Luxury Institute News

March 31, 2011

Tourneau creates new platforms

CEO James Seuss on new ways to approach the customers

Interview by Deborah Yonick
The BASELWORLD Daily News
March 30, 2011

Ideal ambassador of the watch industry, one of America’s largest retailers for luxury watches, Tourneau is guided by its mission to cultivate collectors, “We don’t just sell watches; we help people discover them.”…

BWDN: What kind of research has Tourneau done to develop the ultimate luxury experience for its customers?

Seuss:  We’ve partnered with the Luxury Institute to improve the Tourneau customer experience and assist us in developing a new training program, which has been instrumental in allowing our sales associates to create the ultimate luxury environment for the consumer. We’re using customer feedback to improve the experiential qualities of shopping for a fine timepiece…

Click the link to read the entire article: http://media.messe.ch/epaper/BASELWORLD/BWDN20110330/flash.html#/50/

March 29, 2011

High Net-Worth Shoppers Rank Luxury Brands On Multiple Criteria; 38 Women’s Fashion, 27 Women’s Shoes And 28 Luxury Men’s Fashion Brands Evaluated In Luxury Institute WealthSurvey

(NEW YORK) March 29, 2011 – Firsthand perspectives of wealthy U.S. consumers provide detailed rankings of luxury brands’ reputation and prestige in results of the 2011 Luxury Brand Status Index (LBSI) surveys, released today by the independent and objective New York City-based Luxury Institute.

A balance of men and women from households earning at least $150,000 per year evaluated dozens of luxury fashion and shoe designers on quality, exclusivity, status enhancement and ability to create “special” shopping and owning experiences.

Wealthy respondents also ranked each brand on worthiness of a significant price premium, their willingness to recommend it to friends and family, and the likelihood of consideration next time they make a purchase in that category.

Based on overall LBSI scores (1-10), the top luxury brands rank as follows:

Women’s Fashion
o Hermes 7.72
o Prada 7.70
o Louis Vuitton 7.58

Men’s Fashion
o Brioni 7.66
o Ferragamo 7.48
o Ermenegildo Zegna 7.47

Women’s Shoes
o Versace 8.06
o Christian Louboutin 8.04
o Valentino 7.98

“We find that some categories are very predictable with certain brands rating in similar positions over the years. The luxury women’s shoe category is one where fickle consumers rank and rate brands differently over the years,” said Milton Pedrasa, CEO of the Luxury Institute.”

The proprietary Luxury Brand Status Index (LBSI) survey is the only unbiased measure of the reputation of leading brands provided by direct insights from wealthy U.S. consumers. Sample households had average annual income of $271,000 and $2.4 million average net worth.

About Luxury Institute (www.LuxuryInstitute.com)

The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

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

March 28, 2011

Pricey baubles in demand

Luxury businesses emerge from dark days of recession; some still waiting for rebound

By Eilene Zimmerman
Crain’s New York Business
March 27, 2011

In early 2008, business was humming for Wendy Brandes, a jewelry designer who produces her pieces by hand. During a Valentine’s Day sale for a small group of private clients, she grossed $25,000 in a few hours.

“My private show sales had been more than doubling year-to-year since we started in 2005,” she said.

Then the economy tanked, making many of her clients skittish.

“Everything collapsed,” Ms. Brandes said. “We saw a huge drop in business.”

But today, her company is on the mend. Sales in 2010 were up 10% over 2009, a year in which revenues plunged 30%. She expects 2011 sales to be 15% higher than 2010 sales, with most of her jewelry retailing for $2,000 to $6,000.

She’s not the only luxury purveyor who sees business picking up. Many struggling high-end brands were “kicked out of the market” during the recession, according to consulting firm Bain & Co.’s annual Luxury Goods Worldwide Market Study. The luxury sector has been steadily recovering, with sales up 10% in the last quarter of 2010.

Certainly, a rebound is far off for many players in New York’s luxury sector. Milton Pedraza, chief executive of Manhattan-based research firm Luxury Institute, says the jewelry and watch industries were hit especially hard over the past two years, and recovery will be tougher.

