Luxury Institute News

September 22, 2012

Consumers’ Expectations High for Luxury Brands on Mobile

The highest percentage of high-end consumers expect luxury apps to include a loyalty program

eMarketer
September 21, 2012

Luxury brands have been slow to the mobile party, with marketers steering clients toward traditional brick-and-mortar locations where products could be displayed in elegant surroundings and customers were treated to an impeccable shopping experience. But luxury brands are making up for lost time, according to a new eMarketer report, “Luxury Marketing: Recreating the One-on-One Experience with Mobile.”

Click the link to read the entire article: http://www.emarketer.com/Article.aspx?R=1009366&ecid=a6506033675d47f881651943c21c5ed4

September 18, 2012

Luxury Institute CEO on Why You Must Empower, Educate & Mobilize Sales Forces

By Kelly Hushon
The eTail Blog
September 17, 2012

Milton Pedraza, CEO at The Luxury Institute, says we should be providing just as much information to the sales professional as we do to the customer. Makes sense. Somehow many retailers still aren’t doing that.

At a presentation he gave at eTail Europe this past June, Pedraza used Apple as an example. The company empowered its sales force by arming them with mobile devices that allowed them to interact with customers more efficiently and personally. But that’s just the beginning.

When retail stores are less full, Pedraza says there is a great opportunity for sales professionals to work on relationship building with their customers, and they can do so if they are given mobile devices with minimal functionality that allows them to reach out to the clientele they already have through email and other forms of mobile communication. Sales professionals can reach out to customers and nurture relationships in a way that scientific algorithms and data mining can’t compete with because, quite simply, they’re not as good as human beings.

It might seem radical – you might be thinking, “So you’re asking me to give my sales person in my store a mobile device and let them openly and directly email customers? NO WAY!”

According to Pedraza, it doesn’t have to be so scary. The two keys to doing this successfully are:

1. Hire the right people. Hire people who share your customer centric values. If they are selfish, they should work elsewhere.
2. Educate, educate, educate. And add to that Empower; use incentives that will empower them to build relationships with their customer base.

So why haven’t more retail operations done this already? Pedraza says it’s because it’s easier to create a technology app than it is to face the idea of finding the absolute best people, training them and paying them properly. He’s convinced though, that if we do this, it will pay off.

Customers who have admitted having a good relationship with a company and/or its sales force have been proven to spend more wallet share with said company.

Click on the link below to view the brief video of Luxury Institute CEO, Milton Pedraza, and hear more about why this idea works – and why, if you’re not already – you should be doing it:
http://www.theetailblog.com/featured/ceo-the-luxury-institute-on-why-you-must-empower-educate-mobilize-sales-forces-now/

September 14, 2012

In China, Bikes Shed Their Working-Class Roots

By Debra Bruno
Wall Street Journal
September 13th, 2012

BEIJING — Yu Yiqun sees the bicycle as the ideal form of transformation — and not because he can’t afford a car.

In fact, the 40-year-old, who works as a creative director at Geogrum Advertising, owns 21 bikes, including high-end brands like Moulton, Cervélo and Colnago. “You need different kinds of bicycles to ride in different kinds of environments,” he says.

Mr. Yu has spent as much as 110,000 yuan (more than $17,000) on a bike and considers their versatility an advantage over cars. “People in Beijing should update their ideas,” he says.

Click the link to read the entire article including quotes from Luxury Institute’s CEO Milton Pedraza:
http://blogs.wsj.com/scene/2012/09/13/in-china-luxury-cycles-help-bikes-shed-their-working-class-roots/

September 12, 2012

In Asian Luxury Hotels, Wealthy Chinese Love Lodging With Hyatt And Marriot, But Japan Prefers Putting On the Ritz

(NEW YORK) September 12, 2012 – U.S. hotel operators prove popular among wealthy travelers in Asia’s two biggest markets, according to two new Luxury Brand Status Index (LBSI) surveys of affluent Chinese and Japanese by the independent and objective New York-based Luxury Institute. Japanese travelers earning at least 15 million yen per year ($190,000) evaluated 20 luxury hotel brands, and Chinese consumers with minimum annual income of one million yuan ($157,000) considered 26 luxury-lodging names.

