers and the marketers are involved in making sure we come out with really terrific products.

Ad Age: When does marketing get involved with a new product?

Ms. Bedard: Right from the beginning we try to provide as much market insight as we can. We seek a lot of input from all our different audiences of consumer and owners. We also value the input of our retailers, our distributors and all those designers who specify our products to make sure that we come up with the right products.

Ad Age: Have you reallocated media spending because of the economy or because the web is more important to today’s consumer?

Ms. Bedard: The role for more traditional media is there. Magazines [such as Elle Decor, House Beautiful and Saveur] and TV [shows such as HGTV's "Divine Design" and "Spice Up My Kitchen"] are really great ways to increase brand awareness and brand preference in our category. If you’ve ever remodeled a kitchen, everybody starts a kitchen project with a binder and ripping pages out of a magazine to really help develop the dream that they have. Online is really to engage our audience and tell the story.

Ad Age: How tough is it to own two high-end brands in this economy?

Ms. Bedard: This company has been around a long time, and in 66 years, we’ve seen downturns before, so it’s really about taking the long view. Our brands are more relevant now. People want to make sure that what they invest in is worth every single penny. … The collapse of the project business and the high inventory of homes certainly has affected us, but there is a lot of remodeling going on as well. Things are starting to pick up, and we know that good kitchen designers are still busy.

Ad Age: Have you changed your messaging at all to focus on value or particular features?

Ms. Bedard: Consumers are wanting to make smart purchases, and we’ve known for several years now that flaunting and ostentatious spending were out. That’s no news to us. Our advertising and marketing strategy is really trying to take advantage of those trends. The recession has made this more universal. [It is more about] luxuries with substance.

Ad Age: What happens if, when the recession ends, it turns out there is a permanent change in the market and your target audience. How do you then regrow a consumer base?

Ms. Bedard: The home will continue to be a very important place to invest. Consumers want to stay at home, entertain at home, and create many great environments to create great moments with family and friends. The kitchen especially will be important. Along with that, consumers want to spend money on something that will be a long-lasting value.

Ad Age: What’s the thinking behind Sub-Zero’s digital and social-media strategy?

Ms. Bedard: Our content addresses everything associated with creating a kitchen but also with their personal passions like wine and cooking. We have a lot of videos that show consumers how to be inspired by Wolf, for instance. We’ve put those on YouTube. … We have chefs on staff, and they help us with product training, product development, and they just happen to be great on camera, and that helps bring our product alive. … We just started a Facebook page, and so far we have lots of fans — consumers and designers uploading photos of their kitchens with genuine love for our product. It’s important to be genuine and [offer] relevant content.

http://adage.com/cmostrategy/article?article_id=136817

May 29, 2009

As People Tighten Belts, How Luxury Concierge Firms Are Faring

Posted in Luxury Market

May 27, 2009
Rachel Walsh
www.wealthbriefing.com

Even the wealthiest individuals are weighing up how to cut costs as the recession bites so paying a company to book your football tickets, make restaurant reservations or arrange flights to the Caribbean might appear excessive.

As belts are tightened, what future is there for businesses whose very raison d’être is not only taking menial tasks off the busy hands of high net worth individuals but finding new and ever more amazing ways for them to have a good time? As the recession rumbles on, will private clients still want to indulge in space tourism or undersea dinner parties?

Businesses devoted specifically to luxury concierge services emerged at the beginning of the decade, offering global access to the kind of lifestyle one expects to enjoy through financial success: effortless, exclusive and often extravagant. A number of the world’s largest concierge firms told WealthBriefing how they are faring in the current environment – several of which said they are still planning to open new offices in different parts of the world.

“The question is: how do they stay relevant and profitable during these harsh economic times when even the wealthiest have cut back on everything?” says Milton Pedraza, chief executive of US-based research firm the Luxury Institute. International concierge services such as Quintessentially and WhiteConcierge in the UK, UUU Luxury in Paris and Conciant and Pure Entertainment in North America, said they have not experienced a decline in the last year. William Holroyd, managing director at WhiteConcierge, says requests in the first quarter of 2009 rose 30 per cent on the same of 2008 and each company said it is actively expanding due to client demand. Steve Edo, chief executive of Pure Entertainment, says the firm is receiving especially strong demand from the emerging and frontier markets. He even describes the sector as “recessionproof.”

But all note recent changes in client behaviour.

“The volume of requests from members hasn’t changed, just their nature,” says Guy Lawrence, global chief executive at Quintessentially. “We’ve seen more requests utilizing our global network, insider knowledge and beneficial rates for travel itineraries, insider city guides, nightlife and entertainment. People are reaping the convenience of having a concierge and the time and money we can save them.”

Quintessentially is the best-known and ultimate industry trailblazer. Founded in 2000 by aristocrat entrepreneur Ben Elliot, film producer Aaron Simpson and commercial lawyer Paul Drummond, seventeen sister businesses, each specialising in different luxury sectors, have grown from the group’s core concierge service.

Quintessentially, which describes itself as a club first and foremost, is effectively a luxury brand in its own right at this point with 44 offices worldwide and plans to open another five this year.

Steve Edo, of the Montreal-based Pure Entertainment Group, says there is less call for basic concierge services such as dinner and hotel reservations and more demand for tailored, comprehensive plans. “Clients are more interested in the bespoke experience which includes more services all in one,” he says, comparing his work to that of a Saville Row tailor.

