Luxury Institute News

June 18, 2011

Wealthy Consumers From China And Japan Rank Luxury Brands In Four Categories; Lots Of Love In Asia for Chanel, Hermès and European Stalwarts

(NEW YORK) June 17, 2011 – A new series of Luxury Brands Status Index (LBSI) surveys from the independent and objective New York City-based Luxury Institute reveals firsthand impressions and rankings of dozens of luxury brands by high net-worth consumers from Japan and China. Respondents were 21 years of age and older, earning the equivalent of at least $185,000 per year—one million Chinese renminbi or 15 million Japanese yen.

Wealthy Japanese and Chinese shoppers rated each brand on quality, exclusivity, social status and overall ownership experience. Also considered were price worthiness, willingness to recommend the brand and likelihood of purchase.

Based on overall LBSI scores, the top luxury brands rank as follows:

  • Hotels
    • China: Fairmont Hotels & Resorts; JW Marriott; Aman Resorts
    • Japan: Ritz-Carlton; Orient-Express Hotels; Aman Resorts
  • Handbags
    • China: Chanel; Louis Vuitton; Dior
    • Japan: Hermès; Chanel; Louis Vuitton
  • Women’s Fashion
    • China: Chanel; Dior; Hermès
    • Japan: Hermès; Chanel; Louis Vuitton
  • Men’s Fashion
    • China: Giorgio Armani; Versace; Brioni
    • Japan: Hermès; Louis Vuitton; Burberry

“European luxury brands are warmly received by wealthy shoppers throughout Asia,” says Milton Pedraza, CEO of the Luxury Institute.  “Japan’s market is more mature and surprisingly resilient so far in the wake of the tsunami and quake, while growth stays red hot in China.  Firms need to know where they
rank.”

For greater details on brand rankings in each category and other purchase considerations of wealthy Japanese and Chinese consumers, 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

June 8, 2011

Wealthy Millennials Define Luxury Brands In 16 Categories; Craftsmanship And Quality Still Count, But Loyalty Programs, Special Offers And Personalized Service Rise In Importance; Is Apple The New Dom Pérignon?

(NEW YORK) June 8, 2011 – High net-worth consumers 35 years of age and younger define luxury brands much more in terms of loyalty programs and unique offers than do their older wealthy cohorts, according to Luxury Brand Marketing to Wealthy Millennials,” a new survey by the independent and objective New York City-based Luxury Institute.  “Generation Y” individuals born in 1975 and later are also much more likely to have made a luxury purchase in the past year than 35+ wealthy consumers (83% vs. 66%).

Apple, cited without prompting by 45% of wealthy millennials as a luxury brand, tops all other brands, followed by Rolex, Coach and BMW, each offered by 30% of respondents as examples of luxury brands. Just 5.2% cited the iconic Dom Pérignon as a top-of-mind luxury brand, compared to 12% for those older than 35.  In spirits, the most popular brand is the relatively young Grey Goose vodka.

“Wealthy millennials view luxury much more for the experiential factors associated with it, rather than relying on brand heritage or residual prestige earned long ago,” says Milton Pedraza, CEO of the Luxury Institute. “The good news for luxury firms is that these tech savvy shoppers want to interact with them, not only in stores but also online and on mobile devices.  This builds richer experiences and deeper relationships.”

For greater details on brand perceptions, awareness and what matters most to wealthy millennials in each of 16 luxury categories, please contact Martin Swanson, VP of Luxury Institute.

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

June 6, 2011

Is the luxury footwear arms race on?

By Rachel Lamb
Luxury Daily
June 3, 2011

With the recent acquisition of luxury footwear company Kurt Geiger by Jones Group following the sale of Jimmy Choo to Labelux last month, the two massive conglomerates are being presented with new opportunities that rival fashion empires LVMH Moet Hennessey Louis Vuitton and Pinault-Printemps-Redoute.

Although this does not seem to be a typical arms race of footwear giants, both conglomerates are clearly decisive when choosing brands to add to their respective portfolios. Additionally, both Jones and Labelux are most likely to be watching one another quite closely as the market continues to improve and acquisitions become more likely.

“You still have a situation where many small but high-growth potential luxury brands are available, especially with the economy and BRIC markets put together which are giving tremendous growth opportunities,” said Milton Pedraza, CEO of the Luxury Institute, New York.

“These two parent companies will be the LVMH and PPR equivalents and have a portfolio where one or few brands become a massive hit and it can have very significant returns that drown out the others that don’t do so well,” he said.

“What you’re seeing is a very active market in acquisitions.”

The mergers
Jones Group announced yesterday that it is buying British retailer Kurt Geiger for $350 million from Graphite Capital.

Kurt Geiger is one of the leading footwear maker in Britain, selling its nine brands at high-end department stores such as Selfridges and Harrods.

The brand will join companies such as Stuart Weitzman, Givenchy, Judith Jack, Jessica Simpson and Anne Klein in the Jones Family.

Meanwhile, upscale footwear manufacturer Jimmy Choo was sold to German luxury goods company Labelux last month.

At the time, Jimmy Choo was said to have been valued between $650 and $895 million.

Labelux owns Derek Lam, Bally, Zagliani and Solange Azagury-Partridge.

“Public and private often organizations operate and exist for different reasons,” said Chris Ramey, CEO of Affluent Insights, Miami. “Public companies work to increase stockholder value by nurturing the value of their brands.

“Historically we’ve found that private equity groups buy properties to sell them at a profit,” he said.