Wealthy respondents rated hotels 1-10 on criteria including quality of accommodations, exclusivity, degree of status enhancement and ability to deliver special guest experiences.  They also indicated which hotel brands they planned to stay with this year, and whether they’re willing to pay premium prices or to recommend a brand to people close to them.

In China, St. Regis (8.41) earns the highest LBSI score, but the JW Marriott (36%) and Grand Hyatt (34%) were most frequently visited in the past year by wealthy Chinese travelers and are the two hotels where they plan to stay next. Along with InterContinental, Marriott and Hyatt are also the two most likely brands to receive favorable recommendations from wealthy Chinese travelers.

In Japan, Ritz-Carlton ranks at the top for both popularity and prestige. Ritz earns the second-highest (7.62) LBSI score, just behind Peninsula Hotels (7.66), but it is deemed the hotel most worthy of a price premium.  Ritz-Carlton is also the most popular choice for the next hotel visit.

“Luxury hotels don’t achieve consistently superior ratings by accident,” says Luxury Institute CEO Milton Pedraza. “Standards, systems and training underpin excellence in any service business, especially luxury.”

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.

Ralph Lauren And Calvin Klein Are The Most Popular Fashion Brands For Wealthy Shoppers, But Women See More Prestige In Chanel, Vuitton and Prada; Men Prefer Italian.

(NEW YORK) September 12, 2012 – Men and women earning at least $150,000 a year shared detailed opinions on 30 Ready-to-Wear luxury fashion brands in the latest Luxury Brand Status Index (LBSI) survey from the independent and objective New York-based Luxury Institute. LBSI scores comprise average (1-10) scores on product quality, customer service, social status and ability of the brand to deliver special customer experiences.

Chanel earns the highest LBSI score (7.49) from women, ranking comfortably above Louis Vuitton (7.29) and Prada (7.21). Chanel is also the leading brand for delivering the best customer experience, and the one most deserving of charging premium prices.

Among high-income men, the highest ranking brands are three from Italy: Canali (7.84), Brioni (7.80) and Ermenegildo Zegna (7.72). Canali earns the highest overall rankings for product quality and service experience, and it’s one of the top three brands most deserving of charging premium prices, along with Zegna and Brunello Cucinelli.

Brand prestige and popularity are two different matters. The top two brands purchased in the past year by both men and women are Calvin Klein and Ralph Lauren, and Ralph Lauren is the brand most mentioned as one wealthy consumers will buy in the coming year. Zegna ranks second for intended purchase among men.

“With luxury Ready-to-Wear, wealthy consumers certainly place tremendous weight on product quality, but those brands that combine great products with excellent service are the ones delivering superior overall experiences,” says Luxury Institute CEO Milton Pedraza. “Consistently delivering that kind of experience is at the heart of sustaining premium pricing.”

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.

Poor Burberry earnings point to problems for luxury market

By Stacey Vanek Smith
Marketplace
September 11th, 2012

Shares of Burberry are down more than 18 percent this morning. The luxury retailer slashed profit forecasts and warned that the luxury goods market is headed for hard times.

The main cause, says Milton Pedraza, CEO of the Luxury Institute, is global slowdown. Even while other retailers struggled, luxury retailers were boosted by sales from overseas, especially in Asia.

“China had been the engine of growth for the last several years,” says Pedraza, “[and] it generated a tremendous number of tourists who had been holding up the European luxury market.”

The Chinese slowdown, therefore, has not only affected the luxury market there, but also in Europe.

