Luxury Institute News

May 25, 2010

Dinosaurs, DNA & the End of the Party

Posted in Luxury Market
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Recently www.LuxurySociety.com published a variety of soundbites and statistics that are circling the luxury arena. By Libby Banks

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The get-it-cheap party for luxury consumers has ended.

Milton Pedraza, Luxury Institute CEO
(On the end of deep discounting) 
Bloomberg

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The old media model is a frozen  moment in time; a monthly magazine, a seasonal trend — it’s over. Digital culture is a constant stream. Either you adapt to it, or you are a dinosaur and you will die.  Jefferson Hack, Editorial Director of Dazed Group  Business of Fashion

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As long as men feel the need to spread their DNA to the four corners of the earth, they’re going to buy Porsches. And as long as women look for as many offers for mating as possible, they’re going to keep buying Manolo Blahnik shoes. Scott Galloway, New York University marketing professor (on why the understated luxury trend will give way to more glitz soon)  Newsweek

1/4 Of affluent consumers have “friended” a luxury brand on a social networking site (according to Unity Marketing) Biz Report

http://beta.luxurysociety.com/articles/2010/05/dinosaurs-dna-the-end-of-the-party

May 18, 2010

High-end spenders again indulge urge to splurge

Posted in Luxury Market

By Johnny Diaz
BostonGlobe.com
May 17, 2010

Claudia March has a taste for the finer things. She drives a 2010 BMW. For Gucci shoes and Prada handbags, she shops at Saks Fifth Avenue and Neiman Marcus. And the 38-year-old treated herself and her mother to a weekend at the Boston Park Plaza hotel for a spring getaway.

Her spring spending spree follows a year of trimming her $3,000-a-month spending budget by half by reducing her trips to high-end stores, restaurants, and bars.

“I’ve been cutting back in the past year, but I feel that I can start indulging again,” said March, a marketing manager for an information technology staffing firm, as she shopped at the new Nordstrom store at South Shore Plaza in Braintree, where she bought $300 worth of makeup. “The economy is doing better.”

During the recession, consumers in every income bracket scaled back on discretionary spending. But analysts say the slow and steady economic recovery is causing higher-end shoppers to loosen their purse strings again – splurging on everything from $200 pearl necklaces to $500,000 cars to million-dollar homes.

Some analysts note, though, that the average consumer may not be riding this luxury wave.

Nationally, sales of luxury goods rose 22.7 percent in March, compared to a year earlier, according to SpendingPulse, an information service of MasterCard Advisors that tracks US retail sales across all forms of payment.

“Affluent and wealthy consumers went into hibernation for the first three quarters of 2009,” said Milton Pedraza, chief executive of the Luxury Institute, a New York-based research-and-consulting firm that focuses on the spending habits of the affluent. “Consumers are more discerning now, but they still covet the best.”

Analysts and business owners say upper-income consumers’ increasing optimism about the economy is reinforced by the recent surge in the stock market.

A study released last month by the Boston consulting firm Bain & Co. estimates global luxury-goods industry revenues this year will increase 4 percent from last year. The report said the increase will be a reversal from the 8 percent decline in revenue the global luxury-goods sector suffered from 2008 to 2009.

High-end retailers, home sellers, and car dealers are all experiencing an uptick in business.

Nordstrom reported a 16.8 percent increase in same-store sales (sales at stores open at least a year) for March, while Saks Inc. had a 12.7 percent increase for the same period. The big percentage increases are in comparison to a bleak first quarter in 2009.

Herb Chambers, who owns several car dealerships that sell BMW, Lexus, Audi, Porsche, and Rolls-Royce, said his luxury car division’s business has increased 30 percent in sales from the first quarter of last year to this year.

So far, Chambers has sold one Rolls-Royce and three Bentleys this quarter. During the same time last year, he did not sell any Rolls-Royces, and just one Bentley. The cars are priced between $190,000 and $500,000. Overall, he sold just over 1,000 luxury cars in March, compared with 700 in March 2009.

“Bottom line, luxury is really, really good,” he said. “I think people are feeling better about the economy. The stock market is up and people have got confidence. They are tired of not spending money.”

Beth Dickerson, senior vice president of sales at Gibson Sotheby’s International Realty in Boston, said high-end home buyers also are beginning to come back. Last year, she sold $57 million worth of real estate. This year, she has sold $42 million worth and believes she is on track to surpass that.

