Luxury Institute News

May 31, 2011

China’s Super Rich Go Gaga Over Prada

By Blue Carreon
Forbes
May 27, 2011

“Why buy just the handbag when you can buy the company.” This could be the growing sentiment among Hong Kong’s ladies who lunch once Prada starts selling its shares to the public. What better sartorial status symbol is there than the ability to proclaim that you own part of one of the most iconic luxury brands in the world?

Everything seems set for the release of Prada’s shares to the public on June 14. This after several failed attempts at an IPO in the last decade.

Financial experts and luxury brand strategists view Prada’s decision to list in Hong Kong as an affirmation of the growing importance of the China market and its people’s insatiable desire for luxury.

“It means that Hong Kong is seen as a very important exchange and source of capital for global brands. This only bolsters Hong Kong and China’s credibility as a financial capital. Prada and its advisors probably saw more potential enthusiasm and valuations from eager Asian investors,” says Milton Pedraza, founder and CEO of the Luxury Institute, a research firm devoted to studying the behaviors of high net-worth individuals.

“China is a tremendously important market for the company, as well as Asia broadly. Listing in Hong Kong is profile-raising in the region. It will attract meaningful interest from Asian institutions as well as retail investors. The view is that the Hong Kong market could attract a higher valuation versus listing in European markets,” says an industry expert based in Hong Kong, adding, “This will clearly create more focus and attention on the Hong Kong market as a primary venue for luxury brands to list, be they Asian brands, or global companies with either a meaningful component, or at least the aspiration of sales and growth to be generated from China. There is no doubt Prada will be the first of many brands to pursue a Hong Kong listing.”

This move from Prada is sure to be emulated by other brands that want to gain a stronger foothold in the growing Chinese economy, especially when the initial figures and the performance of its shares are released. The luggage company Samsonite is set to offer shares in Hong Kong on June 16.

But how does this affect the Chinese? Will China’s luxury goods consumer lap up Prada shares as they do Prada bags and shoes? Will the Chinese’s love for luxury goods translate to wanting to invest in a luxury brand? “Chinese investors want to be global investors and they want to take majority shares in global brands,” says Patricia Pao, CEO of the brand strategy and consulting firm Pao Principle. “The Chinese cannot create brands and they recognize this. This is why I think they are looking to actively buy them.”

Studies done by the Pao Principle concluded that the Chinese consumer likes to stand out from their peers hence their desire to buy multiple items especially those that are limited edition pieces. Is there a better way to stand out from other luxury goods consumers than owning a piece of that designer Prada pie?

http://blogs.forbes.com/bluecarreon/2011/05/27/chinas-super-rich-go-gaga-over-prada/

May 20, 2011

Maintenance of customer relationships key concern at Luxury Interactive conference

By Rachel Lamb
Luxury Daily
May 19, 2011

The chief expectation for attendees at the Luxury Interactive Conference: Integrating Your Marketing and Branding Strategies Globally May 24-25 are real-life case studies of luxury brands, whose examples will help the industry to more effectively navigate in the future.

This invitation-only event at the Millennium Hotel London Mayfair, London, will feature executives from upscale brands such as LVMH’s Tag Heuer, Alfred Dunhill, Polo Ralph Lauren and Christian Dior. Luxury analysts will also attend and speak to explain what is moving the needle in the luxury industry today.

“We launched the event in 2007 and have experienced a tremendous amount of change in the industry throughout the years,” said Seth Adler, general manager of Luxury Interactive, New York. “We’re excited for the 2011 incarnation of the event as the industry seems to be in a much healthier place than the recent past.”

Emerging  trends
At last year’s show, much of the hubbub was around social media marketing.

This year, Shenan Reed, founder and managing partner of Morpheus Media and a host at the conference, hopes that the show will focus on digital trends.

The United States is further ahead in digital marketing than Europe, per Ms. Reed.

Therefore, this conference may encourage new trends such as search engine optimization or Web site development to emerge in Europe.

“The industry has woken up to digital marketing in the last year, and we’ve made some great strides,” Ms. Reed said. “Banner ads are making a huge comeback because they’re so much more developed than what they have been in the past.

“We can make an entire experience for a customer through a banner ad without having them leave the page,” she said.

Meanwhile, social media is continuing to be a beacon of customer interaction, per Milton Pedraza, CEO of the Luxury Institute, New York.

“I’m looking forward to hearing about the digital space in luxury and how effective brands’ Facebook and Twitter presence are,” Mr. Pedraza said. “It’s going to be interesting to see how it is generating sales, building long-term loyalty and what functionality is necessary and what is just bells and whistles that customers don’t want.”