Firms that expanded aggressively or took on debt to prepare for growth that never came often faltered, says Ketty Pucci-Sisti Maisonrouge, president of Manhattan-based luxury industry consulting firm KM & Co., who also teaches a course at Columbia Business School.

“The businesses that reached out the most into aspirational luxury were the most affected,” she said. “If their bottom line was relying heavily on younger executives who don’t make as much money as the truly affluent but still want the Louboutin shoes, they were out of luck, because those people stopped spending.”

Ms. Brandes found that a nimble marketing strategy was vital to weathering tough times. She expanded a blog she launched in 2007 to help make her jewelry and other luxury goods less intimidating to the average consumer. It now receives about 17,000 views a month. She also has about 3,000 followers on Twitter.

“I developed a network of people who think of me as a friend, and when they got engaged or celebrated an anniversary, they [came] to their friend to design the jewelry,” she said.

SWEET DREAMS UP 40%

A flexible approach to pricing helped Magniflex, which sells mattresses that start at $1,000 but can run as high as $24,000. The company offered decorators discounts of 20% to 30% and offered boutique hotels and single-store retailers the same discounts it gave to larger hotels and retailers. It also provided five-day delivery in the U.S. for $45, says Andrea Mugnai, general manager for Magniflex North America, based in SoHo. U.S. sales increased 40% from 2009 to 2010 in large part because of these programs.

Private Picassos, a Brooklyn-based art education company, grew by introducing lower-priced classes. In 2006, the company provided private art lessons to children of wealthy clients. When the recession caused a slowdown, owner Valeen Parubchenko started offering group classes and giving a discount to parents who committed to 10 lessons. She began holding classes at retailers and bookstores in late 2008, and demand rose in 2009 and 2010.

“The lessons aren’t customized for the child, but it’s also less expensive-$22.50 per child, as opposed to $85 an hour for private lessons,” said Ms. Parubchenko.

The company doubled its business from 2009 to 2010.

http://www.crainsnewyork.com/article/20110327/SMALLBIZ/303279988

Dimonds: Experts in search of better customer relations

Posted in Jewelry,Luxury Market
Tags:

By Claire Adler
Financial Times
March 25, 2011

The presidents of the World Federation of Diamond Bourses are meeting in Dubai in April at the invitation of the…

Click the link to read the entire article which includes several quotes from Milton Pedraza, CEO of Luxury Institute: http://www.ft.com/cms/s/0/eee514f2-54e3-11e0-96f3-00144feab49a.html#ixzz1Hu3jNdVZ

March 25, 2011

Enduring Quality

Posted in Luxury Market,Retail
Tags:

Downturns rarely affect the very top end

By Maryam Omidi
Wall Street Journal
March 24, 2011

The brands that have proven robust are ones which have “pedigree, heritage and resources,” says Milton Pedraza, chief executive of the Luxury Institute in New York. “Consumers now are more discerning,” he says. “They want great design, great craftsmanship and great service. . . a product they can pass down as an heirloom.”

Click the link to read the entire article: http://online.wsj.com/article/SB10001424052748703386704576186183754327272.html

March 23, 2011

Heady Times for Tourneau

By Marc Karimzadeh
WWD
March 22, 2011

NEW YORKIt’s been exactly a year since James Seuss joined Tourneau as chief executive officer, and since then the executive and his team have quietly developed a multipronged strategy for the 111-year-old American watch retailer…

…Tourneau partnered with The Luxury Institute and its ceo, Milton Pedraza, to develop the strategy and “create an environment that customers enjoy, that’s friendly, reliable and discreet,” Seuss said. It will be the first major visible change since Green Equity Investors IV LP, an affiliate of Leonard Green & Partners LP, bought the retailer for $300 million in 2006. Seuss declined to disclose Tourneau’s sales volume…

Click the link to read the entire article (subscription required): http://www.wwd.com/markets-news/tourneau-has-a-new-face-3561580?src=nl/mornReport/20110322

March 21, 2011

Gilt City sells experiences to Facebook Deals

By Elizabeth Zelesny
Luxury Daily
March 18, 2011

Flash-sales experience site Gilt City will be one of the first companies to participate in Facebook Deals, which lets consumers sign-up for deals and share them with friends.