“There has been an increase in requests for unique experiences which are much more personal and deliver service i.e. bespoke wine tasting, unique art tours and the organizing and managing of private events,” says Mr Lawrence.

These companies also report increased client requests for price comparisons, a sign of greater hunger for value for money. Valerie Castle, a managing member at Conciant, which provides concierge services to individuals and corporations on every continent and is soon to open an Australian base, says that for the first time in the company’s history members are not shopping for high-end brands.”

People seem to be getting back to basics, pragmatic describes the behaviour best. They no longer believe luxury brands justify the cost.”

At a time when extravagance may be seen as less acceptable, James Lawson director of international wealth consultancy Ledbury Research, identifies a common behavioral trend among concierge clients: stealth wealth. “Individuals, especially in the US, are moving away from conspicuous consumption or overt signalling of their status.”

“In an environment where the wealthy are under increasing societal scrutiny, these concierge organisations allow them to operate under the radar so that they can buy those necessary luxuries anonymously,” says Mr Lawson.

“Members have become more discreet in their spending – less conspicuous and more savvy,” says Quintessentially’s Mr Lawrence. The focus now seems to be on getting high quality goods at the best price. As concierge services have the insider knowledge and contacts to get the best deals for their clients in a discreet fashion, this has emerged as one of the key ways they can adapt to the recession.

WhiteConcierge recently launched a “haggling” service to cater to clients seeking the best deals but who are shy about negotiating for them. “The recession has not reduced our business; it has simply made people more careful about what they are buying,” agrees Zakary Chanou, chief executive of the UUU Luxury group, which operates globally from Paris and plans to open agencies in London, Africa and the Benelux countries in the coming months.

Both Mr Chanou and Pure Entertainment’s Mr Edo cite better communication with clients as a key strategy for retaining clients and gaining new ones in recession time.

As new clients are often referred by members, nurturing client relationships is key, and firms are making increasing use of the Web, moving away from simple word-of-mouth contact and referral.

“Listening to what your client tells you is one of the best ways to keep existing business and attract new clients,” says Mr Edo. To this end, Pure Luxury and Conciant both emphasise the importance of marketing and social networking online. Conciant says 58 per cent of members now contact their round-the-clock service through an internet portal. Quintessentially’s Qube, an exclusive online community, is well established. “The affluent consumer is a user of technology and you have to adapt,” says Mr Edo.

Another survival strategy for concierge services is to partner with other firms to gain new services and discounts for their own clients, while tempting those of other businesses with luxury privileges. This is the concept upon which WhiteConcierge was built. The company evolved from a travel support service that was bought out in 2007 by air entrepreneur Jonathan Breeze and Austria’s EurAm bank.

It partners with over 90 business clients worldwide from a variety of sectors, providing an “added-value” service to these companies’ clientele. WhiteConcierge’s banking partners, for example, can offer premium financial services combined with the ability to find a fabulous watch that the client’s wife spotted on the Desperate Housewives television show. This appears to be a strategy for success. “The overall number of registered customers has increased by 15 per cent to over 1 million around the world in the last year,” says Mr Holroyd.

Clients get in touch with the company through WhiteConcierge’s partners.

Indeed, they may be unaware these services are not carried out directly by their bank but rather by a concierge firm. Mr Holroyd calls WhiteConcierge, which operates from a multi-lingual resource centre in Cambridgeshire, a “facilitator”. Other concierge firms will partner with a company, such as a hotel chain, to build up their own brands.

Both Mr Pedraza and Mr Lawson believe there is still a market for these services as long as they strategically adapt to clients’ needs. Communication, partnerships, expansion and discretion mean this industry may weather the recession far better than the luxury sector in general.

As Steve Edo told Wealthbriefing, “People are still willing to spend on things that are meaningful to them and will somehow make their lives better. However, I believe [our business] is about enriching their lives with new experiences, not simply being rich.” 

The New High-end Consumer: ‘Please Put My Bottega Veneta Wallet in a Plain Bag’

Posted in Luxury Market
Published: May 27, 2009 in Knowledge@Wharton

For high-end shoppers on Madison and Fifth Avenues in New York, the hottest must-have accessory for 2009 is not the crocodile cuff bracelet, the snakeskin clutch or the python leather purse — it’s the plain paper bag.

That was the consensus of a recent Penn Fashion Week panel discussion titled, “Can Luxury Survive the Economy,” hosted by Wharton. “It used to be that you’d buy a pencil just to get the bag” with an up-market label, said panelist Antonia Thompson of Robert Burke Associates, a strategic consultant for luxury vendors such as wedding dress designer Vera Wang, jeweler Fred Leighton and retailer Bergdorf Goodman. But extravagance isn’t what it used to be. These days, even the have-a-lots are feeling pangs of recession. Since the economy has soured, consumers of luxury items have scaled back on their spending, and those still shopping are being more discreet.

“It’s a little bit gauche to be ostentatious with your purchasing,” said Roxanne Paschall, senior merchandising director at luxury Italian brand Bottega Veneta. Customers are asking for plain white bags, no boxes, or requesting goods be delivered later to their hotels. “They don’t want everyone to know. They don’t want to flaunt.”

Sales of luxury goods worldwide could fall by as much as 10% this year, global management consulting firm Bain predicted earlier this month. In the U.S., where about a third of all luxury goods are sold, sales are expected to drop by 15%.