The industry ahead
There have been many reports that suggest affluent consumers are back, with open wallets at the ready.

However, do luxury brands know what to do with this newfound willingness to spend?

“The market is very healthy in terms of growth with regards to BRIC [Brazil, Russia, India, China] markets, but we have some challenges in the developed markets such as the U.S. and in Europe,” Mr. Pedraza said. “The service levels and relationship building capabilities leave a great deal to be desired.

“There is a lot of healthy activity, but there are real challenges and opportunities to address,” he said.

Moreover, Ms. Reed believes that consumers are more eager than ever to start splurging on luxury goods.

The Luxury Interactive show will be sure to address this concern, as well as make it easier for brands and consumers to interact.

“Real-life case studies are so important because everyone gets this wonderful, tactical information and it’s one of the great attributes of a conference like this,” Mr. Pedraza said.

“I expect a lot of open and friendly debates on the realities of the industry right now and the results of things that have really happened from actual case studies,” he said. “I expect a lot of best practice and honesty to help us better traverse the landscape better than we’re doing now.”

Tactics such as a better-developed Web site so that customers can easily find products or more mobile awareness is definitely something that could serve both the luxury industry and its consumers, per Ms. Reed.

Still, she believes that most brands are beginning to acknowledge these concerns and are taking marketing into their own hands.

“As far as consumer and profitability going up, I’m seeing positive things from luxury brands,” Ms. Reed said. “A lot of affluent consumers didn’t get hit as hard as any of them expected to be, and those that did get dinged are back and with a vengeance.

“I heard someone say ‘I’m too poor to buy cheap products,’” Ms. Reed said. “I truly believe that luxury brands are benefitting from this new wave of thinking.”

http://www.luxurydaily.com/luxury-interactive-conference/

May 19, 2011

Young Affluents Ditch Traditional Media

Print readership still high among affluents overall

eMarketer
May 18, 2011

Affluents’ relationship with traditional media is a bit of a mixed bag, according to February 2011 data released by The Affluence Collabrorative. And among the younger members of the wealthy set, that mix may be turning more negative than positive.

On the one hand, affluent internet users are still big fans of print media. More than 20% of those with incomes of at least $500,000 spent 11 or more hours per week reading newspapers. This compared with just 6% of the general population. Affluents with incomes between $200,000 to $500,000 landed in between, at 9.1%.

Affluents’ consumption of magazines also outstrips that of the general population. According to the same survey, 22% of affluent internet users earning $500,000 or more read magazines for 11 or more hours per week, contrasted with 4.5% of the general population. Only 11.5% of those affluents “rarely or never” read magazines, while more than 30% of the general population said the same. As above, affluents with incomes of $200,000 to $500,000 fell in between the two extremes.

Television is a different story. Affluents show a much lighter consumption pattern than the general population. Nearly 40% of the general population watched 21 or more hours per week of television in February 2011, compared with 21.5% of the highest-income respondents. More than 40% of affluents in both groups watch 10 or fewer hours of television a week, compared with 26.5% of the general population.

According to April 2011 data from the Luxury Institute, high-net-worth millennials (ages 35 and under) are replacing both television and print with digital media faster than their older financial peers. Their combined average weekly time spent with online video (1 hour 40 minutes) and DVR (3 hours 47 minutes) was greater than the 4 hours 49 minutes spent watching live TV. Watching online video (78%) was more popular among wealthy millennials than reading magazines (76%) or newspapers (68%).

“This is clearly a tipping point,” said Milton Pedraza, CEO of the Luxury Institute. “The rising generation of wealthy consumers [are] consuming media in vastly different ways than anyone did just a decade ago.”

Luxury marketing requires a balancing act, straddling old and new media. Targeting affluent internet users means meeting both the expectations of an older audience still heavily dependent on print, while reaching out online to the next generation of affluents who are going all-digital.

http://www.emarketer.com/Article.aspx?R=1008393

Sell Your Sole

Christian Louboutin’s red lacquer sole is even more valuable than you think

By Robert Klara
Adweek
May 18, 2011

You’re not likely to quicken the pulse of many fashionable women by mentioning Registration No. 902955, Pantone 18.1663TP, Class 25. But you’ll probably get much further by translating what this identification code—currently in the files of the World Intellectual Property Organization’s headquarters in Geneva—means to female shoppers around the world: a pair of Christian Louboutins.

More precisely, a pair of Louboutins with a red-lacquer sole. Infact, there is no other kind. The chic Parisian cobbler first slapped alittle red paint on the bottoms of his pumps
and platforms back in1993. Since then, his irreverent designs have used everything from toundra fur to blue Austrian crystals. But it’s those shiny, inevitable red soles that have become a veritable trademark.

