Luxury Institute News

April 27, 2010

News Release: Wealthy U.S. Consumers Rate the Most Prestigious Luxury Watch Brands-Blancpain, Vacheron Constantin, Breguet

(NEW YORK) April 27, 2010 – The objective and independent New York City-based Luxury Institute reported today the top-rated luxury watch brands in the 2010 Luxury Brand Status Index (LBSI) survey. This survey identifies the brands that deliver true luxury based solely on the unbiased ratings of wealthy U.S. consumers.

High net-worth consumers rated Blancpain the “Best of the Best” among 33 luxury watch brands. Despite being a relatively unknown brand, Blancpain clearly stands out as the most luxurious brand of the 33 in this study, with the highest ratings for all four component measures of the LBSI and both outcome metrics. 

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 Watches

  • o Blancpain-8.74
  • o Vacheron Constantin-8.15
  • o Breguet-8.09

“The luxury watches category is one of the oldest and most prestigious,” said Milton Pedraza, CEO of the Luxury Institute. “And yet the industry is stuck in time in terms of its distribution and customer relationship building innovations. We predict that more luxury watch brands will build their own direct distribution channels via retail and online as they realize that the future belongs to those watch brands that have direct and deep relationships with their end consumers.” 

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 505 ultra-wealthy American consumers, with weighted average household income of $845,000 and average investable assets of $16.6 million, was surveyed online.

About the Luxury Institute (www.LuxuryInstitute.com)

The Luxury Institute is the uniquely independent and impartial ratings, research and Luxury CRM consulting 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, Vice President, (914) 909-6350, mswanson@luxuryinstitute.com

April 21, 2010

News Release: Wealthy U.S. Consumers Rate the Most Prestigious Luxury Jewelry Brands

(NEW YORK) April 21, 2010 – The objective and independent New York City-based Luxury Institute reported today the top-rated luxury jewelry brands in the 2010 Luxury Brand Status Index (LBSI) survey. This survey identifies the brands that deliver true luxury based solely on the unbiased ratings of wealthy U.S. consumers.

High net-worth consumers rated Graff the “Best of the Best” among 21 luxury jewelry brands, securing top ranks for three out of four components of the LBSI. Asprey and Buccellati were ranked second and third, respectively. Buccellati has been consistently rated in the top three in previous years and is rated the most unique and exclusive.

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-8.28
o Asprey-8.16
o Buccellati-8.14

“As the luxury jewelry industry makes its comeback, wealthy consumers are looking for truly differentiated value,” said Milton Pedraza, CEO of the Luxury Institute. “While quality and uniqueness are critical dimensions in jewelry, in today’s world the relationship with the client is the major differentiator. Clienteling has become the priority in luxury jewelry. Top brands are now investing in clienteling best practices training as part of creating true Luxury CRM cultures.”

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 505 ultra-wealthy American consumers, with weighted average household income of $845,000 and average investable assets of $16.6 million, was surveyed online.

About the Luxury Institute (www.LuxuryInstitute.com)
The Luxury Institute is the uniquely independent and impartial ratings, research and Luxury CRM consulting 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, Vice President, (914) 909-6350, mswanson@luxuryinstitute.com

April 20, 2010

Wealthy consumers rate Boston Private Bank top

By Helen Kearney

NEW YORK, April 20 (Reuters) – Tiny Boston Private Bank & Trust topped bigger and better-known wealth managers as best financial adviser for the wealthiest investors, according to a survey released on Tuesday by The Luxury Institute.

Two New York-based advisory firms followed the Boston firm: Bernstein Global Wealth Management, part of AllianceBernstein Holding LP (AB.N) and Rockefeller Wealth Management, a firm that started as the oil baron’s family money manager.

William Oberlies, senior financial officer of the investment group at Boston Private Bank, said their small size gives them an advantage over bigger firms.

“We’re able to give our clients direct access to their portfolio manager, the person actually making the investment decisions,” he said. “At bigger shops you usually have to deal with a middle person.”