In a recent study by the New York-based Luxury Institute, 62% of wealthy consumers reported that the state of the economy has changed their views on luxury purchases. Some are more budget conscious. Others said that flaunting luxury right now is insensitive, and they would rather help others than spend on themselves.

Finding that even the super-rich are focused on frugality, luxury brands are groping for new ways to stay viable. During the Fashion Week discussions, some luxury retailers said they have had to cut prices, while others described wooing customers with new, more affordable products. Others shunned any type of discounting, arguing that price reductions would permanently sully the brand. Finding it harder to sell glamour, some luxury brands are hyping value and stepping up service. Nearly everybody wondered when — if ever — the heady days of free spending would return.

Luxury at 70% Off
Price-cutting began last year in some high-end department stores after Saks Fifth Avenue aggressively lowered prices in November, slashing as much as 70% off designer fashions that usually don’t get marked down until the end of the season. The dramatic move put pressure on rivals to follow suit.

Panelist Frank Doroff, senior executive vice president and general merchandise manager at Bloomingdale’s, said his store was forced to cut prices. “We had no choice. We had to get rid of the inventory. In October, the whole economy collapsed. All the stores had geared up with big seasons and they were left with all this inventory…. You don’t want to cut prices, but at some point there’s a sales drop that you just can’t take.”

Overall sales for Cincinnati-based Macy’s — Bloomingdale’s corporate parent — fell 9.6% for the first nine weeks of 2009 over the same period last year. Same-store-sales declined 8.9%.

Discounting at luxury department stores made it tough for designers like Bottega Veneta. The Italian leather house, a subsidiary of the Gucci Group, is known for woven leather accessories like shoes, wallets, handbags and luggage. The brand saw its sales drop 8.8% in the last quarter of 2008. Given that “the price of craftsmanship hasn’t changed, our margins are already [very] small,” said Paschall. “It does hurt our business when they put things on sale that we would never mark down…. We really don’t want to discount.”

Fashion designers are not the only luxury vendors who believe discounting is dangerous. “I am very against cutting prices,” said panelist Javier Vivas, general manager of The Box, a burlesque club and dinner theater on New York’s Lower East Side, where customers regularly pay more than $1,000 per table for bottle service. The Box is owned by Simon Hammerstein and partially run by celebrities, including Jude Law and Rachel Weisz. “Nobody in the city’s nightclub business has dropped prices because, if you do, they will smell weakness. You have to target the [customers] who have money [to] keep the integrity of the product.”

Cutting prices could cause long-term problems for a luxury brand, said Andrea Soriani, marketing director for Maserati North America. Automotive News reported in April that sales of Maserati, a division of Turin, Italy-based Fiat, slid about 30% in the first quarter of 2009. “If you cut the price, you will never be able to increase the price again,” Soriani warned. “You cannot cut the price and add value…. It’s the luxury business. Take it or leave it.”

Soriani suggested a better strategy would be to focus on the product’s experience and value. “I’m trying to convince my customers that they do need a Maserati. I say, ‘It’s hand-built. Think about the value of the product.’ You are still in the luxury business. You are not downgrading your product. I’m going to hide the guilty factor and go for the inspirational.”

Some businesses that cater to the luxury market are modifying their products to make them more affordable. Panelist Stephen Starr, the owner of upscale restaurants in Philadelphia, New York, Atlantic City and Ft. Lauderdale, has noticed a change among customers since the economy slowed. Although the flow of diners has not diminished, they are opting for inexpensive wines over cocktails, he said. In response, rather than dropping prices, Starr has added new items to the menu. “You have to be careful not to just drop the price. That would cheapen what we do. So we put [lower-priced] items on the menu…  It’s the same customer. We just want to make them feel comfortable by offering something less expensive … without telling them that it’s cheap.”

In similar fashion, Munich-based luxury automaker BMW has also added a lower-priced item to its menu: a ‘baby’ version of the Rolls-Royce Phantom. Rolls-Royce sales dropped about 5% to 174 cars in the first quarter of 2009. The new smaller 200EX Sedan, set to hit the streets in 2010, will come equipped with many of the classic touches of its larger counterpart, but instead of a $400,000 price tag, it will sell for under $300,000. The new version is designed to appeal to existing customers as well as bring in new ones, said Andy Thomas, general marketing manager of Rolls-Royce Motor Cars. “We have a lot of owners who see the smaller car as their everyday car. And when you offer a smaller size, you open yourself up to a different segment.”

Aside from trying to bring in new customers, luxury brands are also working harder to please their existing customers with flawless service. “You have no choice but to be almost perfect,” said Paschall of Bottega Veneta. “When they make a request, you listen.” Everything “that we sell,” noted Bloomingdales’ Doroff, “can … be bought somewhere else. Service has always been important, but especially now. A person comes back for the relationship with their sales associate.” Starr said his restaurant managers are working harder to keep in touch with his regulars. “We are targeting our existing customers, literally calling them up or e-mailing them. We’re actually doing a better job. Our managers are scared, so they’re being better. They’re being nicer.”

Have the Good Times Rolled — Away?
But will it be enough? Some in the luxury industry worry that Americans may be making a permanent shift away from extravagance. “Will we go back to our bad habits?” asked Maserati’s Soriani. “That’s the million-dollar question.”

