Luxury Institute News

November 20, 2009

Recession Increases Affluents’ Happiness Levels

Posted in Luxury Market

MediaPost.com
Sarah Mahoney, Nov 19, 2009 10:57 AM

Overall consumer confidence may still be in the cellar, but there’s growing evidence that for the affluent, economic recovery appears to be right around the corner.

Thanks to recent gains in the stock market, “the wealthy are feeling wealthier than they have,” Milton F. Pedraza, founder and CEO of the Luxury Institute, tells Marketing Daily. “Real estate has probably stabilized, and for the affluent, there’s a real sense of optimism — it’s tempered, of course, but it’s a solid confidence.”

Luxury marketers are seeing signs of it, too. Saks, for example, just reported third-quarter results that were stronger than expected, and while same store-sales fell 10.1% in the quarter, the declines are lessening. “Several merchandise categories, such as women’s designer sportswear and ‘gold range’ apparel, outerwear, jewelry, and soft accessories, began to show relative strength,” the company says in its release. And at its New York City flagship, it saw “a meaningful improvement from earlier this year.”

Nordstrom also reported improving trends in its quarterly results, and Richemont, the Swiss company that owns such brands as Cartier watches, says that while sales fell 15% in its first half, it is cautiously optimistic about sales during the holiday period. Late last month, Bain & Co. issued a report that thanks to strength in mainland China and online, it now expects global luxury sales for the year to decline just 8% — not 10% as it predicted back in the spring.

Pedraza thinks that clothing, accessories, and travel will be among the first categories to bounce back. “People don’t want to miss out on their vacations,” he says, while he expects purchases of jewelry, watches and housing-related splurges, such as new appliances and furniture, to lag.

Not only are the well-to-do feeling optimistic, he says, but they’re also happier as a result of the recession. A recent Luxury Institute survey, which included those with an average income of $310,000 a year and average net worth of $5.3 million, “shows a rethinking,” he says. “Yes, they lost money, but they’re still wealthy. Even those who worried about losing a lot of wealth at once seem to have realized, ‘I am better off than most people.’ There seems to be a level of gratitude and recognition that as bad as things have been, they have much to be happy about.”

When asked to rate their overall happiness on a 0-10 scale, 70% say their happiness rates as an 8 or above. Just 3% could be considered unhappy. Friends and family generate the most happiness, followed by home and physical environment, personal growth and development, romantic relationships and health.

He says the growing sense that recovery is near will also ease some of the guilt and sensitivity the wealthy have felt about making splashy purchases when so many people are struggling. “There will be a few more red Ferraris out there,” he says. He’s also expecting an increase in charitable giving. “It’s one of the greatest personal brand-builders, and now that people feel they can afford to give again, they will.”

http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=117703

November 10, 2009

News Release: Which Lux Brands Receive Top Scores in Europe?

(NEW YORK) November 10, 2009 – The objective and independent New York City-based Luxury Institute (www.LuxuryInstitute.com) reported today results of the top luxury brands in Europe based on the “2009 Best of the Best European Luxury Brand Status Index” (LBSI) survey.  The LBSI identifies the top brands that deliver true luxury based solely on the unbiased ratings of wealthy European consumers, rated in the following seven luxury categories: Women’s Fashion (31 brands), Women’s Shoes (35 brands), Handbags (36 brands), Men’s Fashion (30 brands), Men’s Shoes (29 brands), Automobiles (20 brands) and Hotels (18 brands). 

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 providers deliver the best combination of quality, exclusivity, customer experience and peer prestige in Europe? 

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

  • Women’s Fashion:
  • o Chanel-7.56
  • o Valentino-7.54
  • o Louis Vuitton-7.53

 

  • Women’s Shoes:
  • o Christian Louboutin-8.37
  • o Manolo Blahnik-8.35
  • o Jimmy Choo-8.30

 

  • Handbags:
  • o Hermes- 7.84
  • o Chanel-7.69
  • o Jimmy Choo-7.66

 

  • Men’s Fashion:
  • o Loro Piana-7.79
  • o Ermenegildo Zegna-7.32
  • o Giorgio Armani-6.94

 

  • Men’s Shoes:
  • o Bottega Veneta-7.83
  • o Piaciotti Cesare-7.77
  • o Salvatore Ferragamo-7.64

 

  • Automobiles:
  • o Porsche-7.53
  • o Mercedes-Benz-7.24
  • o Jaguar-7.18

 

  • Hotels:
  • o Small Luxury Hotels of the World-8.40
  • o The Luxury Collection-8.25
  • o Maybourne Hotels-8.11 

“Europe will always be a core market for the luxury industry, said Milton Pedraza, CEO of the Luxury Institute.  “It is still the largest continental economy in the world and continues to be the cradle of luxury. That is why it is so gratifying to see the top-rated European luxury brands embrace Luxury CRM as the next step in their evolution. Top-tier brands recognize the need to not only  outperform, but, to dramatically outbehave their competition and are embracing a complete redesign of their corporate culture and values to be aligned with those of their customers. These leading brands also are using data, analytics and technology to manifest the culture and values across all channels.” 