Luxury retailers could react in a number of ways, says Pedraza, from lowering their prices to reducing their inventory. Most importantly, though, he thinks they will “go after retaining customers who have purchased before,” hoping to increase customer culture and keep previous customers coming back.

http://www.marketplace.org/topics/business/poor-burberry-earnings-point-problems-luxury-market

September 11, 2012

Wealthy Shoppers Rank Experiences At Online-Only Luxury Retail Sites Ahead Of Traditional Brands; Barneys is best among brick-and-mortar but MR PORTER, SSense prove more pleasing

(NEW YORK) September 11, 2012 – Wealthy shoppers with minimum annual income of $150,000 rate the online experience at websites of 10 traditional luxury retailers and 16 online-only retailers in the 2012 Luxury Online Experience Index (LOEI) survey by the independent and objective New York-based Luxury Institute. LOEI scores include evaluations of a site’s navigation, visual appeal, selection of products, ability to deliver product feature information, ease of purchase, availability of human help and trustworthiness to keep personal data.

It appears that upstarts have made quick inroads. One-year old men’s luxury site, MR PORTER, earns the highest score (86) of all retailers, online and traditional, followed by fashion site SSense (85) and My-Wardrobe and Shopbop (both 84). NET-A-PORTER and Zappos Couture earn scores of 83 and 82, respectively.

Barneys New York earns the highest LOEI score (84) among luxury retailers that also operate physical stores, followed by Neiman Marcus, Saks Fifth Avenue, Intermix and Scoop all with 82.

Nordstrom is the brand most likely to be recommended (92%) and the site that most wealthy shoppers plan to return to for their next online shopping experience. Among online-only sites, Zappos is the most recommended (88%) and eBay Fashion Vault (95%) enjoys the highest rate of return visits.

“Online luxury retail proves that smaller and newer brands can shake up incumbents with the right technology, product mix and site design,” says Luxury Institute CEO Milton Pedraza. “The proliferation of web and mobile shopping truly creates opportunity.”

Respondents reported average income of $310,000 and average net worth of $3.6 million.

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.

September 8, 2012

Internet finance: How to kick-start your bright idea

By Claire Adler
Financial Times
September 7th, 2012

A watch brand has emerged as the king of crowdfunding, a trend that allows creative people to connect online with the public for cash to fund their business ideas.

In April, after numerous rejections from venture capitalists and rapidly running out of cash, five 20-something men from Silicon Valley turned to Kickstarter, a site that allows creative companies, including many filmmakers and musicians, to raise money from individuals online.

The site does not charge to set up a campaign. But, if it is successful, the site takes 5 per cent of the final amount. Amazon, which processes the payments, takes 3 to 5 per cent.

Click the link to read the entire article which includes quotes from Milton Pedraza, CEO of Luxury Institute: http://www.ft.com/cms/s/0/51da221e-f1c3-11e1-bda3-00144feabdc0.html#ixzz26Cbscu00

Accepting Chinese debit cards pays dividends

Upmarket US retailers cash in on influx of tourists from the far east
By Yu Wei
China Daily
September 7, 2012

Hoping to attract the business of Chinese travelers, luxury retail chains Saks and Neiman Marcus will soon start accepting debit cards issued by China UnionPay Co at select US stores.

Saks Inc is installing point-of-sale keypads that accept UnionPay cards’ personal identification numbers at its Saks Fifth Avenue flagship store in New York. The company plans to add other stores over the next few months, spokeswoman Julia Bentley said.

China UnionPay is China’s only provider of domestic bank-services cards, credit and debit. Both Saks and Neiman Marcus already accept China UnionPay credit cards.

Efforts to capture the lucrative market of Chinese tourists are not new. The French jewelers Van Cleef & Arpels and Cartier, the Swiss watch makers Piaget and Omega and the duty-free chain DFS Galleria, owned by LVMH Moet Hennessy Louis Vuitton SA, have been taking China UnionPay cards for some time, as have mid-range retailers such as Macy’s, Apple and Best Buy.

“Macy’s has accepted (China UnionPay’s debit) card since 2004,” says Jim Sluzew-ski, a spokesman for the department-store operator based in Cincinnati, Ohio.

“The card is accepted in all Macy’s stores and is popular among our customers who visit from China.”