The recovery may happen differently for different types of luxury brands. “I think it’s going to come back quickly for the restaurants,” said Starr. “Restaurants are a social event. They will come back because people have to be social.” But the recovery might be slower for retailers of luxury apparel and accessories. “The consumer is a million times more discerning and a million times smarter now,” according to Thompson of Robert Burke Associates. “Consumers are starting to buy a lot less and [when] they do buy, they’re more discriminating.”

And the deep discounts at department stores may have permanently changed the public’s views about high-end fashion, retailers said. Everyone is questioning how much things should really cost, Doroff noted. “You have intrinsic value and emotional value. A $5,000 Chanel suit could be worth $5,000 because it’s Chanel. But is that piece of cloth worth $5,000? … The discounting has led the customer to [wonder], ‘Were those things really worth that much in the first place?’”

http://knowledge.wharton.upenn.edu/article.cfm?articleid=2248

May 28, 2009

High Net-Worth Consumers Rank “Best of the Best” Wealth Management Brands

(NEW YORK) May 28, 2009 – The Luxury Institute reported today the top-rated wealth management brands in the 2009 Luxury Brand Status Index (LBSI) survey, which identifies the top brands that exhibit true luxury in numerous categories based solely on the independently verified ratings of wealthy and ultra-wealthy consumers.

High net-worth consumers rated Bessemer Trust the “Best of the Best” among 35 wealth management brands. Bessemer Trust has consistently been rated number one in previous years. It towers above all competitors across the four indices that comprise the LBSI. Bessemer Trust also is the firm that wealthy consumers are most likely to rank as worthy of premium fees for their services. Consumers willing to recommend Bessemer Trust say it has a “client-centric, long-term focus,” provides “specialized attention,” delivers “excellent service and quality research” and has a “superb record and fine service.” La Salle Bank and BB&T were rated second and third, respectively.

The LBSI asks high net-worth consumers to rate luxury brands by category across four equally weighted components: Consistently Superior Quality, Uniqueness and Exclusivity, Making the Customer Feel Special Across the Entire Experience and Being Consumed by People Who Are Admired and Respected. 

The “Best of the Best” are: (LBSI score out of 10)

  • Wealth Management
  • o Bessemer Trust Company- 6.54
  • o La Salle Bank Private Wealth Management- 5.89
  • o BB&T Wealth Management- 5.86 

“The dramatic shift in rankings for TARP-related brands this year was decisive and swift,” said Milton Pedraza, CEO of the Luxury Institute.  “While many leaders in the wealth management executive suite turn a deaf ear to what their ultra-high net-worth customers and prospects are saying, we have seen the top-rated names that made negative headlines topple in the rankings, with most finding themselves in the bottom tier. The ultra-wealthy tell us that they have been damaged not only by fraud and incompetence, but by revered brands of wealth managers who were brilliant in executing clear conflict of interest strategies and betting against even their best clients. This is an opportunity for the honest men and women in the wealth management industry, and there are many, to stand for something other than fees. If there was ever an industry in need of gut-wrenching innovation and reinvention, based not only on what you do, but how you do it, the wealth management sector is it”. 

The proprietary Luxury Brand Status Index (LBSI) survey is the only unbiased measure of the prestige of leading brands among wealthy and ultra-wealthy Americans. A national sample of 1,013 ultra-wealthy American consumers, with minimum household income of $489,000 and average investable assets of $6.9 million, was surveyed online. 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 LuxuryBoard.com (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:

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

May 27, 2009

Customer Service and Value are Key for Luxury Brands

Posted in Hotel/Resort

Luxury Institute CEO, Milton Pedraza provided some insights on how Luxury hotels can survive this economy, including: “We need to deliver a hospitable experience in a world that’s becoming impersonal”

The State of Luxury: A Special Report  

This story is the second in a series. The first installment discusses the new definition of the luxury segment. Read it here.

INTERNATIONAL REPORT-Despite changes in the luxury segment, it can’t escape the criticism tied to the financial crisis.

“From an operating standpoint, we are cursed with the AIG syndrome,” said Homi Vazifdar, managing director and CEO of Canyon Equity LLC, said. “The president is bashing certain luxury brands, which is causing fear and guilt in the marketplace. It’s highly politically motivated. This will blow over soon. I’m not concerned.”

It’s fairly typical for high-priced items to take criticism in times of restraint, Tony Potter, CEO of Corinthia Hotels International, said, acknowledging  that people cut back in tough times.

“There’s been a slowdown, but it’s in terms of the number of people, not pricing,” he said. “We’re being taken to task on delivery. We have to deliver value. It’s not a question of charging more for a room.”

In view of the economic situation, luxury hotels are under fire, said Geoffrey Gelardi, managing director of The Lanesborough in London and VP Europe for St. Regis Hotels and Resorts. Luxury hotels are looking to survive the economic situation, and there’s a lot of discounting going on. However, The Lanesborough isn’t getting into discounting.

“We’ve made a conscious effort to provide great value for the money, which transcends how much you pay for a room,” Gelardi said. “We do a lot of things other hotels don’t. We don’t nickel and dime the guest.”

That includes putting a Sony laptop in every room, free access to the entertainment system and Internet, and complimentary bottled water and fruit. Gelardi said this adds up to about 100 pounds per room per day.

