Luxury Institute News

September 28, 2011

Luxury Spending Surge Continues in China Even as Wealthy Throttle Back on Purchases in Europe, Japan and U.S.; Half of Wealthy Chinese Plan to Spend More on Luxury This Year, Compared to Just 6% in the U.S., Japan and Germany

(NEW YORK) Sep 28, 2011- Wealthy shoppers from seven countries around the globe earning at least $150,000 (in local currency) reveal candid attitudes on luxury brands and personal spending plans in the “2011 State of the Luxury Industry: A Global Comparison of Consumers in Top Markets.” The just-completed survey conducted by the independent and objective New York City-based Luxury Institute shows strong increases in luxury spending continuing to come from China, while restraint is more widespread in the U.S., U.K., France, Germany, Italy and Japan.

More than half (57%) of wealthy Chinese shoppers say that the current economic environment has prompted them to spend more on luxury in the past year; 50% plan to boost spending in the next 12 months. This compares to just 10% of the wealthy in the U.S. who have stepped up spending recently and 6% who plan to spend more this year. In the U.S., consumers are twice as likely as they are in China (32% vs. 16%) to have trimmed luxury spending last year.

More than half of wealthy Chinese expect to boost spending on luxury travel, apparel, fitness, jewelry and shoes.

“China is clearly driving growth in global luxury brands,” says Luxury Institute CEO Milton Pedraza. “Exclusivity and prestige continue to be highly prized by wealthy Chinese consumers, even more than in the U.S. or Europe.”

For more details in the complete survey, 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

The Affluent Family | An Emerging Market Segment

By Susan Kime
JustLuxe
September 27, 2011

New research from both Ipsos Mendelsohn and the Luxury Institute display similar trends regarding an emerging luxury market segment: the affluent family. Starwood/St. Regis and Ritz-Carlton have re-sculpted their branding messages in order to attract this group among others, and membership sales of Exclusive Resorts. ER is the largest Destination Club in the world, with approximately 3,400 members. Their new member sales were up 60% in the first six months of 2011, versus the first six months of 2010. A major portion of their member-base is the affluent family.

Ipsos Mendelsohn, in their 2011 Annual Affluent Survey, found this year, that brands marketing to the affluent family have a higher chance of seeing ROI, since the family generally buys many products all at once, particularly in the digital and consumer electronic goods industries. This year was the first time that the affluent family was explored by Ipsos Mendelsohn. Their survey is based on 14,405 representative interviews with adults who have more than $100,000 in annual household income, which collectively represents 58.5 million adults.

Also, according to this research, the affluent family has now emerged as a major marketing segment, due in part to changes observed in the contemporary family dynamic. Purchasing decisions are no longer made by the head of house, but are largely discussed and influenced by the children, especially in the digital and mobile areas.  Mature affluents are looking to their tech-savvy kids for advice on electronic products like mobile phones, tablets and laptops or computers.  Children also have become heavy influencers on vacation locations.

The Luxury Institute’s Wealth Report for September 2011 mirrors many of these findings. The top two luxury categories in which the wealthy indicate plans to spend more are travel (18%) and technology (16%). Driven by the success of the iPad and numerous smartphones, plans to boost tech spending are up from 13% who indicated they would be spending more last year.

Private jet travel has become more popular also, with 12% of respondents planning to boost spending, compared to 9% in 2010. The Luxury Institute surveyed wealthy U.S. consumers earning at least $150,000 per year about attitudes toward luxury goods and services and future spending plans. Two luxury hotel brands, those who historically cater to both the ultra affluent and high-end travel have recently changed their messaging, possibly to attract more of this emerging segment.

At Starwood Luxury Collection hotels, that includes the St. Regis brand, their first new branding campaign in three years encompasses the theme of discovering unique experiences for its guests. The advertisements showcase what a travel experience looks like for a Luxury Collection guest through various photographs in an affluent consumer’s home, with the motto “Life is a collection of experiences. Let us be your guide.”

Also, in a move toward enhancing the positive, memorable experience of the guest, Ritz-Carlton has created a new marketing concept, as it now suggests to its guests to let the brand “stay with them.” With the new campaign, the Marriott-owned hotel chain invites consumers to create memories in Ritz-Carlton properties around the world that will stay with guests long after they leave the hotel. The “Let Us Stay With You” film is already being featured on the branded Ritz-Carlton website as well as on its Facebook page.

In both cases, the focal evolution appears to have moved from outer to inner, instead of externals, stories of hotel histories and their locations, the focus has moved to a deeper dimension: the experience of the guest(s), their needs and wants, and how these luxury brands can fulfill them, creating unique memorable experiences.

Finally, it is important to mention Destination Clubs. I have written about this industry since its inception. This industry has had its ups and downs in the past years, but Exclusive Resorts has emerged as its largest and arguably most visible representative. Like all of destination clubs now extant, Exclusive Resorts has consistently catered to the affluent family and their travel needs. This year, as a validation point to the previous research mentioned, Exclusive Resorts’ growth YTD through June 30, 2011 in new membership sales were up 60% over the same period in 2010. They have added three new destinations this year at St. Andrews, Scotland, Doonbeg, Ireland and Montage, Deer Valley, and have partnered with Delta Air Lines and Delta Private Jets.

And, next week, members will learn about the new accessible events for 2012 that include The Super Bowl, The Final Four, New York Fashion Week, The Daytona 500 and more. ER’s logo is, “There’s No Place Like Together.” Seems to fit well with the current research.

