Luxury Institute News

January 29, 2010

It’s a Man’s World

By Sonia Kolesnikov-Jessop | NEWSWEEK 
Published Jan 28, 2010
From the magazine issue dated Feb 8, 2010

Some luxury brands have always catered exclusively to either men or women-think Dunhill, Ermenegildo Zegna, and Brioni for men or Jimmy Choo and Christian Lacroix for the ladies. But most are happy to promote their stores as emporiums for both sexes. Yet just as some educators believe that single-sex classrooms are better for learning, some luxury brands are finding that single-sex boutiques boost the bottom line. While it’s not exactly a man’s world on Main Street, luxury brands are increasingly offering greater exclusivity in men-only shops.

The trend took off two years ago, when the Hankyu department store opened in Osaka, Japan, with its entire 16,000 square meters of floor space devoted to masculine products from shoes to cigars. Soon after, Louis Vuitton opened its first men-only store inside Hankyu, replete with leather furniture, pure wool carpet, and a goatskin rug. Around the same time, the British fashion queen Vivienne Westwood, who can spot a forward-looking trend seasons away, also opened her first store geared for men in Tokyo.

Now others are catching on. On Feb. 9, Hermès will open its first men-only store on Madison Avenue in New York. Housed in a classic brownstone, the 817-square-meter interior will resemble a cross between a traditional tailor’s shop and a gentlemen’s club, reimagined with a contemporary vibe. The fourth floor, designed to evoke the feel of a private home, will be devoted to made-to-measure wear, including bespoke suits as well as special-order items like luggage. Meanwhile, a few blocks uptown, Ralph Lauren has announced plans to convert its landmark Rhinelander mansion into a shop for men only, a move that underscores the importance of the menswear market to the company.

For all the talk of women’s rising spending power, luxury brands seem to be courting the fashion-savvy male these days. “Luxury fashion brands that have catered primarily to women see the menswear market as a growth opportunity in a low-growth market,” says Milton Pedraza, CEO of the New York-based research firm the Luxury Institute. “They have had some male offerings for some time and feel they can gain market share from weak competitors, primarily top Italian brands that cater to men only and whose tired and outdated brands currently attract primarily older men due to lack of great marketing and ‘cool’ factor.”

In some cases the move to men-only stores follows a steady rise in menswear sales. Louis Vuitton, which recently opened a men-only boutique inside Harrods, has seen “very strong growth” in its menswear business, says Jean-Baptiste Debains, president of Louis Vuitton Asia Pacific. “We want bigger and more differentiated places for men…and I believe it is a trend that will spread.” The luxury giant’s interest in creating different shopping atmospheres for men and women extends to existing equal-opportunity stores, which have made subtle changes to color and lighting schemes in the men’s departments. “We know that men don’t necessarily have the same expectation and don’t behave in the same way in stores,” says Debains.

Men can be very loyal customers, supporting their favorite brands more than women do, but they also tend to adopt a cavelike attitude toward shopping. “It’s a cliché, but men like to hunt, while women gather,” says Christian Barker, editor in chief of The Rake, a classical-style magazine for men. “Men will set out on a shopping expedition with a clear, specific goal in mind, and once they’ve found what they want, they quickly seek refuge from the crowd. Women are content to spend hours trawling, often with no clear goal. But give a man a retail environment where he feels at home-or even more comfortable than he does at home-and you’ll keep him there longer, and almost certainly sell him more.”

Even luxury brands already strongly associated with menswear are paying more attention to their retail space, trying to create a private club environment. Barker cites Tom Ford’s flagship boutique in New York as a prime example. The über-luxurious store boasts perforated suede walls, gilt mirrors, a faux fireplace, and even a bronze desk draped in gold alligator skins. Suits are displayed in glass cabinets like works of art. Similarly, Alfred Dunhill launched a “Home” store in Ginza, Japan, in 2008, which offers a comprehensive array of the company’s menswear, leather goods, and accessories, including limited-edition ties, cufflinks, and even surfboards. It also houses a spa, valet services, and dining rooms. Since then Dunhill has opened similar Homes in London and Shanghai; the London shop features a state-of-the-art humidor and a private cinema.

The men-only concept store is likely to expand as luxury firms pursue male spending power in emerging markets, particularly in Asia. “Though things are slowly changing, traditionally the man has had the spending power in China,” says Barker. “And now that the affluent Chinese customer isn’t under pressure to conceal his wealth, men are really treating themselves and visibly enjoying the fruits of their success.” And that doesn’t entail plowing through miles of lipstick and high-heel shoes to find what they want.