Gelardi said the decision not to discount at The Lanesborough is working, albeit not perfectly. Occupancy is down 15 percent compared to last year. The Lanesborough can sustain lower occupancies for some time and is far from losing money, he said.

“While the bottom line will be affected by lower occupancy, we’re not nearly at a break-even point,” he said.

The luxury segment is amid another down cycle it’ll have to get through, but this one is different from, say, the one after 9/11 because people don’t know when it’s going to end. Even though the market has shrunk, it’ll come back, Potter said, citing the London market.

“We’re seeing tremendous demand there,” he said.

Cutbacks
It’s clear everyone is suffering across the board, and luxury hotels are no different, said Milton Pedraza, CEO of The Luxury Institute, citing occupancy in the high 50s to low 60s.

“And you can’t make money with that kind of occupancy,” he said.

Many hotels are cutting costs, such as the number of employees, but it’s risky because if customer service slips, reputations will suffer.

“Some hotels have to cut back, but they need to do it with a scalpel instead of a hatchet,” Pedraza said. “It’s a huge risk. I’m hearing a lot more about it-cutting back on personnel, training and the quality of employees.”

An example of cutting with a scalpel is postponing some renovations or upgrading to higher-end electronics in the room instead of refurbishing the entire room. Cutting back on laundry is another.

“People waste towels because they are given them,” Pedraza said. “Explain to guests why you are cutting back on laundry. Be sincere and honest about wastage.”

Pedraza suggested reinventing luxury while keeping waste reduction in mind.

“A lot of creativity in the hotels is useless,” he said. “Cut back on the massive floral arrangements. Enhance the people and the service instead. Lower the air conditioning in the hallways-make the temperature 68 degrees instead of 50. There’s a lot of room to save in the area of energy consumption. There’s a tremendous amount of waste, especially on club floors.”

Luxury hoteliers can efficiently survey their customers before making some of these changes, Pedraza said.

Luxury performance in April 2009

 

% change

April 2009

Occupancy

-14.5 percent

63.1 percent

ADR

-16.0 percent 

US$248.67

RevPAR

-28.2 percent

US$156.89

Source: STR

“You can get a general consensus,” he said. “Some changes don’t need customer validation (temperature in the hallways), and some do (fewer towels or request to reuse towels).”

Pedraza said changes fall into three categories: ones that are no-brainers; ones that require you to ask the customers; and ones that require you to ask the customers and then customize per customer.

But no matter the service or the changes, if a company doesn’t have a strong balance sheet, it won’t survive this Darwinian economy. Ritz-Carlton, Four Seasons, Mandarin Oriental, Peninsula and Small Luxury Hotels of the World are brands Pedraza thinks have strong balance sheets and will emerge from the recession and thrive.

Most brands are beaten up, but they need to keep employers motivated, he said. They also need to use their customer relationship management system to deliver a custom experience. For example, Ritz-Carlton called Pedraza, knowing he has a 3-year-old son, and asked what they could buy for him and his family before they arrived at the hotel.

“Some people say we need to get back to basics, but we don’t,” Pedraza said. “You have to reinvent yourself and create a personal experience. Give the best and most customized welcome. Go the extra mile. Yes, you need a high standard of luxury in the bricks and mortar, but the devil is in the details. What are guest paying the extra money for?

“We need to deliver a hospitable experience in a world that’s becoming impersonal,” he added. “We need to think more like the customers and less like hoteliers.”

http://www.hotelnewsnow.com/articles.aspx?ArticleId=1259&PageType=Featured&ArticleType=1 

May 21, 2009

High Net-Worth Consumers Rank the “Best of the Best” Cruise Customer Experiences

(NEW YORK) May 21, 2009 – The Luxury Institute reported today the top-rated cruise line brands in the 2009 Luxury Customer Experience Index (LCEI) survey, which identifies the top brands that deliver true luxury customer experiences in numerous categories based solely on the independently verified ratings of wealthy and ultra-wealthy consumers. 

High net-worth consumers who have been customers of the brand during the past 12 months rated Crystal Cruises the “Best of the Best” among 14 cruise lines. Consumers who recommend Crystal say, “This is a true luxury line.  Every aspect of your trip is thought out and your every whim is catered to,” and “Excellent service, fabulous food, ideal destinations, good passenger to crew ratio and excellent amenities.” 

The LCEI asks high net-worth consumers who are actual customers to rate luxury brands by category across three equally weighted and detailed rating components: Complete Satisfaction, Brand Personnel and Cruise Line Environment. The survey also measures the Problems and Resolutions ratings and the Worthiness of a Significant Price Premium and Willingness to Recommend on the part of wealthy customers. 

The “Best of the Best” are: (LCEI score out of 10)

  • Cruise Lines
  • o Crystal Cruises- 8.57
  • o The Yachts of Seabourn- 8.55
  • o Regent Seven Seas Cruises- 8.34 

“The luxury cruise line industry is incredibly competitive and capital intensive. As we begin to see hopes of an economic recovery, many luxury brands are rejecting the call for ‘back to basics’ while embracing innovation and reinventing luxury for the 21st century. It is clear that luxury consumer values and attitudes have changed dramatically,” says Milton Pedraza, CEO of the Luxury Institute. “We expect the best luxury cruise lines to begin to innovate and reinvent their customer experiences to address the new needs, attitudes and desires of luxury consumers in a way that delivers pleasurable, engaging and meaningful luxury cruise experiences.” 