Gilt City will start testing the integration through Facebook Deals in five cities nationwide. In the coming weeks, Gilt City will allow users to purchase the site’s coveted experiences on Facebook and share them with their friends.

“I know that Gilt as a company is one of the most sophisticated analytics companies in the world,” said Milton Pedraza, CEO of the Luxury Institute, New York. “Social networking has such an influence on what you buy and what you do these days.

“It makes sense that Gilt City would have to embed themselves inside Facebook Deals in order to personalize experiences,” he said.

Facebook is planning to offer multiple deals every day, focusing on activites that can be shared with friends. The company is squaring up to the likes of Groupon and LivingSocial with this discount deals program.

While the exact details have not be organized, consumers can expect similar deals from Gilt City like wine tastings, exclusive restaurant deals, cultural workshops and medical treatments.

Facebook steals
Local businesses will soon be able to sign-up to use this feature for Facebook users to find deals on the social network.

Gilt City provides access to a broad range of local services at exclusive prices to its membership. Each sale lasts seven days and features many of the city’s most sought-after restaurants, spas and concerts.

The Gilt City service is currently available in New York, Boston, Chicago, Miami, San Francisco and Los Angeles. It is a subsidiary of Gilt Groupe Inc.

The beauty of the Facebook platform is that affluent consumers and luxury brands are there, so there is marketing in the social network itself.

The Gilt City experience builds on Facebook’s existing Deals program, which is offered as part of Facebook Places.

“A lot of luxury brands have no idea what to do with social media,” Mr. Pedraza said. “Luxury brands need to incorporate the power of social media with the power of their own marketing.

“You can leverage the power of both organizations like Gilt City and Facebook to provide for customers,” he said. “They are what the consumers are and I think that’s one of the first rules of multichannel marketing.”

Loop on
This development may come as something of a blow to Groupon, which is on the verge of an IPO. But with 60 million users, Groupon has big head-start.

“Luxury brands have to be where consumers are to influence them and you have to do it in your own brand DNA,” Mr. Pedraza said. “The fact that Gilt City is personalizing consumers is the way marketing should be done at the luxury level.”

http://www.luxurydaily.com/gilt-city-takes-experiences-to-facebook-deals/

March 14, 2011

Christie’s auction brand may help local realtor Hall & Hunter

By Greta Guest
Detroit Free Press
March 12, 2011

Christie’s, the word’s largest auction house, has launched a real estate branding effort that could help local affiliate  Hall & Hunter Realtor of Birmingham boost sales.

Earlier this year, Christie’s changed the name of its real estate division from Christie’s Great Estates to Christie’s International Real Estate, a move aimed at giving its luxury listings global exposure.

While Christie’s isn’t part of the Hall & Hunter name, the local brokerage’s connection to Christie’s helps it compete with SKBK Sotheby’s International Real Estate in Birmingham for the area’s most luxurious home deals. Other rivals include Max Broock Realtors, Coldwell Banker Weir Manuel, Re/Max New Trend and Real Living Cranbrook.

“Sotheby’s and Christie’s are two truly premier names,” said Milton Pedraza, CEO of the New York-based Luxury Institute. “It does give you a significant edge.”

Birmingham homeowner Sarah Deson-Fried and her husband, Harold Fried, decided to sell their $3.695-million custom home with Hall & Hunter’s Meredith Rands Colburn, an associate broker.

“I chose Meredith and luckily enough she was affiliated with Christie’s,” said Sarah Deson-Fried on a recent tour of her home. “I wanted a brand that would appeal to true luxury buyers.”

The couple, both attorneys, built the French-inspired home in 2002. The house has four bedrooms, five bathrooms and 6,324 square feet.

