Luxury Institute News

August 31, 2011

Luxury retailers turn to social media for Hurricane Irene

By Rachel Lamb
Luxury Daily
August 30, 2011

Although luxury brands took precautions and prepared for the worst this past weekend, Hurricane Irene did not do much to hamper sales of luxury goods.

Brands have done their best to keep sales going despite the bad weather in the northeast by promoting their ecommerce sites and other online platforms. Others have even reached out via social media to ensure the safety of consumers and to offer valuable emergency resources.

“I don’t think that luxury branded sales were that affected,” said Milton Pedraza, CEO of New York-based Luxury Institute. “If anything, they  just lost a weekend’s worth of sales from local buyers and from tourists.

“There is significant geography where shopping is a large part of culture, but I think that  consumers will make it up,” he said. “There was more of a lag than a foregone sale.”

Boarded up
Luxury brands, most notably New York-based retailers, took advanced precautions by deciding to shut down locations in the Northeast on Saturday Aug. 27 and Sunday Aug. 28 when the storm was supposed to be the worst.

For instance, department store chain Bloomingdale’s posted store hours and property closings on its Facebook page.

Bloomingdale’s also posted a picture of its stores being boarded up in preparation for the storm.

The retailer was joined by Bergdorf Goodman, which announced that it had boarded its windows and would “see consumers on the other side of the storm.”

“Like all messages, [luxury brands promoting] news of a storm has to be relevant,” Mr. Pedraza said. “You can overdo it because customers certainly have a lot more to worry about than luxury in a hurricane.”

However, other luxury brands decided to use the platform to aid their Facebook fans.

For instance, Mercedes-Benz USA posted a link to the Red Cross Web site with a checklist of preparations for consumers to take note of before a hurricane hits.

“If messages are lending a hand with true resources, that is wonderful,” Mr. Pedraza said. “Otherwise, I think that the messages in the height of an emergency are trite and irrelevant.

Shaken, not stirred
Despite the worries from the past weekend, luxury sales are actually doing well.

Retail stocks are up post-Irene, possibly because retailers emphasized ecommerce options despite the closing of physical retail locations.

Although the effects of this storm were less than those of other natural disasters, it is still encouraging that luxury brands stepped up to help.

Brands may not have posted links like Mercedes had, but many of them reached out to consumers to wish them safety and good thoughts.

For instance, in the height of the London riots earlier this month, luxury department stores Harrods, Selfridges and Harvey Nichols used social media to communicate and express sympathy to consumers.

“Disasters are topical,” said Chris Ramey, president of Affluent Insights, Miami. “Facebook and other Internet media are the fastest ways to communicate with clients.”

Luxury brands may feel the need to reach out to affluent consumers because brands see their customers as family, Mr. Ramey said.

Indeed, social media may be a better approach than sending out an email or another form of digital advertising, since that could just alarm or panic consumers.

“It’s about your relationship,” Mr. Ramey said. “Treat your customers with the same care you’d show your family.

“A deepening relationship always benefits the brand,” he said.

August 23, 2011

In-store mobile devices can help employees increase luxury brand CRM

By Kayla Hutzler
Luxury Daily
August 22, 2011

Luxury brands can significantly increase their CRM and deepen customer relationships by enabling employees to use mobile devices and applications in-store.

Brands that implement a mobile strategy for their employees have the ability to cater directly to each customer’s needs and increase customer retention. Mobile is becoming the best way for luxury brands to deliver superior experiences since affluent consumers expect a higher quality of service for the high price-points they are paying.

“Brands should use mobile in the store to help the salespeople collect and use data to create relationships,” said Milton Pedraza, CEO of the Luxury Institute, New York.

“Say the store is empty, employees can use the mobile device to send recent customers information and deals and offer to make them an in-store appointment,” he said.

“Every employee with a mobile device can be far more effective at creating customer relationships.”

Check it out
Luxury brands can use mobile in-store in a variety of different ways that increase the salesperson’s ability to better serve each customer.

“The mobile medium is particularly effective when used as an extension of the luxury sales associate that is capable of synchronizing the on-premise and off-premise experience with the brand,” said Scott Forshay, Dallas-based director of mobile strategy at Morpheus Media, a Createthe Group company.

Mobile devices can be effective for checking inventory without leaving the customer’s side and can also allow salespeople to easily order the item to the store or direct the customer to a nearby retailer that has the product in-stock.

By providing employees with detailed product information at their fingertips, they immediately become experts on every luxury good in the store.

In addition, the salesperson can show the interested consumer any videos or campaigns relating to the product.

Mobile apps can allow salespeople to seamlessly make a transaction without having a customer wait on a register line.

Furthermore, mobile devices can allow salespeople to look up a returning customer so that they can access spending habits and offer appropriate product suggestions.

If a customer chooses to share details such as family members and important dates, employees can also cater direct marketing approaches revolving around birthdays and anniversaries.

“Luxury brands, by and large, are highly personalized, deeply consultative and fanatically service-oriented,” Mr. Forshay said.

“Brands should use the mobile medium in ways that accentuate what makes them, by definition, luxurious,” he said. “It is this innovation that luxury shoppers expect from the brands they most covet.”

Lighting the way
Brands such as Nordstrom, Benefit Cosmetics and Burberry along with many luxury hotels are already using the iPad to increase CRM.

For example, luxury department store chain Nordstrom recently revealed plans to start using iPod touch devices to quickly and effectively help customers check-out and find products in-store.

In addition, Benefit Cosmetics is using an in-store-only iPad app that educates users about services and products through videos, reviews and comparisons, as well as serving as an in-store shopping assistant.