The proprietary Luxury Customer Experience Index (LCEI) survey is the only unbiased measure of true customer experiences of leading brands among wealthy and ultra-wealthy Americans. A national sample of 2,856 wealthy consumers was surveyed in-depth online. Respondents were recruited and screened to only include those age 21 or older with minimum gross annual household income of $150,000 and/or minimum investable assets of $2 million. 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 LuxuryBoard.com (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:

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

May 14, 2009

News Release: High Net-Worth Consumers Rank the “Best of the Best” Luxury Retailer Brands

(NEW YORK) May 14, 2009 – The Luxury Institute reported today the results of the “Best of the Best” Luxury Retailer Brands and announced  that Bergdorf Goodman is the most prestigious luxury retailer in the 2009 Luxury Brand Status Index (LBSI) survey, which identifies the top brands that deliver true luxury based solely on the unbiased ratings of wealthy consumers. 

The LBSI asks high net-worth consumers to rate luxury brands by category across four equally weighted components: Consistently Superior Quality, Uniqueness and Exclusivity, Making the Customer Feel Special across the entire experience and Being Consumed by People Who Are Admired and Respected. 

Which luxury retailers deliver the best combination of quality, exclusivity, customer experience and peer prestige? High net-worth consumers rated Bergdorf Goodman, Neiman Marcus and Nordstrom the “Best of the Best” among eight brands that were rated. 

The “Best of the Best” are: (LBSI score out of 10)

  • Luxury Retailers
  • o Bergdorf Goodman-7.62
  • o Neiman Marcus-7.54
  • o Nordstrom-7.51 

“While many in luxury continue to stick to their static, Victorian business models, a courageous few are seeking out the voice of their high net-worth customers to ensure that the innovations they undertake in enhancing the customer experience are relevant and increase sales and profits,” said Milton Pedraza, CEO of the Luxury Institute. “The days of fearing and ridiculing quantitative and qualitative customer feedback in luxury boardrooms are coming to an end. Luxury executives who embrace creativity and innovation, combined with understanding the total customer experience have begun to take quick and decisive action, dramatically enhancing business results. 

The proprietary Luxury Brand Status Index (LBSI) survey is the only unbiased measure of the prestige of leading brands among wealthy Americans. A national sample of 1,208 wealthy American consumers, with an average income of $345,000 and average net worth of $3.2 million, was surveyed online. 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 LuxuryBoard.com (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:

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

May 11, 2009

Third Annual “Handbag Awards” in June; Finalists Selected

Luxury Institute CEO, Milton Pedraza will be one of the presenters at the 2009 IHDA (Independent Handbag Designer Awards) taking place in NYC June 17, 2009

New York, NY (PRWEB) May 9, 2009 — Handbag Designer 101, the handbag designer resource, announces today the long awaited results of the finalists for the Independent Handbag Designer Awards ™ Now with Shoes. Over 600 applications were received from around the world ranging with diverse backgrounds from North Dakota to Mongolia to Finland. The Independent Handbag Designer Awards is the only design competition of its kind in the world for handbag designers to receive credibility and recognition to stand out in today’s competitive accessory market. The winners will be announced on June 17th at the IHDA event at the New York Historical Society. The live Finalist Announcement can be seen at: http://www.youtube.com/watch?v=jINHPgdQVdU

“These 35 designers whether they are established or emerging, share a common passion, commitment and creativity to make a unique handbag while being role-models for entrepreneurship and small business,” says Emily Blumenthal, founder of Handbag Designer 101 and the Independent Handbag Designer Awards. “Each designer is well deserved in their recognition for in each category of Best Student-Made Handbag, Best Handmade Handbag, Most-Socially Responsible Handbag, Best Green Handbag, Best Use of Swarovski Crystallized (™) Elements, Best Show in Overall Style and Design and Best Handbag in Overall Style and Design.”

These finalists were chosen by a preliminary judging panel of Handbag Designer 101. A Judging Panel consisting of Famed Handbag Designer and 2007 IHDA Lifetime Achievement Recipient of 2007, Carlos Falchi, Lisa Smilor (Associate Director for the Council of Fashion Designers of America: CFDA), Lincoln Moore, (SVP DMM, Accessories, Saks Fifth Avenue), Sam Edelman (CEO of Sam Edelman), Stephan Toljan, (CCB Vice President Market Management of Swarovski), Devi Kroell (CEO & CCO for Devi Kroell), Christina Polychroni, (Director of Marketing for Korres Natural Products), Katie Boertman (Trade Marketing Manager for Singer Sewing Company), Tina Aldatz (President of Foot Petals), Meghan Cleary (Miss Meghan: America’s Shoe Expert) and Julia Poteat (Assistant Professor of Fashion Methods for Parsons The New School for Design) will decide who has the “Top Handbag and Shoe Design” and select a winner from each respective category. These finalists, whose bags and shoes all must be made under their own label, representing a wide range of styles and designs, in each category are:

Best Student Made Handbag – These finalists’ bags are students who have successfully started their lines while still in school. This award will be presented by Devi Kroell, CEO & CCO for Devi Kroell.
-   Bridget Duffy: Bridget Duffy Originals, Philadelphia Univeristy
-   Carmen Talavera: Carmen Talavera, Mercy Jackes College
-   Rachel Esswood: Rachel Esswood, Cordwainers at London College of Fashion
-   Daisy Ho: Hodaze, London College of Fashion
-   Susan Jina Lee: Movement, Parsons The New School for Design