Find this article at http://www.newsweek.com/id/232695

January 25, 2010

Luxury retailers find new ways to woo the well-heeled

By Marina Strauss
Globe and Mail Update

Carriage trade putting renewed emphasis on customer service as business model changes in aftermath of recession

The Hermès store on Toronto’s famed mink mile did something in December it had never done before: It brought in an engraver to personalize fragrance bottles with a customer’s initials, flowers or hearts.

It was a free service for customers at the upscale retailer, one that the well-heeled appreciated. Not bad for business either, as overall sales at the store almost doubled from a year earlier.

“Now was not the time to shrink on customer service,” says Jennifer Carter, chief executive officer of Hermès Canada, which runs four luxury stores. “Every sale counts.”

The move by Hermes is emblematic of how the carriage trade is more aggressively courting consumers after the downturn as the business model changes. Retailers are finding they need to be more attentive – provide random acts of kindness, as it’s known at Holt Renfrew – or risk losing customers spooked by the recession.

Holt Renfrew, Canada’s premier upscale retailer, has formalized its “random acts of kindness” program, sending flowers or theatre tickets to its top customers. Hermès has extended to as much as a week the 24-hour period that the stores will normally hold an item for a customer. And jewellery chain Tiffany & Co. TIF-N sends snail-mail notes, personalized e-mails and Facebook messages to its customers.

Early results show that luxury retailers are starting to see better times.

Yesterday, Tiffany said that its sales at stores open a year or more rose 8 per cent in November and December, compared to a dramatic plunge a year ago. Saks Inc. and Nordstrom also reported better same-store sales in December: 10 per cent and 7.4 per cent, respectively.

Montreal-based Birks & Mayors Inc. BMJ-A saw a 6 per cent increase in same-store sales in November and December at its Canadian stores, although overall same-store sales were flat because U.S. sales fell 6 per cent, an improvement over the 2008 decline of 7 per cent.

Discerning customers are seeking service more than ever as a big differentiator in choosing their stores, says Milton Pedraza, CEO of the Luxury Institute consultancy in New York.

For Holt Renfrew’s new president, Mark Derbyshire, improving customer service is a top priority. Sales at the privately held chain exceeded targets, he adds, helped by its “random acts of kindness” initiative. “Clearly we’re on the right track,” he says. “But I encourage our employees to take more risks with that … go deeper and find ways of truly anticipating the needs of customers.”

He is empowering sales employees to find out so much about their customers that they can “go out on a limb and have what the customers wants,” he says. “It’s not easily done.”

But ensuring better customer service also requires new ways to reward employees. Mr. Pedraza says staff compensation has to be based on more than sales generation. And customer feedback has to be constantly monitored through surveys.

Mr. Derbyshire says he will review employee rewards to try to make them reflect better how customers are served.

Other retailers, including Tiffany, are reinforcing a tradition of catering to customers. Tiffany, started in 1837 as a stationery store, has kept true to its heritage and continues to send written notes to its new customers. The message also includes suggestions for future purchases.

“There’s nothing as personal as a handwritten note,” says Edward Gerard, a group vice-president at Tiffany.

January 24, 2010

Asian brands’ reputation among wealthy Europeans is strong

By SONIA KOLESNIKOV-JESSOP
The New York Times
Published: January 22, 2010

SINGAPORE – International hotel brands are stepping up their investments in the Asia-Pacific region because of its outsized growth prospects. So it would seem almost counterintuitive for luxury hospitality brands based in Asia to be opening hotels in Europe, where growth is slowing.

Yet over the coming months, several well-known Asian brands, including Raffles Hotels and Resorts, Shangri-La Hotels and Resorts, and Meritus Hotels and Resorts, will open their first European properties.

The focus so far of most luxury Asian brands seems to be France, where the biggest-spending tourists are Chinese, according to an industry survey released this week. This summer, the five-star Royal Monceau in Paris is set to reopen as a Raffles property after a refurbishment that took 20 months and cost 100 million euros ($141 million).

The first European Shangri-La Hotel will open near the Trocadero, in what was once the palace of Prince Roland Bonaparte, Napoleon Bonaparte’s grandnephew. In 2012, Peninsula Paris will open in the 1908 building that currently houses the Centre International de Conférences.

Shangri-La also has projects in Vienna, London and Moscow, while Meritus is working on its first European foray in Frankfurt. Banyan Tree Hotels and Resorts and Six Senses Resorts and Spas are heading to the Mediterranean, focusing in on the Greek coastlines. Banyan Tree will open Angsana Corfu in 2011 and Angsana Santorini in 2012. Six Senses is planning to open a Soneva resort, its superhigh-end brand, on the island of Milos in 2012.