The proprietary Luxury Brand Status Index (LBSI) survey is the only unbiased measure of the prestige of leading brands among wealthy European consumers. A European sample of 752 wealthy women and 752 wealthy men in France, Germany, Italy and the United Kingdom, with a minimum household income of 50,000 Euros and/or 60,000 Pounds was surveyed online.

For Further Information, Please Contact:

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

November 4, 2009

Even Luxe Buyers Expect Discounts

Posted in Luxury Market

Affluent consumers are joining in the national skittishness about spending money during a deep recession

Nov 2, 2009
Mark Dolliver

(Last week, Part 1 of this story looked at how wealthy consumers’ appetite for luxury goods has held up during the recession, and at whether the typical affluent person was keen on conspicuous luxuries in the first place. This week, in Part 2, we examine some other aspects of the luxury-buyer mind-set, including attitudes toward discounting and brands’ use of the Internet, as well as the post-recession outlook.)

With affluent consumers joining in on the national skittishness about spending money during a deep recession, discounts have become a fact of life in the luxury sector. But while this may have kept sales from grinding to a halt, the ploy is not without its long-term costs.

For some retailers, says Luxury Institute chief executive officer Milton Pedraza, offering discounts “was a matter of survival.” And, indeed, the institute’s August polling shows wealthy consumers are not immune to the lure of a bargain (relatively speaking). Twenty-eight percent said discounting has increased their overall expenditures on luxury goods and services, while 14 percent said it has decreased their outlays.
 
The Luxury Institute’s polling numbers were quite different, though, when affluent consumers were asked how discounting has affected their “perception of the value of luxury goods and services.” While 17 percent said their perception of luxury brands’ value has been “improved” by such discounting, 29 percent said it has been “lowered.” (The rest said their perception hasn’t changed either way.)

“It does dilute the value in the minds of luxury consumers,” Pedraza says of discounting. “If an item that used to cost $1,200 is suddenly on sale for $800, you’ll never pay $1,200 for it again.” The marketer may get a sale now, “but you lose your opportunity to price in the future,” Pedraza adds. Greg Furman, chairman of the Luxury Marketing Council, concurs: “Radical discounting is a disaster,” he says. “It tells people how big the margins were.”

DEVALUING THE ‘BRAND CACHET’
Moreover, promiscuous discounting may be especially off-putting to the people luxury marketers can least afford to lose these days: the really, really wealthy. Brands that indulge in such discounting “have added insult to injury because they are diminishing and devaluing their brand cachet, brand experience and brand value,” says Mathew Evins, chairman and CEO of Evins Communications, a marketing firm that focuses on affluent consumers and the luxury market. “And in so doing they have disenfranchised their most valuable clientele — high-net-worth and ultra-high-net-worth individuals.”

Though it may sound odd to people who don’t make a practice of buying luxuries, those who do so are inclined to believe (unless price fluctuations give them reason to wonder about it) that such items are worthwhile at their ordinary prices. In the Luxury Institute’s August polling, for instance, 74 percent of respondents agreed with the statement, “I buy luxury items for quality. Luxury products last longer and keep their value.” That far exceeded the number agreeing that “I buy luxury items purely for the enjoyment of it. I like to surround myself with beautiful, exclusive and unique products” (39 percent) or that “I buy luxury items as a reminder that I’ve made it” (19 percent). Likewise, more than eight of 10 affluent consumers surveyed for a recent Ipsos Mendelsohn report agreed that “When it comes to quality, I believe you get what you pay for.”

Affluent consumers also reject the notion that they make luxury purchases in order to flaunt their wealth or to impress other people. Sixty-two percent of the Luxury Institute’s respondents endorsed the statement, “I buy expensive items for myself, not to show off.” By contrast, just 20 percent agreed that “Owning luxury items gives me a leg up in social and business situations.”

Read the full article here: http://www.adweek.com/aw/content_display/esearch/e3i26911e62ce1ee0f749f599a1a243e624

November 2, 2009

Jimmy Choo Launches Line for Main Street

Jimmy Choo is that latest luxury retailer to launch a more affordable line in hopes of boosting sales hit hard by the recession.

Choo, renowned for shoes and handbags ranging in the thousands of dollars, will produce footwear and clothing for the Sweden-based international clothing chain H&M, starting Nov. 14.

The company heralded its change in strategy, saying “the brand’s glamorous world will be available to all.”

The Jimmy Choo brand will be sold in about 200 H&M outlets worldwide, including four in Canada.

Other high-end designers have already made the retail plunge. Anna Sui has launched a clothing line for Target in the U.S., Vera Wang has entered into a partnership with another American chain, Kohl’s, and taking a slightly different retail route, Narciso Rodriguez has plans to sell a line of his clothing exclusively on eBay.

The world of haute couture has been dabbling in the lower end for years: witness Ralph Lauren, Donna Karan and Calvin Klein. But many more have launched secondary lines recently.

Earlier this month, Coach Inc., based in New York, credited its cheaper Poppy collection of handbags for helping to boost sales.

The luxury industry has been hit hard in this recession because the top income earners have pulled back in spending. Luxury department store sales are down 25 to 30 per cent on average from their peak in early 2008, according to analysts.

And a September survey by the New York-based Luxury Institute found that just over half of wealthy consumers were spending more on essentials than on what they wanted.

http://www.cbc.ca/consumer/story/2009/10/29/consumer-luxury-market-jimmy-choo.html