It features a solid mahogany front door with an etched glass insert, travertine flooring on the first and lower levels and a hand-forged wrought-iron handrail on the curved staircase. The kitchen features Italian pistachio-green Valcucine cabinetry and a solid walnut floor.

Hall & Hunter remains an independent brokerage, yet met the criteria to become a Christie’s affiliate and works under its guidelines. In contrast, Sotheby’s real estate arm is a franchise system in which local brokers take on the Sotheby’s name and use it to market all its properties. The Christie’s name only goes on local properties listed for sale at $750,000 and above.

Dennis Wolf, Hall & Hunter’s CEO, believes the affiliation with Christie’s brings amazing business. Ten months ago, the owner of 300 acres on Lake Michigan picked up a Christie’s brochure that led to listing the property with Hall & Hunter for $34 million.

Don’t expect Wolf to divulge his client roster — which has included automotive executives, business owners and professional athletes. “We deal discreetly with the clientele.”

The brokerage, founded in 1954, has always sold upper-end real estate. It was affiliated with Great Estates, a network of luxury realtors based in Santa Fe, N.M.

Christie’s ventured into residential real estate in 1995 and purchased Great Estates.

“What Christie’s brings to the table is obvious,” Wolf said. “What they brought to the table is the ability for us to market the properties not just locally but internationally.”

Christie’s real estate affiliates pay annual fees and then pay to advertise their properties in the Christie’s glossy magazine in which a full-page ad costs $3,400 and includes a listing on the Christie’s International Real Estate Web site, www.christiesrealestate.com.

Nearly 90% of the houses listed on the site are priced at $1 million and up, said Gregg Antonsen, senior vice president of Christie’s International Real Estate. And affiliates can join the Christie’s network by invitation only.

Christie’s International had sales at auction of $5 billion in 2010. Sotheby’s had sales of $4.8 billion from auctions last year. Neither reports residential real estate sales.

J. Bradley Wolf, vice president and associate broker for Hall & Hunter, said roughly 5% of the firm’s clients use its full services, which can include auctioning some of a home’s contents.

“One of the services we offer for clients with a lot of art work or jewelry is we can have someone come out from the auction house in New York to appraise things,” he said.

The image of the auction houses suffered as a price-fixing scandal sent A. Alfred Taubman, founder of Bloomfield Hills-based Taubman Centers, to prison in 2002. In addition to Taubman starting the shopping center company, his family had a controlling stake in Sotheby’s, which he sold in 2005 amid the controversy.

Still, Christie’s and Sotheby’s still have enormous clout among the wealthy, said Robert Passikoff, president of Brand Keys, a New York-based consulting firm.

But those luxury brands don’t necessarily impress the masses.

Mike Bernacchi, a University of Detroit Mercy marketing professor, said the auction house names rub off only on the well-heeled consumers and homes.

“It is a good demarcation for anyone who is interested … that is not everybody,” Bernacchi said.

http://www.freep.com/article/20110313/BUSINESS04/103130379/Christie-s-auction-brand-may-help-local-realtor-Hall-Hunter

March 10, 2011

Consumers: We want Gucci or Target. Forget the Gap

By Jessica Dickler
CNNMoney
March 9, 2011

NEW YORK (CNNMoney) — Consumers are ready for a little luxury. Despite cutting back in other areas, such as dining, they are showing a clear preference for select high-end apparel brands, such as Gucci, Louis Vuitton and Burberry.

After taking a hit at the height of the recession, sales of luxury goods have rebounded strongly, up 10%-12% last year in the U.S., according to estimates by Telsey Advisory Group, a retail equity research firm. Comparatively, retail sales across the board rose just 6%.

“People are willing to pay a premium on something that delivers on luxury,” noted Milton Pedraza, the CEO of the Luxury Institute, which tracks spending among wealthy consumers with a minimum annual income of $150,000. “They will buy fewer but more expensive things. There’s a lot more value consciousness.”

But with an eye on value, shoppers are also hunting down designer brands at steep discounts, frequenting stores such TJ Maxx and online sale sites such as Gilt Groupe.

Ed Jay, senior vice president of American Express Business Insights, calls this “the barbell effect.”