Make that a literal trademark. Louboutin’s attorneys secured the rights to the red-lacquer sole in 2008, both in the U.S. and in the 75 other countries that observe WIPO’s conventions. It’s just too bad the designer waited so long, because—as the selection on page 2 demonstrates—several other brands have been making red-soled shoes, too. Last month, Louboutin put his foot down, filing separate suits in Manhattan Federal Court against Yves Saint Laurent and Carmen Steffens for their forbidden use of la semelle rouge.

While neither Louboutin nor YSL responded to requests for comment, Mark Willingham, president of U.S. operations for Carmen Steffens, says red is theirs to use as much as green or purple or canary yellow. “Over the years, we’ve incorporated almost every color imaginable into our footwear soles—including various tones of red,” he says. “It’s part of our brand’s DNA.”

So we’ve obviously got a fight brewing here, and despite how petty it might look, the dispute actually reaches to the core of what it means to create a brand. Alan C. Drewsen, executive director of the International Trademark Association, points out that if Louboutin fails to protect his trademark now, imitators may eventually leave him with nothing to protect at all. “Aspirin and Cellophane were once trademarks that weren’t adequately defended,” he says. “Now they’re generic.” The other core component is color itself: How a certain hue, used in a certain way, can create an icon of fashion.

According to Michael Shaw, a patent attorney with the London intellectual-property firm of Marks & Clerk, it’s only been possible for a brand to trademark a color since 1996, and it’s never been easy. “It [must] be shown that the color has acquired a highly distinctive character as a result of substantial use,” he says. (Rare examples: Tiffany & Co.’s trademark of the robin’s egg blue gift box and Owens Corning’s mark for pink fiberglass insulation.) “Generally speaking, colors don’t function as trademarks,” adds New York Law School professor Dan Hunter. “But they can with enough use, enough marketing, and enough consumer recognition. Which is what happened with red-soled Louboutin shoes.”

But in Louboutin’s case, there’s an X factor that goes beyond what his lawyers will have to prove in court (which is that the competing red soles are likely to cause consumer confusion between the brands). Women don’t drop $1,000 on a pair of CLs because they happen to like red under their feet; they do it because they like what that red represents. “I talked to a very successful businesswoman about this the other day,” relates Milton Pedraza, CEO of the Luxury Institute. “And she said, ‘Of course that red sole matters. It signals to the world that I wear Louboutins—a top-of-the-line shoe. It [says] I’m a successful woman, and I bought these myself, that I’m powerful—and still feminine.”

Christian Louboutin probably didn’t set out to create a product with socio-sexual overtones as complex as that, but it’s part of what he’s defending in court right now. “That sole has a lot of messaging embedded in it,” Pedraza says. “It’s about the emancipation of women in the corporate suite.”

http://www.adweek.com/news/advertising-branding/sell-your-sole-131602?page=1

May 13, 2011

Jewels That Look Good Enough to Eat

By Victoria Gomelsky
New York Times
May 12, 2011

MUNICH – The British television chef and food writer Tamasin Day-Lewis was intrigued last summer when Hemmerle, the famed Munich jeweler, asked her to collaborate on a book of recipes.

The result, “Delicious Jewels,” published this month by Prestel, is an illustrated cookbook centered on 12 vegetables featured in a newly introduced Hemmerle collection…

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://www.nytimes.com/2011/05/13/arts/13iht-acaj-jewelry-food13.html?_r=1

How Much Longer Until the Louboutin Love Dries Up?

By Lauren Covello
FOXBusiness
May 12, 2011

…While it’s impossible to say the brand would have failed had Louboutin stuck to a traditional sole, it’s fair to say that the move has been critical in Louboutin’s branding strategy.

“The brand and that sole are one in the same,” says Milton Pedraza, CEO of independent research firm The Luxury Institute, who says the decision to turn the bottom of the shoe into a focal point was brilliant. “To go with red, with all that implies, is a wonderful carving out of uniqueness in something that had no meaning whatsoever.”…

Click the link to read the entire article which includes several additional quotes from Milton Pedraza, CEO of Luxury Institutehttp://www.foxbusiness.com/personal-finance/2011/05/12/longer-louboutin-love-dries/#ixzz1MEv7p374

May 10, 2011

High Net-Worth Investors Weigh In On Wealth Managers; Luxury Institute WealthSurvey Shows Bigger Not Better As Boutiques Dominate In Brand Status But Big Firms Remain Popular

(NEW YORK) May 10, 2011 – Two new pieces of wealthy investor research released today by the independent and objective New York City-based Luxury Institute show wealthy U.S. investors with income of at least $200,000 per year and net worth of $5 million to have a dim view of Wall Street but extreme loyalty to their primary advisors.