With more Asian tourists, especially Chinese, traveling to Europe, Asian brands, which have a reputation for high-end service in their own backyard, are hoping to capitalize on their name recognition. And they are also hoping the European outposts will become “feeder” outlets for their hotels in Asia.

Like all tourism-related companies, the Asian chains have lost revenue during the economic downturn. In 2008, Banyan Tree Holdings had sales of 427.9 million Singapore dollars ($305 million), nearly double that of 2004, attesting to its rapid expansion. In the third quarter of last year, however, the Singapore company’s revenue fell 14 percent from a year earlier. But its operating profit increased 70 percent, reflecting strong performance in hotel management and investment.

Mandarin Oriental operates 25 hotels, including 12 in Asia, 8 in the Americas, and 5 in Europe and North Africa. It has 16 more under development. In November the chain issued an interim management statement saying that weak demand from both the corporate and leisure segments continued to put pressure on occupancy levels and average room rates in all regions. But conditions in Europe were better than in Asia and the Americas, it noted.

Ho Kwon Ping, executive chairman of Banyan Tree Holdings, said the projects that were about to open would have been decided on as long as three years ago, at the height of a tourism boom – “when everybody was toppish about Europe,” he said. “What you’re seeing now is the outgrowth to that.”

Mr. Ho said he believed Asian brands’ decisions to move into Europe reflected the confluence of two things: “First, European developers are looking toward the Asian market, and also an Asian kind of hospitality, to distinguish themselves from the European brands. Second, Asian brands themselves are looking toward extending to other parts of the world, partly to satisfy the demand from Asian tourists traveling more and more toward other parts of the world.”

Economic indicators suggest that European markets are unlikely to recover as quickly as Asian markets. Worldwide international tourist arrivals fell 4 percent last year amid the severe global economic crisis, and Europe was hit harder, according to the United Nations World Tourism Organization. European arrivals declined 6 percent on an annual basis, compared with a 2 percent decline in the Asia-Pacific region and a 5 percent slide in the Americas.

Hotrec, a trade association of hotels, restaurants and cafes in the European Union, recently said that hospitality business trends across Europe were still very worrying and that a recovery was currently not in sight in many European member states.

“Occupancy rates of hotels in all major cities in Europe went down between January and August, compared to the same period of 2008,” Marguerite Sequaris, the chief executive of Hotrec, wrote in an e-mail message, adding that the rates for major destinations such as London, Paris and Rome fell by less than five percentage points but that the overall picture was showing a more severe decline.

“Most participants to the general assembly reported calamitous business trends in their respective countries,” she added, “and most consider that the recovery is not in sight yet, as 2010 will probably be on the same level as 2009.”

Tourist arrivals in Spain, one of Europe’s top tourist destinations, fell 8.7 percent last year on an annual basis, according to a recent report on the sector by the Spanish secretary of state for tourism, Joan Mesquida. According to Eurostat, the statistical office of the European Union, the latest figures available for some of the European countries, for September and October, still show a decline in occupancy rates.

But Asian brands are pushing ahead with global expansion plans.

“This is part of the group’s growth strategy to extend our presence to key cities and sought-after resort destinations where there is demand for luxury travel and dining experiences,” said John Johnston, president of Raffles Hotels and Resorts.

Milton Pedraza, chief executive of the Luxury Institute, a research company in New York, said that Asian brands’ reputation among wealthy Europeans for providing top facilities and highly rated customer experiences gave the brands fairly high chances of success.

“Mandarin Oriental has already proven its viability in competitive markets such as London,” he said. “As long as they stick to a few major cities or locations in Europe, the Asian brands have low risk of becoming too ubiquitous.”

George Morgan-Grenville, group managing director of Abercrombie & Kent, a high-end travel agent and tour operator based in Britain, said he believed that Asian brands would be “warmly welcomed” in Europe in part because they were “built around an intrinsic service culture.”

“What Asian brands seem to grasp more profoundly than their Western counterparts is a more holistic approach to a guest’s stay, from remembering names to dealing with the smallest detail,” Mr. Morgan-Grenville said.

“Of course, when brands migrate West, the danger is they face some tough competition from established hotel brands who already know how to operate effectively under Western economic conditions,” he added. “But the fact remains that, culturally, the Asian brands have been quick to grasp consumer needs in the 21st century.”

