Luxury Institute News

April 15, 2011

Luxury by Any Other Name

By Romy Ribitzky
Portfolio
April 14, 2011

As retailers and analysts fret over what rising gas prices will do to consumers’ wallets, luxury brands are quietly boosting inventories, ramping up hiring, and doing away with secondary brands in favor of more expensive goods.

Italian provocateur brand Dolce & Gabanna became the most recent to announce it will do away with its lower-priced D&G line, following in the footsteps of Brunello Cucinelli axing his Gunex and Rivamonti collections, columnist Christina Binkley writes in today’s Wall Street Journal.

And while moving away from lines with entry-level pricing may seem like a counterintuitive move during uncertain global economic conditions, Binkley argues that for some luxury brands, it’s a tactic that makes sense. “Luxury brands can seem cluttered with different lines when what consumers really care about is the designers who stand behind them,” she writes.

Jim Taylor, a luxury-consumption consultant adds that “nothing upsets affluent consumers more than finding there are multibrand models for multiple levels of quality.”

In fact, high-net-worth shoppers are drawn to certain brands because of their exclusivity, industry experts explain. A designer’s power to enhance status, imbue lasting quality, and extend a special experience is what those who earn at least $150,000 expect from a luxury label, the Luxury Institute, based in New York, says in its March Wealth Report, also out today.

Hermes, Prada, and Louis Vuitton all ranked as the top women’s fashion brands, while Brioni, Ferragamo, and Ermenegildo Zegna topped men’s fashion choices for households who earn between $271,000 and $2.4 million annually.

So maybe Dolce & Gabanna are onto something. By choosing to stop diluting their brand’s appeal and choosing instead to focus on what makes a $395 corset top a must-have versus what makes it a good value.

The proliferation of flash-sale sites is also complicating luxury brands’ value proposition. For those fashionable men and women who want to look like a million bucks but don’t quite have the budget, waiting sometimes as little as a couple of months can make an unaffordable article of clothing or accessory less of a splurge. Still, for those designers who cater to all levels of consumers, having to discount their wares-not only in stores and online, but also to feed the constant daily deal beast-marketing and branding their different collections in a way that resonates with consumers can be a challenge.

What’s the solution? “Companies must choose between two strategies. Either they must go the way of Michael Kors and Ralph Lauren and “paint the earth” with multiple brand levels, or they must ‘simply be sublime’ and cater to the roughly 20 percent of luxury consumers who shop without regard to price,” Taylor tells Binkley.

http://www.portfolio.com/views/blogs/executive-style/2011/04/14/luxury-brands-choose-to-end-secondary-lines#ixzz1MiTwf1UV

April 6, 2011

Location, Location, Location

By Simon Brooke
Sphere Magazine
Spring 2011

Luxury Consumers used to prefer their favorite shops, brands and services reassuringly uniform, wherever they were in the world. But not anymore. High-end brands are turning away from global messages to imbue their products with a sense of place…

…Luxury has become very standardized, agrees Milton Pedraza, CEO of New York-based consultancy Luxury Institute. “You can often buy many of the same thing in London and Bangkok but luxury customers are always looking for something new and exclusive to buy or to experience,” he says. Brands will produce their classic collections, available worldwide, but then there will be additional products available in just one location.”

These location-exclusive items “will connect more emotionally with the customer,” believes Pedraza. Developing and manufacturing these items is more expensive but luxury groups can afford this outlay. “They can produce handcrafted products from local artisans, which increasingly what luxury customers are looking for,” he says. “There’s more opportunity here to be creative and to continue de-emphasis of the label. I believe people will pay extra for these pieces.”…

Click the link to read the entire article that starts on page 38: http://edition.pagesuite-professional.co.uk/launch.aspx?referral=mypagesuite&pnum=&refresh=T0x98P1ok17C&EID=653aafca-aa62-4659-baf2-3ee0db222659&skip=

April 5, 2011

High Net-Worth Millennials Focused On Financial Success and Digital Lifestyles, Tuning Out Old Media; Luxury Institute Survey Shows Generation Y Spending Dozens of Hours Online Consuming and Creating Media on Multiple Devices

(NEW YORK) April 5, 2011 – A new survey by the independent and objective New York City-based Luxury Institute shows wealthy individuals 35 years of age and younger avidly consuming a wide range of new media on smartphones and tablet computers, and quickly losing the television, radio and print newspaper consumption habits of their parents. Seventy-percent own smartphones (40% iPhone, 24% BlackBerry) and 23% already have an Apple iPad.