The survey asked 505 investors with at least $5 million in net worth to rate wealth managers based on quality of service, exclusivity, the social status they bestow on their clients and other factors.

The survey also asked investors whether it was worth paying higher fees and whether they would recommend the firm to friends and family.

Boston Private, a unit of Boston Private Financial Holdings (BPFH.O), has 14 advisers and over $2.6 billion in banking assets and assets under management, according to Oberlies.

Respondents were only allowed to rate firms they were familiar with, which in Boston Private’s case was 30 people.

The highest-ranking nationwide firm was U.S. Trust, the private banking unit of Bank of America Corp (BAC.N), which finished in 16th place. Wells Fargo Wealth Management Group, a division of Wells Fargo & Co (WFC.N), came in 19th place.

Bessemer Trust, last year’s top placed firm, fell to 12th place. Wealth management firms need to do a better job of explaining why wealthy people should invest with them, said Milton Pedraza, chief executive of The Luxury Institute, a New York-based research firm.

“Wealthy people are fickle,” he said.

http://www.reuters.com/article/idUSN2013040220100420?type=marketsNews

Wealth manager with the most cachet? A new king is crowned

By Hilary Johnson
Investment News

Boston Private Bank & Trust has knocked Bessemer Trust Co. off its perch in a survey of wealthy consumers that asked them to rate which wealth management firm had the most cachet in their social circles.

Bessemer fell to 12th place on the Luxury Institute LLC’s annual survey of top wealth management firms, marking the first time in the survey’s five years that the firm has not ranked in the top three, according to Luxury Institute chief executive Milton Pedraza.

Bernstein Global Wealth Management, a unit of AllianceBernstein LP, ranked second this year, and Rockefeller & Co. Inc. ranked third, appearing on the Luxury Institute’s list for the very first time.

Thirty-four wealth management firms on the list, which is determined by asking consumers whether firms offered superior service, enhanced their social status, were unique and exclusive, and made them feel “special.” The list this year included trust companies, private banks and the high-end wealth operations of other financial services providers.

Some important wealth management players weren’t even in the running. GenSpring Family Offices, the largest registered investment adviser, did not appear on the list of 34, for example, because not enough survey respondents recognized its name.

The lowest-ranked firms included Charles Schwab & Co. Inc., Bank of America Corp., and Ameriprise Financial Inc., though BofA’s U.S. Trust division scored higher than its parent.

The churn among the top names in the survey is likely less a product of the firms’ performance and more the vagaries of consumer perception, and a crowded wealth management field, Mr. Pedraza said.

“Consumers are fickle, and especially in categories where there’s not a high level of differentiation, like wealth management, things bounce around a bit,” Mr. Pedraza said. “Life is messy, and we don’t have all the explanations for why consumers respond the way they do.”

The Luxury Institute surveyed 505 wealthy consumers online last month. Respondents live across the U.S., earn at least $200,000 a year and have a minimum net worth of $5 million.

The Institute, using its proprietary Luxury Brand Status Index, asked various questions to elicit respondents’ views of firms’ quality, exclusivity, clientele and customer service.

To reach its number one spot, Boston Private ranked highest across all questions, although other firms received higher marks in individual categories. Bernstein, for example, was considered most worthy of premium fees.

And even though Bessemer was no longer at the top, it still received high marks for being “unique and exclusive,” the Luxury Institute noted. A spokesman for Bessemer was not available for comment.

http://www.investmentnews.com/article/20100420/FREE/100429987/-1/INDaily01

April 19, 2010

‘Get-It-Cheap Party’ for Luxury Goods Ends at Saks

By Cotten Timberlake
Bloomberg News

April 19, 2010

Lisa Hagen bought a $395 Diane von Furstenberg sundress at Barneys New York last week, paying 58 percent more than she did for a similar dress two years ago.