January 22, 2010

2010 Must-Haves: What Consumers Want

Posted in Luxury Market

By VALERIE SECKLER
WEDNESDAY JANUARY 13, 2010
WWD ISSUE 01/13/2010

Tech toys will be prominent on must-have lists at the dawn of the new decade. Hot new apps and mobile technologies were named by a handful of marketing experts — and close to 3,000 adults in a new Zogby Interactive poll — as things most desired to simplify lives, empower people and stay connected with others.

These things “help people sift through a world when too much is available,” said John Zogby, chairman, president and chief executive officer of Zogby International.

Asked to name one of 20 inventions or technological developments they could not live without, 2,841 adults polled Dec. 28 to 30 ranked high-speed Internet access as number one, followed by e-mail, Google, computer laptops/Netbooks and digital video recorders/TiVo.

Spending more time online communicating via e-mail, social networks and video sites, Zogby said, is resulting in a “redefinition of peer groups — tribes of like-minded people who are becoming more important than any single demographic, like age and religion,” to marketers, among others.

For the Luxury Institute’s ceo, Milton Pedraza, the year’s must-haves would be e-readers, like Amazon’s Kindle or Barnes & Noble’s nook, which enable users to “start eliminating all [print] subscriptions.” Attributing “great functionality, coolness and chic” to e-readers, he added: “There is nothing I see in the luxury industry this year that is so compelling.”

For Euro RSCG Worldwide PR president Marian Salzman, text messaging is supreme. “The status update will be our new form of communicating” for ages eight to 80, she predicted.

But don’t write off snail mail just yet. Cheryl Swanson, president and managing director of brand image developer Toniq, is seeing a comeback in use of the U.S. Postal Service. “Teens’ whole day is in 2-D,” Swanson said. “Actually having a 3-D experience is appealing. Teens have discovered sending notes. Boomers raised to write thank-you notes are writing notes again.”

http://www.wwd.com/retail-news/2010-must-haves-what-consumers-want-2409074/print/ (subscription required)

As Wall Street defers bonuses, others suffer

By: RACHEL BECK
Associated Press
01/21/10 1:25 PM PST

NEW YORK – Big bonuses are back on Wall Street, but that doesn’t mean everybody’s driving a new Ferrari.

This year, companies are giving out more of the rewards in stock that can’t be redeemed for years, limiting the economic benefits for businesses that cater to the Masters of the Universe.

Whether they sell $5 million condos or $50 steaks, those businesses are bracing for a winter without the typical bonus rush.

“They are taking away the pot of cash, and without that cash, there can’t be a trickle-down effect,” says Alan Stillman, owner of the New York steak house Smith & Wollensky. “Everyone feels it. The taxi drivers, doormen, waiters, everyone.”

With banks earning billions again, they are set to pay near-record bonuses for 2009. Just Thursday, Goldman Sachs said it rewarded employees with $16.2 billion in salary and bonuses for the year, up almost 50 percent from the year before.

But those same firms are bowing to political and public pressure and paying more of the bonuses in stock that cannot be redeemed right away. Goldman announced in December that its top 30 executives would get only stock that can’t be sold for five years.

Typically, Wall Street bonuses are paid in a 50-50 split between cash and stock, in the form of restricted shares or stock options. Because they can’t be cashed in for a set time, the ultimate payout depends on the fluctuations in the company’s stock price.

This year, the equation is expected to be tilted, with 75 percent coming in stock, says Alan Johnson, who works with Wall Street companies as they determine how much to pay their employees.

With less cash to spend, bankers will be less inclined to splurge at the high-end stores of Madison Avenue, or go for $20,000 stainless-steel stoves and refrigerators, or vacation at five-star resorts in far-flung locations.

And it won’t be a typical year at places like Ferrari Maserati of Central New Jersey, where Wall Street types troop in with their eyes on the prize: a $125,000 Maserati or, if it was a particularly good year, a Ferrari costing $200,000 or more.

“After the holidays, after they’ve taken care of everyone else, they are ready to take care of themselves. They’ve earned a new toy,” says general sales manager Joe Collado.

But nowadays “if they don’t have the same kind of cash flow, they can’t spend as much.”

Tax collectors in New York stand to lose tens of millions of dollars because deferred stock can’t be immediately taxed. That will make it more difficult to plug the state’s $7 billion budget hole.

“There may be a lot of good sense in why this change in bonuses is being done,” says Robert Whalen, spokesman for the New York state comptroller. “But it is a double-edge sword when what Wall Street earns is an important driver of the economy.”

The actual tax losses due because of the shift in bonuses isn’t yet known. New York state lost nearly $1 billion in personal income taxes because of a big decline in overall bonuses for 2008 in the financial industry.