“I feel in the first of the year, there were more lookers, more buyers, more activity,” said Dickerson, who sold five single-family homes and condos between $1 million and $8 million last month.

At DePrisco Diamond Jewelers, where diamonds are 70 percent of business, it’s the sales of other types of jewelry, including pearls, earrings, necklaces, and bracelets, that have gone up as much as 15 percent in April from a year ago. Those items range anywhere from $200 to $1,000.

Because of the recent sales boost, owner Donna DePrisco, who has four stores in Massachusetts, said she is looking to add three sales jobs.

“Overall, things are looking up,” she said, noting that diamond sales have remained steady since last year.

Also looking to hire: David Walker, chief executive of Shreve, Crump & Low in the Back Bay, who last week opened his first jewelry store in Nantucket, where he is adding 10 employees. Walker said his business grew 35 percent between the fourth quarter of 2008 and the same period in 2009, and that is allowing him to expand.

“We just sold a diamond for $155,000,” said Walker of the 6-carat ring. “People feel better about their position and what is around them.”

Michael Myers, president and owner of Boston Yacht Sales Inc., in Weymouth, said buyers of high-end boats have started to surface in the last few months. He said business is up by at least 75 percent since last year.

Myers recalls how last year’s New England Boat Show did not yield any sales for his company. But at this year’s show in February, his sales staff walked away with four orders for yachts that ranged from $350,000 to $700,000 each.

Myers also recently sold a 42-foot Sabre yacht valued at $900,000.

“As consumer confidence has increased, people are realizing that it’s a buyer’s market and are feeling comfortable enough to make an investment in a boat,” said Myers.

He describes his most recent buyers as local entrepreneurs and business executives.

One of Myers’s customers is Thomas Niles, who is looking to upgrade from a 38-foot yacht called Independence to a 46-foot Sabre Salon Express, which he is planning to call Final Rinse.

Niles recently put a deposit on the new yacht, which is being custom-made with teak flooring, an icemaker, and a sunroof.

Niles declined to say how much he’s spending for his yacht.

Similar models, however, can be priced from $500,000 to $1 million or more.

“I wouldn’t have felt comfortable doing it a year ago,” said Niles, 70, as he looked at other vessels on a recent weekday at Boston Yacht Sales.

The Lexington resident said he lives a modest lifestyle, but refrained from making big purchases until now because of the economy.

Niles develops multifamily homes in Boston but enjoys boating off Buzzards Bay, Nantucket, and Newport in his down time.

“I sense we’re bottoming out and the economy has stabilized . . . Boating is relaxing for me. That’s why I don’t have high blood pressure.”

Johnny Diaz can be reached at jodiaz@globe.com.

http://www.boston.com/business/personalfinance/articles/2010/05/17/spending_on_luxuries_is_back__for_some/

May 11, 2010

News Release: Apple Steals Luxury Shine From Sony

Wealthy consumers rate both brands across multiple metrics, including quality, customer experience and retail presence.

NEW YORK (May 11, 2010) – The objective and independent New York City-based Luxury Institute today released its latest WealthSurvey,” Apple vs. Sony: Brand Face-Off,” a study comparing and contrasting perceptions of the two brands by wealthy U.S. consumers with average household income of $247,000 and average net worth of $1.8 million. 

Sony product ownership far outstrips Apple’s (80% vs. 51%) but Apple owners are more passionate than Sony owners. Using a 0-10 scale, they rate Apple 8.24 for being “truly unique and exclusive” compared to 6.70 for Sony by its owners.  Apple also makes the customer “feel special” more than Sony (7.58 vs. 6.70).   

Wealthy Sony owners are likely to describe Sony products as traditional, sensible and common. By contrast, wealthy Apple owners describe Apple as innovative and trendy.  

In the retail environment, Apple enjoys another edge over Sony.  Wealthy consumers are far more likely to agree that Apple stores are better organized and maintained (8.46 vs. 7.41) and more appealing (8.41 vs. 7.43) than Sony stores. Perceptions of the quality of employee help and the overall store atmosphere favor Apple, too. 

“Although Apple did not set out to be a luxury brand, it exhibits most of the qualities that luxury brands should strive for in the 21st century,” says Milton Pedraza, Luxury Institute CEO. “Apple delivers fabulous product design, unbeatable functionality, and a powerful in-store experience to consumers of all ages that many luxury brands lack. And when it comes to the ‘cool factor’ and a guru CEO, Apple is untouchable. Luxury brands could do worse than borrow a page or two from Apple’s playbook.”