“A lot of the high-end designers are at remarkably high prices,” said Hagen, 51, a marketing consultant in New York.

Still, she said, “I am willing to pay higher prices and full prices if I like it, it fits my need and I know I will use it.”

Luxury chains including Barney’s and Saks Inc. are selling costlier goods after scaling back discounts and promotions they offered to attract shoppers in the recession. Tiffany & Co. raised prices across the store. U.S. sales of luxury goods may rise 4 percent in 2010 after falling to $60 billion last year from a 2007 record of $72 billion, according to Bain & Co.

“The get-it-cheap party for luxury consumers has ended,” said Milton Pedraza, chief executive officer of the New York- based research firm Luxury Institute. “When consumers now turn over the product and look at the price, they see that those days of incredible discounts on luxury goods are over.” 

The higher prices are helping retailers improve their profitability after posting losses during the recession. Saks forecast an improvement this year in gross margin — the fraction of revenue left after subtracting the cost of goods sold. Dallas-based luxury chain Neiman Marcus Group Inc. said margins improved by 7 percentage points in its most recent quarter because markdowns were so much less.

Saks has climbed 42 percent in New York Stock Exchange composite trading this year. Tiffany has increased 17 percent.

More Costly

Saks had been the “poster child” for discounting, Chairman and CEO Stephen Sadove said in an April 15 Bloomberg panel discussion. The chain has since reduced inventory and is offering fewer discounts to sell more merchandise at full price, he said.

 ”You’re getting back to the basics of what the category was all about,” Sadove said.

 The average ticket price for U.S. luxury goods excluding jewelry jumped 11 percent in March from a year earlier, after year-over-year gains of 10 percent and 6.4 percent in February and January, respectively, according to MasterCard Advisors’

SpendingPulse data. The March gain was the biggest in the past two years. The steepest drop was a 13 percent decline in December 2008.

SpendingPulse, based in Purchase, New York, measures retail sales across all payment forms, including cash and checks. For its luxury measures, the firm isolates the top 10 percent of ticket prices in the high end of clothing and leather goods.

Luxury consumers have returned to the stores after stock markets rebounded, housing prices stabilized and Wall Street firms paid their annual bonuses. Sales of luxury goods soared 23 percent in March from a year ago, SpendingPulse said.

Biggest Gain

In the last months of 2008, luxury retailers discounted goods by as much as 70 percent to clear inventories that became bloated after consumer spending nosedived in the aftermath of the Lehman Brothers Holdings Inc. bankruptcy and the global financial crises.

Prices may continue to climb this year as fall merchandise flows into U.S. stores this summer.

“We are hearing that for fall sets, stores are looking to bring some higher-priced goods,” said Sapna Shah, principal of Retail Eye Partners, a New York-based retail research firm.

The average price of a luxury handbag sold at U.S. department stores is rising to $1,800 this year after falling to $1,600 last year from a pre-recession $2,000, Hana Ben-Shabat, a retail expert at the A.T. Kearney management consulting firm in New York, forecast in an April 15 telephone interview.

No Slam-Dunk

“They will do the slight increase if they can get away with it,” Pedraza said. “It’s not a slam-dunk.”

At Barneys, shoppers in December 2008 could buy Tod’s men’s chocolate brown penny loafers for $269, down from $390. On April 16, the Barneys Web site offered similar loafer styles at $395 to $495.

Dawn Brown, a Barney’s spokeswoman, declined to comment on pricing. The chain is privately held.

Tiffany’s Web site on April 16 offered a Metro mini diamond cross necklace at $675, up 23 percent from the in-store price on Feb. 24. A Paloma Picasso green Zellige aventurine ring was at $525, an 11 percent increase.

Tiffany, the world’s second-largest luxury-jewelry retailer, raised its prices at the end of February for the first time in a couple of years to reflect higher product prices, said spokesman Mark Aaron. The average increase was more modest than the two examples above, Aaron said, without providing specifics.  The New York-based chain doesn’t discount its products.