The state could get some of the money back when Wall Street employees’ stock compensation vests, or when it becomes eligible for sale. Of course, if the stock price falls in that time, that means less money goes to Wall Street workers – and to the state in taxes.

Brokers at the luxury real estate company Brown Harris Stevens watched the stock market rise last fall with a sense of giddiness. They’ve been around long enough to know that when Wall Street makes money, they make money.

The change in how bonuses are paid has been a bit of a buzz-kill.

“We are still at a pretty steady simmer, not a boil,” says James M. Gricar, executive vice president and director of sales at the real estate firm.

Another place where the pullback is showing up: jet travel. Wall Street workers are hiring charters for pleasure trips, rather than going in on leases of aircraft they could use more frequently – a fad in recent years.

“They’ll spend $50,000 on four jet charters instead of $2 million on a fractional ownership,” said Milton Pedraza, who runs the Luxury Institute, a consulting firm for high-end businesses.

Not everyone is worried about the fallout from the changes in bonuses. Many hedge funds, which cater to the wealthy and institutional investors like pension funds, had a strong 2009 thanks to the stock market’s rebound, and that will be reflected in their bonuses.

At the same time, hedge funds didn’t take government bailouts, so they aren’t subject to the same political restrictions on pay.

“I have a lot of a clients who work at hedge funds,” says Janet Milligan, who sells homes starting at $3.5 million for Sotheby’s International Realty in Greenwich, Conn.” They are getting their bonuses in cash.”

But other businesses are feeling the pinch.

At Smith & Wollensky, steaks top $40 and wine can cost $2,000 a bottle. It was the type of New York restaurant where investment bankers would spend thousands in one sitting to celebrate a deal.

The meltdown forced Stillman to go after a non-Wall Street crowd. He lowered most of his wines to $50 to $150 per bottle from $75 to $200 during the boom, and froze prices on his menu. Business is up, but not like it used to be at bonus time.

It used to be that when a Wall Street firm doled out $100 million to its workers, “everybody in New York got helped by that,” he says. “It doesn’t help when that $100 million is going into a stock account.”

http://www.sfexaminer.com/economy/82279742.html

January 21, 2010

The Bonus Babies Are Back

Posted in Luxury Market

That’s good news for New Yorkers who are hoping Wall Street’s billions will trickle through the rest of the city.

By Nancy Cook | Newsweek Web Exclusive

January 17, 2010

Luxe Brands Glisten Again

Brandweek.com
Jan 16, 2010
Noreen O’Leary

The swift regeneration of the U.S. banking system-and the concomitant return of the stock market to increases unseen since 2003-has dominated the news of recent weeks. And why not? It’s all in sharp contrast to the so-called Main Street economy, where unemployment remains high and retailers continue to struggle. So, is this any time for folks to pop for a platinum-channel-set diamond bracelet? Actually, it just might be.

If holiday sales at high-end retailers were any indication, the good times might be rolling again. Last week Tiffany & Co., the world’s second-largest seller of luxury jewelry, raised its earnings forecast-this after holiday sales jumped 17 percent.

The news came just after high-end retailers like Saks, Nordstrom and Neiman Marcus reported hikes in same-store sales during the festive season, posting increases of nearly 10 percent, 7 percent and 5 percent, respectively. That’s quite a party, considering that overall holiday retail sales rose an anemic 1 percent, per the National Retail Federation.

So what happened? In contrast to Q4 of 2008 when high-end retailers were taken off guard by the global economic crisis, luxury brands did a better job managing their inventory over the past holiday season, thereby avoiding heavy discounting to drive sales.

But the main ingredient is consumers themselves-and their willingness to spend again. “These reports are extremely encouraging,” said Mary Delk, director, Deloitte consumer retail practice. “It’s indicative that consumers are considering widening the aperture of their wallets again. Those retailers are breathing a cautious, careful sigh of relief that the bad news may have bottomed out.”

Emphasis on “may,” of course. Delk cautions that the holidays tend to put shoppers in a splurging mood. It’s a bravado that invariably cools once January (and its credit card bills) rolls in. Percentage sales gains are easy to post because the earlier quarter used as a comparison was so bad. However, it’s also likely that, as the economy improves, the wealthy are leading the way back.

“People are sick of frugality and tired of holding back,” observed Milton Pedraza, CEO, the Luxury Institute. “People are starting to open their minds to luxury again. Last year, it was a case of them not wanting to look like a conspicuous consumer. Now it’s [a case of consumers] buying the best because the best lasts and has value.”