About the Luxury Institute

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. Its publications, research and consulting services guide and educate high net-worth individuals and companies catering 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.

Contact:
The Luxury Institute, LLC
Martin Swanson, Vice President (914) 909-6350
mswanson@luxuryinstitute.com

May 4, 2010

News Release: Wealthy U.S. Consumers Rate the Most Prestigious Ultra-Luxury Automobiles: Rolls-Royce, Bentley and Maybach

(NEW YORK) May 4, 2010 – The objective and independent New York City-based Luxury Institute reported today the top-rated ultra-luxury automobiles 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.

Rolls-Royce is the top rated ultra-luxury automobile brand according to wealthy consumers. Rolls-Royce scores above the benchmark average for all four components of the 2010 LBSI, as well as for both outcome metrics. Bentley and Maybach tie for second place for the 2010 LBSI, both achieving a score of 8.05. 

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):

  • Ultra-Luxury Autos
  • o Rolls-Royce-8.33
  • o Bentley-8.05
  • o Maybach-8.05

“The ultra-luxury auto category is coming back after a tough 2009,” said Milton Pedraza, CEO of the Luxury Institute. “We expect to see these product-centric companies focus more on the overall customer experience this year as they try to generate traffic, new sales and increase customer retention and recovery rates.” 

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.

 Contact:
The Luxury Institute, LLC
Martin Swanson
Vice President
(914) 909-6350
mswanson@luxuryinstitute.com

French Dressing: Louis Vuitton

April 29, 2010
Wall Street Journal Magazine

Is there a logo with a better pedigree, or a more resilient lifeline, than the LV of Louis Vuitton? A look at the 156-year-old brand.

As brands go, Louis Vuitton is up there with the best. In fact it may be the best if you are talking about global recognition and plaudits in the style stakes. But like anything with longevity, the regal LV initials (first stamped across leather trunks favored by royalty) have had their ups and downs in the cool stakes. The downs were mostly when the economy was “up” during the mid ’90s and early 2000s when, like all the major luxury brands, Vuitton experimented with “masstige”-creating gateway products for the aspirational to buy into. Despite this and having a product that’s notoriously easy to counterfeit (a recent court ruling making it easier for LV to go after companies that use its trademarks in Web advertisements to sell fake bags will help), luxury analysts and marketing consultants agree that the company has managed to shore up both ends of its market in a way that no other luxury brand-not even Gucci, Hermès nor Chanel- has done. (Vuitton is so canny that it has the solidity to take risks in potentially unsettled markets: It recently opened a store in Ulan Bator, the capital city of Mongolia, which has been betting on mining contracts to bring a rush of wealth to its emerging economy.)

“Ubiquity tends to be the antithesis of luxury,” says Milton Pedraza, CEO of the Luxury Institute, a consulting and analysis firm. “That hasn’t happened with LV. It’s no longer that little restaurant with no name that only you know about, but it still appeals to a huge number of people around the globe.”

But the value of a real “winner” in the global luxury stakes is whether a brand can withstand the slings and arrows of the outrageous fortune and attention that are bestowed upon it and still come out with its reputation unsullied. It’s a testament to Louis Vuitton (bought by LVMH CEO Bernard Arnault in 1989) that the moment it looked somewhat, shall we say, “available,” the company reinvigorated the logo.

To read the complete article, visit http://magazine.wsj.com/features/phenomenon/french-dressing/

May 1, 2010

For Luxury Goods, the Recession Is History

Posted in Luxury Market
Tags: ,

Prices for luxury items have jumped
BusinessWeek.com
By Cotten Timberlake

Luxury chains including Barneys New York and Saks are selling costlier goods, scaling back discounts and promotions they offered to attract shoppers during the recession.

The average price for U.S. luxury goods, excluding jewelry, jumped 11% in March from the year earlier, according to MasterCard Advisors’ SpendingPulse data. Says Milton Pedraza, chief executive of New York-based research firm Luxury Institute: “The get-it-cheap party for luxury consumers has ended.”

Average price of a luxury handbag sold at U.S. department stores:

Pre-recession: $2,000

2009: $1,600

2010: $1,800

Data: Hana Ben-Shabat, A.T. Kearney

http://www.businessweek.com/magazine/content/10_19/b4177021145709.htm?chan=magazine+channel_news+-+companies+%2B+industries