Luxury Institute News

February 17, 2011

Burberry, Bottega Veneta in-store experience gets mystery shopper thumbs-up

By Elizabeth Zelesny
Luxury Daily
February 16, 2011

A study by The Luxury Institute finds that Burberry and Bottega Veneta excel far better than other companies at having enthusiastic brand ambassadors in their stores who are interested in helping customers.

This was one of the key findings of the report titled, “Leading edge insights into the world of the wealthy.” Mystery shoppers commissioned by Luxury Institute said that the layout, location and atmospheres of the Burberry and Bottega Veneta stores were what they appreciated most.

“A customer-centric culture is something that is a self-reinforcing system that creates consistently extraordinary customer experience,” said Milton Pedraza, CEO of The Luxury Institute, New York. “Service values, service standards and education on operational and cultural functions need to be in place.”

Brand stores vs. department store
The Luxury Institute conducts research with wealthy consumers about their behaviors and attitudes on customer experience best practices.

Another finding of the report was that the mystery shoppers preferred the customer service and aesthetics in brands’ retail locations over the experiences in department stores selling that specific brand’s products.

Mystery shoppers found the company stores to be better maintained, with a more welcoming environment, than the brand’s area within a department store.

The findings provide insights into how well luxury brands take advantage of the opportunity to control the environment in which they present their goods. The findings illustrate that most brands excel in their own stores.

The mystery shoppers said that company stores provided better experiences because the staff had welcoming smiles, a friendly greeting on entry and a good-bye when they leave.

Creating a culture-centric environment
Luxury brands understand the value of creating a customer service experience in which everyone in the company participates in.

Mr. Pedraza said that luxury brands need to design a customer-centric environment geared towards culture, not projects. He also said that brands need to create a culture in which they can sustain and thrive even in the absence of a CEO.

“Luxury brands should have a set of service values,” Mr Pedraza said. “They need to educate and hire the right people. Whenever a new store opens, brands need to make sure they test employees for personality.

“They need to be educated in the customer experience and the culture of the brand, not just how to work a register,” he said. “We know every luxury brands CEO gets luxury brand customer service.

“They just don’t know how to do it. They don’t understand that the entire group of associates needs to be inspired to become customer-centric, and there are techniques on how to get this done.”

http://www.luxurydaily.com/59pc-of-consumers-would-rather-shop-at-brands-store-than-department-stores/

February 9, 2011

What’s up with the pricey Rolex app?

By Elizabeth Zelesny
Luxury Daily
February 8, 2011

Rolex is showcasing its 100 years of watchmaking history via a pricey mobile application, which is a digital version of the book by Guido Mondani Editore.

The 100 Years of Rolex application lets users swipe through content about the company and its major milestones. It allows users to search Rolex models by model production year, reference and value. But how much is too much for an application such as this?

“If there is no differentiation it is very hard to get consumers to get an expensive luxury app,” said Milton Pedraza, CEO of The Luxury Institute, New York. “The app needs to have tremendous quality and design.

“If you are going to do that in an application, you have to have a difference that is worthy of the price,” he said.

The Luxury Institute is not associated with Rolex. Mr. Pedraza agreed to comment as a third-party expert.

The application is available for purchase in the Apple App store for $11.99.

Inside the app
Within the application, users have the ability to know the up-to-date value of all models produced by Rolex.

The application includes all Rolex models with related detail sheets and estimates. It allows consumers to collect and invest on the go.

The 100 Years of Rolex app runs through all watch models manufactured by the brand during its first century of production. It provides detailed descriptions of all models and more than 500 high-quality images.

Users can add a watch or a reference to their favorites, which provides easy access to have it on hand at any time.

Affluent watch connoisseurs can discover how much a particular Rolex is worth with one click.

Why so much?
Applications for the iPhone and iPad geared to watch-collectors and enthusiasts have started to flourish in the Apple App Store.

The booming App Store has witnessed a wide range of prices.

When the App Store launched in 2008, the most popular applications were either free or cost $0.99 or $1.99.