Chanel, Charvet

Calls to Bergdorf Goodman stores revealed that a Jumbo Classic quilted Chanel handbag in black “caviar” texture with a leather gold chain is $2,995, up 20 percent from three years ago, and that men’s Charvet shirts start at $450. They were $425.

Salvatore Ferragamo ties cost $160 on the Bergdorf Goodman Web site. Three years ago they were $135. Men’s black Gucci loafers with silver horsebit buckles were priced at $475 to $595, compared with $450.

“Prices fluctuate based on exchange rates, materials and design features,” Ginger Reeder, a spokeswoman for Neiman Marcus, said in an April 18 e-mail.

Saks’s recent sales gains have been driven partly by an increase in the average price per unit sold, said Julia Bentley, a spokeswoman. A larger number of transactions also was a factor, she said. Comparable sales jumped 13 percent in March.

‘Desire Is Improving’

Neiman Marcus has also noted a recovery in sales at the highest prices. “Desire is improving,” Neiman Marcus Chief Financial Officer Jim Skinner said March 26 at an investor conference.

“Some of the hottest things we’re selling are at the very upper, upper end of our price range.”

Saks’s “substantial” rebound in full-price selling is helping its profitability, CEO Sadove said.

Gross margin jumped to 36.5 percent in the quarter that ended Jan. 30 from 21.2 percent a year earlier. The New York- based department-store chain said it expects that to widen to as much as 38 percent this year from 36.6 percent last year.

“There’s no question that an increase in full-price selling has a positive effect,” Sadove said.

Hagen, whose clients include Paris Residence Club, a collection of fractional ownership properties in the French capital, said she’s happy to pay for Domenico Vacca silk three- button shirts, which have cost $790 for the past five years, according to spokeswoman Laura Laudiero.

“I buy those shirts no matter what the price,” Hagen said. “Investment dressing!”

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aCRvaA6GfixQ

April 3, 2010

What Men Want

by Sonia Kolesnikov-Jessop
Prestige

Luxury fashion brands are working hard to woo male customers, with den-like stores that guys can spend time in without feeling intimidated, reports

The interior of the tall and narrow red-brick building on New York’s Madison Avenue has cherry-wood panelling and plush leather sofas – the kind of decorative elements usually associated with a gentlemen’s club or a traditional tailor’s shop – and the store’s uncluttered interior design makes it immediately welcoming and friendly to navigate. This is the universe of Hermès Man, a 2,475-sq-ft, for-men-only boutique. “My fondest wish for this store is that the man who steps inside forgets he was only going to stay five minutes, then suddenly realises, to his surprise, that a full, enjoyable hour has gone by,” explains Véronique Nichanian, Hermès’ artistic director for men’s products.

In recent years, luxury brands have been lavishing increasing attention on their male customers, a reflection of the growing importance of menswear to their bottom line, as well as a realisation that men’s and women’s shopping attitudes and habits can be strikingly different. Even in mature luxury markets such as the United States and the United Kingdom, sales of men’s designer clothing have risen at twice the rate of the women’s sector over the past five years, says Fflur Roberts, luxury-goods manager at market-research firm Euromonitor International. In Asia, the retail market for menswear is one of the strongest in the world – for example, Euromonitor is forecasting that consumption of men’s luxury products in South Korea will rise 48 percent between 2009 and 2013.

During the crisis, men’s accessories have also proven to be more resilient than those for women. Paul Cadman, Ferragamo’s Asia- Pacific CEO, says that while the company noted a smaller increase in sales of ladies’ handbags and shoes last year, its maleoriented lines continued strongly. “I think that’s largely because men buy a product when they need one, while women buy when they need but also as an additional luxury purchase, and second luxury purchases went out of the window during the crisis,” says Cadman. He adds that the faster pace of growth of the brand’s men’s products was especially noticeable in developing markets, such as India and China.