Best Handmade Handbag – These finalists’ must be sewn, crocheted, knitted where the design themselves is making their bag by hand or machine. This award will be presented by Katie Boertman, Trade Marketing Manager for the Singer Sewing Company.
-   Alexis Campagna: Antibellum
-   Brenda Zheng: Brenda Zheng
-   Nanang Agung Rahmanto: Muttox 9
-   Lauren Finelli: LaurNelli
-   Darren Wallace, Darren Wallace

Best Green Handbag – These finalists’ that are made out of sustainable, recycled or organic materials. This award will be presented by Christina Polychroni, Director of Marketing for Korres Natural Products.
-   Allison McGowan: TEICH
-   Linda Wong: Canopy Verde
-   Karin Maislinger: kontiki
-   Andres Stickney: DRES
-   Nazly Villamizar, Ecoist

Most Socially Responsible Handbag – These finalists’ meet certain ethical and moral standards in regards to production, employment and philanthropy while impacting the local culture. This award will be presented by Kendall Farell, Executive Director of Bottomless Closet.
-   Pauline Lewis & Le Thi Hong Tu: oovoo design, Made in Vietnam
-   Cherry Kwunyeun: Blumpari, Made in Thailand
-   Katie Smith: Angel Jackson, Made in Bali
-   Clare Elsmore-Dodsworth: Gifted Label, Made in Mongolia
-   Maria Estrada: IGNES Handbags, Made in Uruguay

Best Use of CRYSTALLIZED™ – Swarovski Elements
This category represents the best executed handbag in overall style and design and will be Stephan Toljan, CCB Vice President Market Management of Swarovski.
-   Heather Choi: Farfaraway
-   Michele Gresh: Modern Unity
-   Ana Niculae: Imperfect Indulgence
-   Lorna Nixon: Lorna Nixon
-   Erin Vorhees: Kempt

Best Shoe in Overall Style and Design – This category represents the best executed shoe in overall style and design and will be presented by Sam Edelman, CEO of Sam Edelman and Tina Aldatz, President of Foot Petals.
-   Raphael Young: Raphael Young
-   Minna Parikka: Minna Parikka
-   Jamie Presson: J.L. Presson
-   Marti Zabell: Marz
-   Weronika Lesniak: Weronika: Lesniak

Best Handbag in Overall Style and Design – This category represents the best executed handbag in overall style and design and will be presented by Lincoln Moore, DMM, Handbags, Saks Fifth Avenue.
-   Minna Parikka: Minna Parikka
-   Johanna Baccardo: Beautiful People
-   Emily Cheetham: Cheet London
-   Alice Tapajos: Zibba
-   Adriana Castro: Adriana Castro

The final category to be celebrated is “Audience Fan Favorite” where fans can vote for their favorite independent handbag or shoe designer based on the 35 finalists on Handbag Designer 101. This award will be presented by Founder and Creator of Handbag Designer 101 and the Independent Handbag Designer Awards, Emily Blumenthal. This designer that received the most votes will be announced the night of June 17th at the IDHA event with the other category winners. These aforementioned category finalists’ work can be seen at http://www.hbd101.com/finalists_2009.

Celebrated British designer Lulu Guinness will receive the IHDA ICONOCLAST Award this year for her 20 years in accessories design. Lulu Guinness famous for her exquisite, witty handbags and accessories originally launched her company in 1989 and instantly became a “must” in every fashion aficionado’s international address book. To celebrate the brand’s 20th Anniversary Year, Lulu Guinness will be releasing a new limited collection of her legendary Rose Baskets, which will be on display at the night of the IHDA. Throughout the year, Lulu will be collaborating with famed and up & coming artists to produce limited edition specialty items to be sold at the Lulu Guinness stores worldwide.

The 2009 IHDA Sponsors include CRYSTALLIZED (™) – Swarovski Elements, Singer Sewing Company, WWDMAGIC, Parsons The New School for Design, Pantone, Saks Fifth Avenue, Sam Edelman, Foot Petals, Devi Kroell, The Fashion Center, UK Trade and Investment, Korres Natural Beauty, The Garment Industry Development Corporation, The Luxury Institute, Ripe Ideas, Soho House NYC, Red Branch Public Relations, Collective-E, Miss Meghan, Rosangel from Gran Centenario, Kristof Wines, Shine to Go, Megan Howard Design, Smart Water, enSof Graphics, M&J Trimming, Leather Suede Skins, Rosen & Chadick Fabrics, Verve NYC and Bottomless Closet.
For complete information or to purchase tickets for the Independent Handbag Designer Awards, check out www.handbagdesigner101.com or www.hbd101.com.

Handbag Designer 101, the handbag designer resource, was inspired by the need for the handbag designer, aficionado and fan in all of us as one knows we can never have too many bags. Handbag Designer 101 and Independent Handbag Designer Awards trademarks are owned by handbagdesigner101.com, a privately held company based in New York City.