Greg Furman, chairman of the Luxury Marketing Council, concurred: “The wealthy are coming back, but they’re more value driven and selective.”

Furman’s observation was borne out last week during the National Retail Federation’s annual convention in New York where Saks CEO Steve Sadove told attendees that shoppers want to achieve a “feeling that whatever they buy is worth it. People want things they can’t get everywhere else, but they also want value.”

That desire is also underscored in new Luxury Institute research that revealed that, of the customers who shop for high-end merchandise online, 78 percent of them did so in order to find the best price while nearly as many, 77 percent, did so to compare brands. Clearly, value is luxury’s close cousin.

Just how well recovered the luxury segment is will further reveal itself this week as brands like Coach and Richemont–parent of brands like Cartier and Van Cleef & Arpels-are due to report earnings.

http://www.brandweek.com/bw/content_display/news-and-features/direct/e3ieea0d35bc59ea6b927c6c80983e2c9d3?pn=2

January 15, 2010

Challenge for 2010: Consumers Get Choosier

by Valerie Seckler
Posted Wednesday January 13, 2010
From WWD Issue 01/13/2010

This will be a year of living without.

The U.S. is heading in that direction, marketing experts said. Brands face the challenge of consumers now accustomed to doing without things they once considered essential: attending a concert or sports event, dining out regularly, buying a new car when an old one was still running, and buying premium liquor or a status handbag.

In short, the country’s long-running, pre-recession spending spree isn’t likely to resume anytime soon. Consumers are expected to stay focused on buying fewer, more important things, in a time of the “antibig” – a period in which they are redefining what they value, engaging in more local activities and spending more time at home with friends and family.

“People are in a less and less mind-set,” said Marian Salzman, president of Euro RSCG Worldwide PR. “They’ll be acquiring things that make them more productive or more relaxed. Peace of mind, respite, an escape will be in demand.”

A Zogby Interactive poll of 2,841 adults taken Dec. 28 to 30 found 40 percent of Americans anticipate having less disposable income at the end of this year than they did at year-end 2009, while one-third foresee having about the same amount in their coffers. Most hopeful among them are the Millennials, ages 18 to 29: Thirty percent expect to have more funds at their disposal.

The wealthy are no exception to the conservative spending outlook. Luxury consumers “haven’t recovered anywhere near to their wealth of 2007,” said Milton Pedraza, chief executive officer of the Luxury Institute. “They splurged a bit over Christmas, but I expect conservative spending on luxuries this year,” with interest centering on innovative products.

In times of more limited consumption, simply getting people to consider purchasing a brand “won’t be good enough,” said Walker Smith, executive vice chairman of The Futures Co., a London-based unit of WPP. “The single-biggest issue facing marketers is learning how to reconnect with people about what’s worth paying for and what’s worth paying extra for. People are learning how to live without things. There’s this seething outrage people feel about things. It’s all about irresponsibility – the financial crisis, the housing crisis.”

The 10 percent U.S. unemployment rate, depressed housing market and a forecast for widespread home foreclosures to continue through 2010 are expected to keep exacting a toll on the consumer’s psyche.

Almost half those polled by Zogby Interactive, or 47 percent, said their financial situation was worse than it was as 2008 ended.

Even the advertising extravaganza that is the Super Bowl is being  evaluated by CBS and advertisers. The price of the average 30-second commercial is ranging from $2.5 million to $2.8 million for CBS’ Feb. 7 telecast of Super Bowl XLIV, average 30-second commercial is ranging from $2.5 million to $2.8 million for CBS’ Feb. 7 telecast of Super Bowl XLIV, down from $3 million in 2009, TNS Media Intelligence reported Monday, citing ad buyers. If the average cost ends up at less than $3 million, it won’t be the first time the price of Super Bowl spots dropped: They dipped 4 percent to about $2.4 million in 2007, versus $2.5 million in 2006, said Jon Swallen, senior vice president at TNS Media Intelligence.

PepsiCo Inc. has bowed out of the Super Bowl telecast for the first time in 23 years, as it allocates more than $20 million to its new Pepsi Refresh Project, which will be financing local causes submitted by people around the country to Pepsi’s Web site at refresheverything.com.

A reevaluation of fashion goods may result in sharing and cooperative ownership of certain items by young adults, Euro RSCG’s Salzman said, like “five women pitching in to buy and share evening coats.”

Thought leaders engaged by marketing consultant Zandl Group, Millennials and Gen-Xers believed to be on the leading edge of new trends, “are ready to get involved with fashion again,” said Irma Zandl, president of the consumer insights specialist. “But with the economy so bad, it isn’t that must-have item.”