September 23, 2011

Culture that money just can’t buy

Measuring return on investment might be tricky, but the world of finance is leveraging arts sponsorships to reach the super-rich, writes Claire Adler

By Claire Adler
Raconteur Media
September 22, 2011

Financial institutions are increasingly viewing the arts as a pivotal tool for building business relationships. Whether it’s a behind-the-scenes private exhibition tour with crossdressing artist and curator Grayson Perry at the British Museum, courtesy of AlixPartners, or watching a rehearsal of The Marriage of Figaro at the English National Opera and then chatting to director Fiona Shaw, banks, wealth managers and professional service organisations are determined to offer access to experiences money simply can’t buy…

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://np.netpublicator.com/netpublication/n55415154

September 21, 2011

Most Wealthy U.S. Shoppers Plan to Keep on Spending on Luxury Travel and Technology Are the Biggest Beneficiaries, but Jewelry and Antiques Look Vulnerable to Cutbacks

(NEW YORK) September 21, 2011 – The new “State of the Luxury Industry According to U.S. Consumers 2009-2011” survey from the independent and objective New York City-based Luxury Institute reveals that two-thirds of U.S. households earning at least $150,000 per year do not plan to trim spending on luxury purchases in coming months, a three year-high for optimism.

Although 32% of wealthy consumers report spending less on luxury recently due to the economy, that’s down from 37% in August 2010 and 42% in August 2009 who reported cutting back. Furthermore, 10% report boosting luxury spending in recent months, up from 7% who said the same last year.  Many (39%) still report buying what they need instead of what they want, down from 55% who were similarly cautious two years ago.

Good news for hotels and Apple: the top two luxury categories on which the wealthy indicate plans to spend more are travel (18%) and technology (16%). Other notable turnarounds include automobiles, where 11% of the wealthy plan to spend more, up from 8% in 2010.

Jewelry (39%), antiques (37%), custom apparel (34%), art (34%), handbags (33%) and watches (33%) top the list of likely areas for the wealthy to cut.

“Despite all of the turmoil in the economy and markets, wealthy shoppers show remarkable resilience,” says Luxury Institute CEO Milton Pedraza. “Rewards accrue to retailers who focus on providing exclusive objects and experiences with impeccable service.”

For more details and full survey results, 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

September 16, 2011

Luxury Spending Forecast: Good News, Bad News?

By Accessories Staff
Accessories
September 15, 2011

New York—A study of the nation’s affluent consumers released today found they are less likely to curtail—and even spend more—despite the current economic uncertainty and stock market fluctuations.

But should they cut back on spending, jewelry and accessories may likely be among the categories they’ll curtail.

According to The Luxury Institute’s State of the Luxury Industry, the results for August 2011 “paint a far brighter picture than previous State of the Luxury Industry reports” in August 2010 and 2009.

“Compared to 2009 or 2010, fewer high net worth U.S. consumers have plans to curtail spending this year,” the report states. “And many expect to spend much more, especially on travel and technology gear.”

The study, which surveyed affluent consumers earning at least $150,000 a year, found that 32% said they were still spending less on luxury purchases as a result of current economic condition, down from 37% in August 2010 and 42% in August 2009.

“In fact 10% of respondents reported boosting their luxury spending in recent months, up from 7% who said the same thing one year ago,” the study reports.

When asked about future spending, fewer say are will curtail spending, too, about 32%, down from 36% in August last year and 45% in August 2009.

Discounting Luxury Brands?

Which luxury sectors stand to gain by these wealthy consumers? The report says wealthy consumers indicated two top categories: travel (18%) and technology (16%). Other categories with notable turnarounds include automobiles (11%) and private jet travel (12%).

Although there appears to be a spending “retrenchment” among affluent shoppers, jewelry, apparel and accessories categories may be the first victims of any future spending cutbacks. “Jewelry (39%), antiques (37%), custom apparel (34%), art (34%), handbags (33%) and watches (33%) top the list of likely areas for cutbacks,” the survey found. Indeed, about half of the respondents said they would spend “more practically” on luxury items.

The report also found that these high income consumers have a more favorable opinion of the luxury industry than they have had in two years.“On questions of craftsmanship to customer service and the commoditization of luxury, wealth shoppers entertain a more charitable view than they did in 2009 or 2010.” Their chief complaint? 64% says luxury brands’ prices are too high for the value they deliver.

On the subject of discounting on luxury goods, 25% agree that such discount diminish the perceived value of a luxury brand. However, 19% said discounting actually improved their opinions. Another 28% said that heavy discounting boosted their spending while only 12% said they would spend less due to discounting.

Another 16% said they would spend more on discounted luxury items—“far ahead of those 6% who plan to increase spending on full-price luxurgygoods or services.”

About The Luxury Institute

The Luxury Institute, a leading objective and independent global voice of the high net-worth consumer, conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customers experience best practices. In addition, the institute works closely with top-tier luxury brands to transform their organizational cultures into more profitable customer-centric enterprises. The Luxury Institute also operates the LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises. www.LuxuryInstitute.com

http://www.accessoriesmagazine.com/21172/luxury-spending-forecast-good-news-bad-news

September 13, 2011

Supercar mania drives on among the wealthy


Mountains of economic uncertainty around the world would hardly seem to create the frothy time for automakers to roll out new, mega-expensive sports cars.

By Chris Woodyard
USA Today
September 12, 2011

Yet the automotive world finds itself awash in the kind of extreme two-seaters that are so quick, light and expensive that they are called supercars. More than a dozen choices, some costing upwards of $2 million, are here and more are on the way to cater to the fickle rich elite who seem largely immune to economic downturns…

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://www.usatoday.com/money/autos/story/2011-09-12/super-cars/50375454/1