Today’s HB101: http://www.handbagdesigner101.com/designer
Bag Trends: http://www.handbagdesigner101.com/trends
Celebrity Bag Watch: http://www.handbagdesigner101.com/celebrity
Jobs & Services: http://www.handbagdesigner101.com/jobs
The Independent Handbag Designer Awards Now With Shoes: http://www.handbagdesigner101.com/independent_handbag_designer_awards
IHDA Ticket Purchase: http://www.handbagdesigner101.com/handbags?s=processCard
Contact: http://www.handbagdesigner101.com, http://www.hbd101.com, 1-866-206-9067 x2342

http://www.prweb.com/releases/2009/05/prweb2400054.htm

May 7, 2009

News Release: High Net-Worth Consumers Rank the “Best of the Best” Luxury Jewelry Brands

(NEW YORK) May 7, 2009 – The Luxury Institute reported today the top-rated luxury jewelry brands in the 2009 Luxury Brand Status Index (LBSI) survey, which identifies the top brands that exhibit true luxury in numerous categories based solely on the independently verified ratings of wealthy and ultra-wealthy consumers. 

High net-worth consumers rated Graff the “Best of the Best” among 21 luxury jewelry brands, securing top ranks for all four components of the LBSI. Consumers who recommend Graff describe the brand as “large and understated, but beautiful diamond jewelry” and having “ultimate quality and design”. Harry Winston and Buccellati were ranked second and third, respectively, and have been consistently rated in the top three in the previous two years. 

The LBSI asks high net-worth consumers to rate luxury brands by category across four equally weighted components: Consistently Superior Quality, Uniqueness and Exclusivity, Making the Customer Feel Special Across the Entire Experience and Being Consumed by People Who Are Admired and Respected. 

The “Best of the Best” are: (LBSI score out of 10)

  • Luxury Jewelry
  • o Graff-7.88
  • o Harry Winston-7.51
  • o Buccellati-7.49

“Today, as even the ultra-wealthy have re-assessed their priorities and values, it is critical to deliver extraordinary customer experiences beyond the design, quality, craftsmanship and heritage of a luxury brand,” said Milton Pedraza, CEO of the Luxury Institute.  ”Ultra-wealthy and wealthy consumers tell us that the customer service, and the people who deliver it, leave a great deal to be desired and few luxury brands are heeding the warning. Many luxury brand executives are betting their businesses on their experience of the last 20 years, and have yet to learn to optimize technology with tested, trained, well-compensated and continuously rated brand ambassadors. Wealthy consumers will compromise their loyalty if luxury executives fail to dramatically enhance their service experience. Interestingly, the highly-rated luxury jewelry brands that have become larger and more ubiquitous are rating lower and lower on the list each year. This is a testament to savvy consumer value perception. Most of these people got rich by understanding the meaning of uniqueness and exclusivity.”

The proprietary Luxury Brand Status Index (LBSI) survey is the only unbiased measure of the prestige of leading brands among wealthy and ultra-wealthy Americans. A national sample of 1,013 ultra-wealthy American consumers, with minimum household income of $489,000 and average investable assets of $6.9 million, was surveyed online. 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 LuxuryBoard.com (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:

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

Upscale buyers now yearn for value, not just sophistication-

Posted in Automobiles
Hyundai hopes the luxury Equus sedan finds a niche in U.S.
HWASEONG, South Korea — With Hyundai having found unlikely success selling luxury cars in the U.S., now it’s toying with the idea of moving up in price point again — to $75,000 sedans.

It’s exploring whether Equus, an updated large sedan that just went on sale in South Korea, can take on the BMW 7 Series, Mercedes-Benz S-Class and Lexus LS 460L in America.

Long known for cheap cars and a 10-year warranty aimed at dispelling a reputation for inferior quality, Hyundai is hoping its luxury strategy will burnish its image. It already has two luxury models in the U.S. under the name Genesis, a midsize sedan and a sporty coupe.

 

Success of the Equus “would decisively shift public opinion in our favor. It would be the capstone,” said spokesman Oles Gadacz at Hyundai’s Research & Development complex outside Seoul.

This summer, the South Korean automaker plans to ship 100 Equus luxury sedans to U.S. dealerships to quietly gauge what American customers think about the model. Equus also was displayed at the New York International Auto Show last month simply to gauge reaction. “We have modest expectations,” Gadacz said.

Hyundai sold 6,021 Genesis sedans this year through April, Autodata says. Prices ranged from $32,250 for a V-6-powered version to about $42,000 for a fully loaded V-8 model. To lure luxury buyers, Hyundai is discreet about where its logos appear on the Genesis. Buyers so far have included those moving over from entry-level Lexus or BMW 3 Series, as well as those trading in Toyota Avalons or other large non-luxury sedans, says Art Spinella of CNW Marketing Research.

Jeff Schuster, executive director of forecasting for J.D. Power and Associates, says that while there is promise, Hyundai needs to worry about stretching its brand too far. But Milton Pedraza of the Luxury Institute says upscale buyers now yearn for value, not just sophistication, and there is room for a lower-price alternative luxury brand.

The larger Equus uses the same 4.6-liter, 375-horsepower V-8 as is found in Genesis. In South Korea, Equus comes in a chauffeur version with a rear-seat power leg rest and seat massage unit.

If it decides to sell Equus in the U.S., Hyundai could face “a stronger challenge” than Genesis did, says Alexander Edwards, CEO of Strategic Vision.

http://www.usatoday.com/money/autos/2009-05-06-hyundai-equus_N.htm

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