China UnionPay says its debit card is the most popular mode of payment among China’s richest consumers because purchases are linked to a bank account rather than a limited credit line.

Other benefits: No fees are applied to purchases and the buyer has the option of getting cash back at the store checkout.

“Our goal is to make it easier for our Chinese customers to pay however they wish to pay,” Bentley says.

Like Saks, Neiman Marcus of Dallas will begin accepting China UnionPay debit cards at some stores beginning this month. These include the Neiman Marcus store in Honolulu and the Bergdorf Goodman department store in New York.

The company plans to follow suit at Neiman Marcus stores in Los Angeles, Las Vegas, San Francisco and Boston.

“We like to accommodate as many Chinese customers as we can, and most of them prefer debit cards to credit cards,” says Ginger Reeder, a spokeswoman for the privately held Neiman Marcus Group.

“We have seen more Chinese customers in our stores over the years, and the most popular items among Chinese travelers are handbags and other accessories.”

To enhance its service to shoppers from China, the company has begun hiring Mandarin-speaking sales assistants.

“Every store has at least two or three and we’ll continue to hire more,” Reeder says.

Not so long ago the upmarket retailer only accepted its store credit card, cash and American Express.

“The funny thing is, two years ago Neiman Marcus didn’t accept Visa, MasterCard or checks at its stores,” says Milton Pedraza, CEO of the market-research firm Luxury Institute LLC.

“Now they allow all kinds of payment because they realized they were losing sales by their card policy. When I was in Miami I had to go to a cash machine before buying something in Neiman Marcus because I didn’t have a Neiman Marcus credit card, which was very inconvenient.”

Pedraza considers Neiman Marcus’ revised card policy a “must decision” that proves that retailers need to adapt to customers’ changing preferences. “Smart companies will do it because they’re customer-centric,” he says.

US retailers still have work to do in better serving Chinese shoppers, consumers, Pedraza says.

“We are not friendly enough to Chinese customers compared to Europeans (visiting the US). That’s a lot of opportunities because today the Chinese consumer is a very important global consumer and will be more important in the future.”

A record 1.1 million Chinese visited the US last year, up 36 percent from the previous year, the US Commerce Department’s International Trade Administration says.

The country’s economic growth has boosted the buying power of Chinese who travel abroad, and some savvy US businesses have taken steps to draw in these shoppers.

An example is the prominent placement of UnionPay’s logo at the checkout counters of some upmarket retailers, along with the installation of the PIN-enabled keypads.

Wu Miaoqing, visiting New York from Hangzhou, a coastal city in eastern China’s Zhejiang province, applauded the decision by Saks and Neiman Marcus to start taking China UnionPay debit cards.

“Being able to use the card abroad not only makes my purchase convenient, it also makes me feel good. It shows the businesses care about us.”

http://usa.chinadaily.com.cn/weekly/2012-09/07/content_15741171.htm

September 7, 2012

Rolls-Royce targets blooming Asia-Pacific market in boutique expansion

British automaker Rolls-Royce Motor Cars is keeping its brand top-of-mind with trend-savvy, affluent consumers in Thailand through a new boutique experience set to open in the fourth quarter of this year.

The new Rolls-Royce Central Bangkok boutique will be the first of its kind in Asia. The automaker has additional plans expand its presence in Thailand due to strong interest from consumers in the emerging market, which seems to welcome status brands with open arms, experts say.

“Rolls-Royce understands that Asia has a lot more opportunities than just China,” said Milton Pedraza, CEO of the Luxury Institute, New York. “It has large populations that are growing in their economic and demographic profiles.

“The slowdown in China, while it is still a wonderful opportunity, is causing the brand to move further out,” he said. “Now you have to open your eyes a little wider, and you will find out that Asia is much bigger than China with a tremendous amount of growth opportunity.”

Click the link to read the entire article which includes quotes from Milton Pedraza, CEO of Luxury Institute: http://www.luxurydaily.com/rolls-royce-targets-blooming-asia-pacific-market-in-boutique-expansion/

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