Just as luxury conglomerates LVMH, PPR, Richemont and Prada Group are acquiring other brands at the same time, their rivalry is not a battle.

“There is a label of expertise that the Labeluxes of the world have that [small] luxury and premium brands really need in order to grow,” Luxury Institute’s Mr. Pedraza said.

Marketing
There does not seem to be a trend with other acquisitions that suggest brands will lose their identities or drastically change their marketing efforts.

For example, even though Christian Dior has been owned and controlled by LVMH since 1984, it still retains the classic and timeless advertisements, products and image as it did when it was first conceived earlier in the century. That portral is classic: elegant women wearing or using Dior products.

Kurt Geiger’s marketing consists of digital, out of home and print media, especially in publications such as The New York Observer and Glamour.

The ads are slightly risque and usually just show the shoes.

Jimmy Choo’s ads, on the other hand, consist of women in brightly-colored clothing against bold backgrounds.

Also, Jimmy Choo runs extensive marketing, including print ads in Vanity Fair and Vogue and out-of-home and online ads.

Only time will tell if these brands will control their advertising techniques under the new leadership.

“Some holding companies have tremendous expertise and position that a lot of small premium brands don’t have within their ranks,” Mr. Pedraza said. “Every time conglomerates bring someone in their ranks that become a great marketer, they are squashed and removed from the ownership.

“In order to survive with a new leader, you need to be brand-centric and customer-centric,” he said. “This is what conglomerates such as Labelux are designed to do.”

The competition
As in the fashion world, there are conglomerates and there are independents.

From the outside, it does not seem as though these acquisitions are as emotional as, say, LVMH’s lust over scarf and handbag maker Hermes, but in the world of fashion politics, feelings cannot get in the way.

“Acquisitions are about economies of scale,” Affluent Insights’ Mr. Ramey said. “Brands may be about emotion, but financial organizations are not.”

Furthermore, acquisitions do not always mean that brands will suffer.

On the contrary, luxury and fashion houses are usually picked up when they are on the verge of bankruptcy or are having trouble surviving.

Footwear powerhouses such as Tod’s and Manolo Blahnik are self-governing – for now – but can independents survive in a world of luxury conglomerates?

“Companies with money like Labelux are looking to buy, and they are very good at doing what they do and they tend to manage brands very well,” Mr. Pedraza said. “These two brands need to become strategic in their growth and brand communications, especially needing to make sure that they build relationships with top-tier products and find out which products resonate with consumers in the market.

“Resources such as these in the luxury world are very scarce,” he said. “If some resources grow independently they can become scattered and although they will be large, they are undisciplined, unwieldy and sometimes unprofitable.

“Being under the care of a conglomerate can add skill, technique and knowledge to the luxury label, especially in terms of marketing and knowing the customer.”

http://www.luxurydaily.com/are-jones-group-and-labelux-footwear%E2%80%99s-lvmh-and-ppr/

June 3, 2011

Fear of What’s in Store

By Romy Ribitzky
Portfolio
June 3, 2011

The month of May isn’t traditionally a good one for retailers, and this one wasn’t an exception, as many chains open for at least one year reported muted sales. Bad weather and rising concern over volatile energy prices kept consumers at home.

It didn’t help that the Easter holiday fell in April this year and that Mother’s Day was a lackluster gift-giving holiday with mom not getting expensive gifts overall.

Of 24 retailers, about 60 percent missed expectations and 40 percent beat expectations, according to a poll by Thomson Reuters.

Even typical trend-bucker Target felt some weakness. “Our guests continue to shop cautiously in light of higher energy costs and inflationary pressures on their household budgets,” Target’s CEO Gregg Steinhafel told the Associated Press.

However, at the other end of the spectrum, high-end luxury sales, jewelry, and e-commerce enjoyed strong growth in May, as did the hotel and restaurant industries, according to the MasterCard Advisors SpendingPulse report, a monthly macroeconomic indicator that measures national retail sales per sector.

But perhaps the best standout continues to be e-commerce. Now in its 22nd month in positive territory, and posting its seventh month of double-digit gains at 15.9 percent, e-commerce sectors continue to dominate across the board says Michael McNamara, Vice President, Research and Analysis for MasterCard Advisors SpendingPulse in a statement.

Luxury-hungry Millennials may be driving that growth, finds the latest report from the New York-based Luxury Institute. “Wealthy Americans 35 years of age and younger are avid consumers of a wide range of new media on smartphones and tablet computers,” according to the report. “Seventy-percent own smartphones (40 percent iPhone, 24 percent BlackBerry) and 23 percent already have an Apple iPad.” Their tendency to use their tech toys to make purchases on the go is likely to only continue driving up e-commerce sales. And once mobile payment platforms truly become integrated into mainstream retail, expect Millennials to largely dominate how—and where—retailers spend their ad dollars.

http://www.portfolio.com/views/blogs/executive-style/2011/06/02/same-store-sales-muted-in-may-but-ecommerce-shines#ixzz1OFHAnQWu

June 2, 2011

The Survivor

By Ruth La Ferla
New York Times
June 1, 2011

Call him a genius. Call him a junkie, an original, a shameless copycat, a winsome recluse, a brazen exhibitionist. Marc Jacobs has heard it all. And he has absorbed it all with a hard-won equanimity…

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://www.nytimes.com/2011/06/02/fashion/marc-jacobs-the-survivor.html?pagewanted=1&_r=1