“I think all luxury brands today understand there’s an opportunity in men’s products, due to the lack of competition in that market segment,” he adds.

Milton Pedrazza, CEO of the Luxury Institute, a New York-based research firm, believes that affluent men in general may buy fewer pieces than women, but they often buy far more expensive items such as bespoke and made-to-measure pieces. “They also tend to do product-specific destination shopping at highly specialised stores,” he says.

Marshal Cohen, chief industry analyst at the NPD Group, a research specialist in consuming and retailing, notes that men have become more style-conscious and increasingly confident shoppers. “Men aged 45-plus are carrying style into the workplace and beyond,” he says, “as they find a need to look more managerial, and many find themselves single again. The younger male consumers seek style to separate themselves from the competition.”

 A BOLD NEW WORLD
Comme des Garçons – Hankyu Men’s also houses its first ever men-only Louis Vuitton boutique and the first Japanese outlet for Tom Ford. In its first year of operations, the department store managed to beat its own revenue projections by six percent, raking in ¥26.5 billion in sales. Customer service has been at the heart of its success, with a fee-based personal advice and shopping service, along with VIP-member parties.

In the same year, Vivienne Westwood also opened her first ever store geared for men in Tokyo, while in the UK, Lanvin closed its womenswear store on London’s Bond Street and opened a men’s emporium in Savile Row, the city’s traditional bespoke-tailoring district. Last year, Harrods revamped its men’s floor to address a perceived growing male interest in all things sartorial, as well as new attitudes toward shopping. It now offers a store-within-the-store concept, with a menswear section that is closer to a modern gentlemen’s club decorated lavishly with marble flooring, wood panelling and plenty of leather chairs. It has increased its madeto- measure sales areas, introducing a bespoke service in Dunhill and Corneliani, and has also introduced Valentino and E Tautz to men’s tailoring. Feedback has been positive, and the department store is launching made-to-measure Tom Ford suits this spring.

In New York, in addition to Hermès’ first ever men-only boutique, Coach Inc opens its first men-only store next month on trendy Bleecker Street in the West Village, while later in the year, Ralph Lauren is hoping to convert its landmark Rhinelander mansion into a shop for men only. Meanwhile Vivienne Westwood is planning to open a new men’s boutique in Conduit Street in London, In Asia, Ferragamo opened its first men-only boutique in Macau last year and followed up with a second men-only boutique in Suzhou. “It’s still a bit too early, but we are seeing men congregate to these stores, especially the one in Suzhou. Our belt and wallet categories are doing very well. When men get disposable income in China, their first purchase is usually for themselves to show status,” Cadman says.

Comfortable, soft, and colourful is the definitive look this season. “Menswear has been reinvigorated, with designers showing much more daring and interesting styles,” says Jason Broderick, general merchandise manager for menswear at Harrods.

“It seems that the fashion houses believe that men are prepared to wear colour again, which shows that there is a growing confidence in the market,” Broderick adds. Reds feature highly in many collections – Gucci has fiery red for evening suits,  Bottega Veneta is mixing red with other strong colours such as purple and orange, with tie-dye used to good effect with tailored jackets and knitwear. Pastel colours of lilacs and lemon feature prominently in Burberry Prorsum’s collection (right), in sheer lightweight fabrics for suiting and outerwear, says Broderick.

Burberry offers softer shouldered suits, worn with crew necks and knits that have straps. Roberto Cavalli splashed pink, yellow and green on their tops, trousers and shiny shoes. Matthew Williamson’s new menswear collection includes knitwear in his signature vibrant colours, while Tom Ford also features strong colours in purple blouson jackets, electricblue suede jackets and pale blue and white suits.

The trend for the spring/summer 2010 menswear is a mix of tailoring and dressed-down looks. Suits are less structured than they have been recently, Broderick notes, adding even suits in white linen are less formal.

“There is a sheerness to fabrics, which gives a fluidity to the clothing when they are worn – ideal for the summer,” he says.