App developers are pushing their boundaries with the pricey applications, especially if consumers believe there isn’t any “bang for your buck.”

Generally, expensive apps are, well, expensive because of their complexity and completeness, but also because of the value they provide.

The Rolex application is complex, but can watch-collectors find this information elsewhere? Yes.

Even though the price of the application is inexpensive for affluent consumers, they would not want to pay money for an essentially useless application.

The information from the app can be found via the Internet or the “100 Years of Rolex” book.

Developers have begun to fiddle around with app prices to maximize revenue from sales.

They are trying to find the spot where the price is low enough to get as many sales as possible, but not too low so that they can still make a profit.

At the end of the day, the reason why some applications are expensive is supply and demand.

“I think consumers will test the application, and if they don’t like it, they will send word of mouth about it,” Mr. Pedraza said. “Word spreads fast in this digital world.”

http://www.luxurydaily.com/what%E2%80%99s-up-with-the-pricey-rolex-app/

February 3, 2011

Q&A with Milton Pedraza, founder and CEO of the Luxury Institute

Posted in Luxury Market

By Marian Berelowitz
JWT Intelligence
February 2, 2011

Before founding the New York-based Luxury Institute, Milton Pedraza held finance, marketing, sales and senior management positions at Altria, PepsiCo, Colgate, Citigroup and Wyndham Worldwide. As we were researching one of our 2011 trends, Eat, Pray, Tech-the idea that high-tech devices and services are fast becoming as integral to people as food or clothing, and that they are more than just a luxury or guilty pleasure-we reached out to Pedraza for his take on the phenomenon. We also talked about what he’s watching for this year from luxury brands and one area in which many of these marketers need to play catch-up.

It seems that consumers are prioritizing digital devices and electronic appliances, which carry a unique cachet. And at a time when people are still cutting back, many consumers feel like it’s OK to splash out on tech because it’s seen as more justifiable. Is this something you are observing?

Absolutely. Because they’re experiential-they’re not just a gadget, they’re products through which we experience things that are very relevant to us, whether it’s watching a movie or having a conversation. You can compare them more to travel than to a watch or a piece of jewelry. They’re basically gateways to experiences.

There’s a shift in priority to memorable experiences-sharing with others now has a higher value than material goods. These gadgets facilitate that. Technology is facilitating far more of those sharing experiences with humans. … The interaction that has been facilitated is so rich and relevant that we see them as gateways. They have become indispensable for us. In a way it’s a luxury, but it’s indispensable to masses of people. So they prioritize those above apparel and many other material goods.

Do you think tech is eating into other categories?

Yes, I do. You have to make a decision: Do I buy that iPhone and the subscription that comes with it, or do I buy a pair of shoes? It is a zero-sum game for most people. They have to decide what they’re going to do. A lot decide to buy the electronic gadget that keeps them connected to experiences than to yet another product.

Do think these devices are not only gateways to experience but also status signifiers?

Yes, they convey status in two ways: One, Apple has such a cool factor. People seen using these products now have a halo effect. In many ways [this is justified] because they are more connected and they can use these devices to enrich their lives and make them more profitable. There’s also a substance effect-those who are using these devices do have an advantage in many ways. Which came first? It’s a chicken and egg thing.

Is it just Apple that conveys status?

BlackBerrys generally indicate a level of success, of professionalism. People who use Apple tend to be seen as more creative, more leading edge. Whether in reality that is true, the perception is there.

Is all this true for affluent consumers as well?

Since they are more educated and older and have been road warriors for a long time, from the age of beepers to having the first mobile phones, they are on the leading edge, even if they’re older. They can upgrade more easily. There’s a myth that older people don’t use mobile devices-if you’re under 70, you’re using these devices.

I think the affluent make far more profitable use of these devices-they use them for deal making, for business transactions, investing online. The use by the affluent is far more substantive and meaningful than just having a conversation as a teenager with your friends. It’s a device for creating economic value.

Click the link to read the entire article: http://www.jwtintelligence.com/2011/02/qa-milton-pedraza-founder-ceo-luxury-institute/