Who’s buying homes? The rich

“They are more high and low in the way that they are spending,” Jay said of today’s consumers. “High-end brands are holding ground among consumers, while spending at value oriented stores has also been pretty stable. It’s a tough place for mid-tier right now,” he said, referring to retailers like the Gap, Chico’s and Ann Taylor.

Susan Towers, who owns her own design business in New York, admits she shops high and low, but nothing in between.

“I shop at Barney’s and Bergdorf’s and take a walk through Loehmann’s every so often,” she said. Lately she says it’s more Loehmann’s and less Barney’s, but still “I’ve never really believed in buying mid-priced stuff.”

She has had to make sacrifices to afford Barney’s, though, because she makes about half of what she used to bring in before the recession. “I had to cut back, eat out less, take less vacations, things like that,” Towers explained.

Part-time French teacher Geraldine Trippitelli also says she would rather have one luxury item, which she pairs with other much less expensive clothing, than more mid-range brands.

“I prefer one Chanel jacket with cheap jeans and T-shirt, but just one, and then I have to be careful for a long time,” said Trippitelli, who shops either in high-end boutiques in New York or discounters like TJ Maxx and Target.

And other shoppers seem to be following suit. Overall luxury fashion spending is up 35% in the past year, while mainstream fashion spending gained just 8% since last year, according to the most recent data by American Express Business Insights, which tracks the spending habits of its 90 million cardholders.

And while high-end department stores like Nordstrom and Saks have rebounded strongly from the recession, more middle-of-the-road shops, such as Macy’s and JC Penney, have struggled to gain ground.

Same-store sales, an important barometer in retail, rose 5.8% at Macy’s and 5% at Kohl’s in February, while Nordstrom jumped 7.3% and Saks was a whopping 15.3% higher. The Gap and Banana Republic both had same-store sales below where they were a year ago.

Part of this trend, explained Robert W. Baird & Co. retail analyst Erika Maschmeyer, is the shift in focus to quality rather than quantity during the recession. “People got used to a different standard of living in the boom area and once you’ve traded up, it’s hard to shift back down,” she said.

Still, as the economy improves and consumer confidence continues to increase, Maschmeyer predicts even those mid-level stores will eventually see stronger sales. “I wouldn’t bet against the American consumer; we like to spend money,” she said.

http://money.cnn.com/2011/03/09/pf/consumers_prefer_luxury/

March 9, 2011

Wealthy Web Users Flock To Facebook Seeking To Stay In Touch And Find Good Shopping; Access Via Mobile Devices Gains Traction

(NEW YORK) March 8, 2011 – According to a new WealthSurvey from the Luxury Institute, 64% of U.S. residents earning at least $150,000 per year are currently on Facebook, while another 4% will join soon.  Wealthy members, on average, have 145 “friends” with 18% reporting 250 or more Facebook friends.

Age is a big factor in adoption: 72% of wealthy 21-34 year-olds are now on Facebook vs. only 56% of those 65 and older. Millionaires are less likely (60% vs. 69%) than modestly wealthy Web users than to have a Facebook account; men are less likely than women (69% vs. 58%) to join.

Almost half (48%) report joining Facebook even though they want to restrict access to personal information on their profiles, and 44% fear that information could be vulnerable and lead to identity theft.

Wealthy Web users cite maintaining existing personal relationships (49%) and locating and reacquainting with old friends (46%) as the top two reasons for taking the Facebook plunge.  One in three joins Facebook to be able to view photos and read what others have to say. 

Nearly one-third (29%) of wealthy users access Facebook via mobile devices, mostly smartphones, but 10% use tablets like Apple’s iPad. One in five use location services to find Groupon-style local deals.

“For luxury firms who advertise with Facebook or simply post news and offers on their Facebook profile, there is clearly rich potential for creating closer relationships with customers,” says Milton Pedraza, CEO of the Luxury Institute. “Closer relationships lead inevitably to higher sales.”

About the Luxury Institute (www.LuxuryInstitute.com)

The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

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

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