For the near-term, apparel’s primary appeal is likely to lie in things that are practical, flexible or needed in someone’s wardrobe, predicted John Zogby, president, chairman and ceo of Zogby International. “The most practical becomes the most fashionable” in 2010, he said.

Similarly, in marketing campaigns, there ought to be less reliance on fantasies and promises of the good life, and more reliance on authenticity and satisfying needs. A commercial slogan like “What happens in Vegas stays in Vegas,” for instance, would better be replaced by a message telling people why they need some time off, where they can vacation and how they can enjoy themselves, Zogby said.

Optimism continues to be seen in marketing circles as an antidote to recession fatigue, as in campaigns like Pepsi’s Refresh Project, Dunkin Donuts’ “We Can Do It,” message and Coca-Cola encouraging people to “Open happiness” when they drink a Coke.

Results of a new, third-party survey for Pepsi, disclosed Monday, revealed 94 percent of the 1,005 adults interviewed in December by StrategyOne agreed optimism is important in creating ideas that have a positive impact. Two-thirds of those interviewed said the best ideas come from everyday people rather than from public figures.

Individuals can begin applying for Pepsi Refresh grants to benefit local projects starting today, and visitors to refresheverything.com can start voting on the best ideas for funding on Feb. 1. Projects will be funded in six categories: arts and culture; food and shelter; health; education; the planet, and neighborhoods.

“This works because this is how the public is redefining their own lives,” said Smith of The Futures Co., alluding to a growing sense of civic responsibility. “It is practical; there are real benefits.”

But how much or how often will the consuming public consider Pepsi’s Refresh Projects when they’re buying soda at the supermarket, movies or beach?

“They’ll get some halo effect,” Faith Popcorn, ceo of Brain Reserve, said of the commercial muscle that could come via the local-cause marketing effort. “When they build a bicycle road, it will get out on the social networks.”

In a similar vein, ordinary people with their own YouTube channel or the cast of a reality series like MTV’s “Jersey Shore” are more likely to resonate in marketing campaigns than are most celebrities, Zandl said.

“We’re never going to go back,” she said. “Everyday people will always be instant celebrities – some by being interesting, some by being outrageous.”

This democratization of celebrity is being enabled and sped by mobile technologies such as cell phone cameras and the short shelf-life for information, and images in a 24/7 media culture.

Susan Boyle, the much-applauded – and sometimes ridiculed – 48-year-old Scottish singer who was a shy unknown until her appearance last year on “Britain’s Got Talent,” sits atop Billboard’s album chart this week with “I Dreamed a Dream” (Syco/Columbia). The videos on her YouTube channel have been viewed a combined 6.58 million times.

“People are still intrigued by celebrities – it’s almost like junk food,” Zandl acknowledged. But with people having the “tools to publish, discuss and link to content” via Facebook, Twitter, YouTube and elsewhere, their personal content “has become more relevant to others than messaging featured in traditional corporate channels,” she said.

Or, as Popcorn put it, in a time of the “anti-big,” people are responding to a sense they “can call someone” for help.

January 14, 2010

News Release: Search Engines Deliver Wealthy Consumers

Luxury Institute’s New WealthSurvey Reveals That Search Engines Are Frequent Starting Points For Online Shopping Across Luxury Categories, Especially In Travel, Entertainment, and Real Estate

NEW YORK (January 14, 2010) – The objective and independent New York City-based Luxury Institute (www.LuxuryInstitute.com) today released its latest WealthSurvey, “Search Engine Usage & Shopping Habits of the Wealthy,” a study detailing how wealthy Americans browse, research and purchase luxury goods and services.

More than three-fourths of wealthy consumers use search engines when shopping for luxury goods and services. They perform an average of 14 daily searches, and 89% report that they made an online purchase as a direct result of a search.  The top reasons for performing searches when shopping are: finding the best price (78%), comparing different brands (77%), finding a specific luxury provider’s website (77%), finding out where to purchase a product (75%) and reading customer reviews (72%). 

Travel is the single most popular luxury category for searches.  Nearly two-thirds (64%) of wealthy consumers report searching for airline flights, hotels, resorts, or cruises in the past three months. Entertainment related searches are the second most popular with 51% of the wealthy going online to find information about movies, theater and live music. Local business listings (50%), electronics (47%), real estate (38%) and automotives (37%) also are popular search categories. 