In the 2011 Wealth Management Client Experience survey, wealthy investors say that the securities industry is reluctant to punish those who commit wrongful acts (43%), driven by greed (38%) and slow to disclose conflicts of interest (32%).  Nonetheless, there’s resistance to change with 45% of high-net worth investors spending at least 10 years with their advisor.

More than one-third (36%) of these investors use a full-service broker as primary advisor, while 28% use an independent advisor and 12% use a private bank.  Morgan Stanley, Merrill Lynch and Wells Fargo are the top three primary wealth managers to the wealthy.

In the 2011 Luxury Brand Status Index (LBSI) wealth management survey, clients ranked national firms on quality, exclusivity, social status and overall client experience.  Atlantic Trust Private Wealth Management earns top honors (6.96), followed by Glenmede Trust (6.78) and Rockefeller Wealth Management (6.67).

“Wealthy clients want to stay loyal to their advisors,” says Milton Pedraza, CEO of the Luxury Institute, “It’s up to these firms to validate that loyalty.”

More details, broken down by respondents’ age, gender income and wealth, are available to journalists and upon request.

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

High Net-Worth Consumers Pick Luxury Leaders And Laggards; Wealthy Shoppers Rank Watches, Jewelry And Ultra-Luxury Autos In Luxury Institute WealthSurvey

(NEW YORK) May 10, 2011 – The independent and objective New York City-based Luxury Institute today releases the 2011 Luxury Brand Status Index (LBSI) survey of wealthy U.S. consumers, offering firsthand perspectives in three rapidly growing luxury categories: watches, jewelry and automobiles selling for $100,000 and up.

Consumers earning at least $200,000 a year rated each brand on quality, exclusivity, social status and overall ownership experience. They also rated brands’ price worthiness, their willingness to recommend it and the likelihood they’ll buy it next time they make a purchase in the category.

Here are the top brands in each category based on composite LBSI score (1-10):

  • Watches
    • Blancpain 8.35
    • Rolex 8.01
    • Vacheron Constantin 7.85
  • Jewelry
    • Graff 8.38
    • Buccellati 8.19
    • Asprey 8.05
  • Ultra-Luxury Autos
    • Maybach 8.44
    • Bentley 8.32
    • Bugatti Veyron 8.22

“Overall LBSI scores yield accurate measures of brand prestige but actual buying behavior and recommendations of wealthy consumers tend to favor brands that are more practical, even if less exclusive,” says Milton Pedraza, CEO of the Luxury Institute, “For example, BMW and Mercedes are the two most frequently owned auto brands and those most likely to be recommended to family and friends, but the $2.6 million Bugatti Veyron has far more exclusivity.”

More details from the proprietary Luxury Brand Status Index (LBSI) survey, broken down by respondents’ age, gender income and wealth, are available to journalists and upon request.

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

May 9, 2011

In fashion, the brand plays on

Sarah Burton’s smooth succession at Alexander McQueen reminds us that fashion houses are bigger than their designers’ personalities.

By Booth Moore
Los Angeles Times
May 8, 2011

Any doubt that there would be life for the Alexander McQueen brand after the death of its founder should have vanished over the last two weeks. The hoopla surrounding the opening of the “Alexander McQueen: Savage Beauty” exhibition at the Metropolitan Museum of Art in New York, and the revelation that his successor – Sarah Burton – designed Catherine Middleton’s wedding gown, were a one-two punch for a brand that could easily have stumbled after McQueen’s suicide at age 40 in February 2010…

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://www.latimes.com/features/image/la-ig-mcqueen-20110508,1,4121851.story

May 4, 2011

The Tastemakers

How Generation Y is helping to save luxury brands

By Fiona Soltes
Stores
May 2011

In the first quarter of 2011 alone, the British luxury brand added more than 600,000 “likes” to its Facebook page. At that rate, it’ll reach 10 million by the middle of next year…

…Milton Pedraza, CEO of research firm Luxury Institute, says “legacy” products are key, and that’s where luxury brands are gaining ground. Millennials typically view expensive purchases as necessary investments in themselves – falling more into the “need” than the “want” category – but “people still don’t spend as much on luxury as they did before,” he says…

Click the link to read the entire article which includes several additional quotes from Milton Pedraza, CEO of Luxury Institute: http://www.stores.org/STORES%20Magazine%20May%202011/tastemakers

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