Also, Burberry used the iPad in-store to let VIP customers view a livestream of the Fall 2011 runway and immediately pre-order the items.

Furthermore luxury hotels are using the iPad to help with traveler check-in as well as with concierge and in-room services.

The St. Regis hotel in New York’s e-butler app acts as a virtual concierge for hotel guests, allowing them to browse restaurant, shopping and event suggestions as well as make reservations through the app.

Taking it one step further, The Plaza hotel in New York implemented a digital concierge service that allows guests to order room service, book spa appointments, contact a concierge and make dinner reservations through in-room televisions, laptops and iPads.

Overall, mobile usage in-store is all about increasing CRM and providing a luxurious shopping experience.

“CRM is absolutely critical, especially when there is a fear of an economic downturn,” Luxury Institute’s Mr. Pedraza said.

“Companies that have consumer data and the ability to go out there and build a relationship have an advantage over companies that have no data and are going to have to resort to deep discounts,” he said.

August 22, 2011

Luxury (Now) Within Reach

Makers of high-end goods are trying new tactics to attract budget buyers.

By Kelli B. Grant
August 19, 2011

While the market upheaval and economic uncertainty has encouraged many people to tighten their budgets, shoppers lusting after that “it” bag, a first-class airline seat or a pricey car may now find those luxuries are more affordable than before.

Companies that make or sell high-end goods are increasingly aiming for what they call aspiration buyers — middle-class shoppers who can afford to occasionally splurge. The tactics are vast, including pitching less-expensive product lines, selling overstock online and allowing consumers to buy luxury perks in lieu of earning them. Audi, for example, is rewarding brand loyalty by offering $1,000 to $3,000 cash-back to households that already own an Audi and want another one. In September, eBay  will team up with Nieman Marcus and other luxury e-tailers to sell goods at discounts of up to 65%. And new credit cards from Amercian Airlines  and United offer a cheaper buy-in for perks previously available only to elite road warriors and big spenders. “Luxury has become more democratized these days, and everyone wants access,” says Milton Pedraza, the president of Luxury Institute LLC, a marketing firm.

Click the link to read the entire article which includes additional quotes from Milton Pedraza, CEO of Luxury Institute:

August 10, 2011

Will the European debt crises affect American luxury spending?

By Rachel Lamb
Luxury Daily
August 9, 2011

All luxury marketers will be hit by the debt crises plaguing European countries such as Italy and Spain, but diversified brands that practice customer retention have the best shot of surviving.

Since many luxury brands are headquartered in Italy and Spain, there is a chance that the productivity will be hindered if the countries are not bailed out. Furthermore, affluent consumers in Europe, as well as around the world, could take this as a sign to slow down luxury spending.

“I have one term: customer retention,” said Milton Pedraza, CEO of the Luxury Institute, New York. “The luxury industry loses customers who will not purchase again in the next 10 months.

“Brands need to gear up for a dramatic effort to make sure customers who buy continue to buy,” he said. “Marketers have been negligent in terms of customer retention and they need to get more serious because it may help them thrive in recessions.

“The debts will definitely have some impact, because there is not a question that there will be some economic repercussion not only for Italy and Spain directly, but for the marketers in the European Union.

“Everyone will have to contribute to make sure that not only Spain and Italy, but Ireland, Portugal and Eastern Europe stabilize.”

Shock market
The current economic status of European countries, most notably Italy and Spain, have consumers worldwide worried about their stock portfolios.

This weekend, the European Central Bank indicated that it would intervene more aggressively in bond marketers to protect the two countries and hoped to suppress some of the mounting stress that this is causing consumers.

Even though the affluent likely will not be as affected as mainstream consumers, the lack of money in luxury product-manufacturing companies in Italy and Spain could have a great impact on productivity as well as consumer spend.

“The affluent that are heavily invested in the stock market are likely to take an immediate hit to their personal wealth, which is likely to impact how they spend through the next quarter or so,” said Pam Danziger, president of Unity Marketing, Stephens, PA.

“The hit to wealth is going to have a powerful psychological effect, and that in turn is tied to their spending and indulging on luxury,” she said.

To twist the knife, stocks in the United States continue to slip, adding more worry as rumors of a double-dip recession are getting louder.

Overly-cautious consumers may stop spending to prepare for the hit, leaving luxury marketers with over-stocked stores and empty cash registers.

“The fact that nobody needs luxury means that it is the first place people can cut back,” Ms. Danziger said.

“Based upon our read of the luxury consumers’ confidence, which took a really strong dip in the third quarter, we expect spending on luxury to be off over the next months,” she said.

Haves and have lots
Since it is likely that the fickle economy will scare customers into safe spending, luxury brands need to work extra hard on holding on to the customers they already have.

“It will affect the luxury market somewhat, but what is important to note is whether or not it is fair, the world has bifurcated into two sections – one that is more affluent and one that is mainstream,” Luxury Institute’s Mr. Pedraza said.

“The very wealthy world is having a pretty good run,” he said. “The luxury market is not immune, but it is resilient and its customers will still demand luxury at a very fast pace.”

While all sectors will be affected, some will be more than others.

For instance, jewelry and watches may suffer more than apparel and handbags because they are less necessary. Travel will most likely remain resilient and gadgets will continue to boom through the entire process, per Mr. Pedraza.

However, experts believe that the damage will be minimal compared to what it could be.

“The brands that have the best chances are those with diversified lines,” Mr. Pedraza said. “If you sell fragrances, jewelry, apparel, skincare and makeup, you shouldn’t have any problem holding onto consumers.

“With the full range of products, you can cross- and upsell customers into all categories,” he said.