More wealthy Generation Y consumers watch online video (78%) than those who regularly read a printed magazine (76%) or newspaper (68%). Their average of 100 minutes weekly spent watching online videos, combined with 227 minutes spent watching DVR playback, exceeds 289 average minutes watching live television. Internet radio is closing the gap, too, with average listening time of 75 minutes per week, compared to 150 minutes for terrestrial radio.

“This is clearly a tipping point, with the rising generation of wealthy consumers consuming media in vastly different ways than anyone did just a decade ago,” says Milton Pedraza, CEO of the Luxury Institute. “Luxury firms face a challenge to adapt accordingly but also a tremendous opportunity to engage younger customers,” adds Pedraza, noting the propensity of wealthy millennials to create content of their own in the form of blog and video posts, as well as Facebook and Twitter status updates.

For complete details on attitudes, demographics and device ownership of wealthy millennials, visit LuxuryInstitute.com.

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

April 1, 2011

Hermes, Brioni and Versace rank highest in reputation, prestige: Luxury Institute

By Elizabeth Zelesny
Luxury Daily
March 31, 2011

A study by the Luxury Institute found that Hermes, Brioni and Versace rank highest in reputation and prestige compared with other luxury brands.

Respondents ranked each luxury brand on worthiness of a significant price premium, their willingness to recommend it to friends and family and the likelihood of consideration the next time they make a purchase. This was the key finding of the report titled “2011 Luxury Brand Status Index.”

“One key finding is that the classic brands have remained strong,” said Milton Pedraza, CEO of the Luxury Institute, New York. “You can see that these brands are not only classic luxury brands, but large.

“With size, you can survive and thrive during a recession,” he said. “What I would emphasize is that the biggest and best got stronger during the recession.”

The Luxury Institute is a New York-based ratings and research organization.

Hey, big spender

Survey participants comprised a balance of men and women from households earning $150,000 or more with an average income of $271,000 and an average net worth of $2.4 million.

Participants evaluated dozens of luxury fashion and footwear designers on quality, exclusivity, status enhancement and the ability to create special shopping and owning experiences.

Independent French luxury house Hermés earned the top ranking in the women’s category among five luxury retailers in the survey of wealthy shoppers.

Prada received the second-highest ranking in the luxury brand status index for women, according to the Luxury Institute, with Louis Vuitton coming in third.

In the men’s fashion sector, Brioni earned the top ranking in the survey, with Salvatore Ferragamo coming in second and Ermenegildo Zegna finishing third.

Versace, Christian Louboutin and Valentino were ranked the top three luxury brands in the women’s footwear category.

“Brands need to have incredibly long product lines, classic and contemporary,” Mr. Pedraza said. “These brands have both.

“All of these brands have a strong focus and a reasonable level of service, especially for the ultra-wealthy clients,” he said. “One surprise is that Chanel wasn’t in the top three, or even the top five.”

Experience for a lifetime

Mr. Pedraza said luxury brands need to focus and improve their customer experience.

The Luxury Institute recently conducted a study that found that Bergdorf Goodman and Nordstrom score far better than other retailers at having a top-notch overall shopping and customer service experience for their affluent consumers.

Moreover, the Luxury Institute found that Burberry and Bottega Veneta excel at having enthusiastic brand ambassadors in their stores who are interested in helping customers.

Mr. Pedraza said luxury brands must focus on creating loyal clients, especially the young affluent consumers who may not be able to afford luxury products now, but possibly could in the near future.

“That is the Achilles’ heel of many brands,” Mr. Pedraza said. “How they are going to create lasting relationships with up-and-coming consumers.

“Luxury brands need to make sure the up-and-coming tiers of younger consumers become loyal clients in the future,” he said.

http://www.luxurydaily.com/hermes-brioni-and-versace-rank-highest-in-reputation-and-prestige-luxury-institute/