Men are more avid users of search engines than women in most categories, but women are twice as likely as men (48% vs. 24%) to have searched online for fashion apparel information in the past three months, and nearly three times as likely (46% vs. 16%) to use a search engine to find information about beauty, skincare, and grooming products and services.  Designer shoes (24% vs. 15%) and designer handbags (24% vs. 12%) are two more categories where women dominate in searches. Of note, men are more likely than women (42% vs. 29%) to research and shop online for home appliances.  

“Effective search engine optimization strategies are clearly becoming more important to luxury marketers,” says Milton Pedraza, CEO of the Luxury Institute. “Wealthy individuals are smart consumers, and this means that they will comparison shop, look for best prices, and closely evaluate the merits of a brand’s offerings.” 

In some categories, like designer handbags, 75% of searches are for the manufacturer’s name, but the real art of search engine optimization comes when wealthy customers are searching by category, not by name, as is frequently the case in health and fitness (61%), home furnishings (52%) and financial services (42%). 

The Luxury Institute surveyed a national sample of 427 wealthy American consumers with average weighted household income of $290,000 and average net worth of $2.9 million. Results of the online survey are weighted to match the profiles of the wealthiest 10% of Americans from the latest Survey of Consumer Finances from the Federal Reserve. 

To purchase the complete Luxury Institute “Search Engine Usage & Shopping Habits of the Wealthy,” please visit the “WealthSurvey” section of the Luxury Institute’s online store. Members of LuxuryBoard.com have free access to these reports via the Resource Center. 

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, research and consulting services that guide and educate 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 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

January 13, 2010

Discerning customers are seeking service more than ever

Posted in Luxury Market

Luxury retailers find new ways to woo the well-heeled

Carriage trade putting renewed emphasis on customer service as business model changes in aftermath of recession

Marina Strauss

Tuesday, January 12, 2010

The Hermès store on Toronto’s famed mink mile did something in December it had never done before: It brought in an engraver to personalize fragrance bottles with a customer’s initials, flowers or hearts.

It was a free service for customers at the upscale retailer, one that the well-heeled appreciated. Not bad for business either, as overall sales at the store almost doubled from a year earlier.

“Now was not the time to shrink on customer service,” says Jennifer Carter, chief executive officer of Hermès Canada, which runs four luxury stores. “Every sale counts.”

The move by Hermes is emblematic of how the carriage trade is more aggressively courting consumers after the downturn as the business model changes. Retailers are finding they need to be more attentive – provide random acts of kindness, as it’s known at Holt Renfrew – or risk losing customers spooked by the recession.

Holt Renfrew, Canada’s premier upscale retailer, has formalized its “random acts of kindness” program, sending flowers or theatre tickets to its top customers. Hermès has extended to as much as a week the 24-hour period that the stores will normally hold an item for a customer. And jewellery chain Tiffany & Co. sends snail-mail notes, personalized e-mails and Facebook messages to its customers.

Early results show that luxury retailers are starting to see better times.

Yesterday, Tiffany said that its sales at stores open a year or more rose 8 per cent in November and December, compared to a dramatic plunge a year ago. Saks Inc. and Nordstrom also reported better same-store sales in December: 10 per cent and 7.4 per cent, respectively.

Montreal-based Birks & Mayors Inc. saw a 6 per cent increase in same-store sales in November and December at its Canadian stores, although overall same-store sales were flat because U.S. sales fell 6 per cent, an improvement over the 2008 decline of 7 per cent.

Discerning customers are seeking service more than ever as a big differentiator in choosing their stores, says Milton Pedraza, CEO of the Luxury Institute consultancy in New York.

For Holt Renfrew’s new president, Mark Derbyshire, improving customer service is a top priority. Sales at the privately held chain exceeded targets, he adds, helped by its “random acts of kindness” initiative. “Clearly we’re on the right track,” he says. “But I encourage our employees to take more risks with that … go deeper and find ways of truly anticipating the needs of customers.”

He is empowering sales employees to find out so much about their customers that they can “go out on a limb and have what the customers wants,” he says. “It’s not easily done.”

But ensuring better customer service also requires new ways to reward employees. Mr. Pedraza says staff compensation has to be based on more than sales generation. And customer feedback has to be constantly monitored through surveys.

Mr. Derbyshire says he will review employee rewards to try to make them reflect better how customers are served.

Other retailers, including Tiffany, are reinforcing a tradition of catering to customers. Tiffany, started in 1837 as a stationery store, has kept true to its heritage and continues to send written notes to its new customers. The message also includes suggestions for future purchases.

“There’s nothing as personal as a handwritten note,” says Edward Gerard, a group vice-president at Tiffany.

http://www.globeinvestor.com/servlet/story/GI.20100112.escenic_1428851/GIStory/#

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