Luxury Institute News

February 19, 2013

Wealthy Flock To Target But Love The Lord & Taylor Experience, Prefer Apple For Electronics, Staples For Supplies

(NEW YORK) February 19, 2013 – U.S. shoppers earning at least $150,000 a year rank 16 mainstream retailers in the 2013 Luxury Consumer Experience (LCEI) survey jointly conducted by the independent and objective New York-based Luxury Institute and Customer Culture Institute. Respondents evaluated national and regional department store brands, as well retailers of office supplies and electronics.

Among national retailers, Lord & Taylor earns the highest (8.00) LCEI score, and ranks first on all seven subcomponents, which include shoppers’ evaluations of staff, stores and degree of overall satisfaction. Lord & Taylor was visited by just 14% of surveyed shoppers in the past year but those who did rave about their experiences. Target, the most popular chain, saw visits from 66% of wealthy shoppers but earns a 6.90 LCEI score.

In electronics, Apple’s LCEI score of 8.40 tops Best Buy’s 6.97. Apple also enjoys nearly unanimous (98%) agreement from shoppers that they will come back to Apple retail locations in the future, compared to 92% for Best Buy.

Staples (7.31) is the clear winner in office supplies, ranked ahead of Office Depot (7.05) and OfficeMax (7.00).

Iowa-based Von Maur receives the highest LCEI score (8.61) among regional retailers and the highest of all 16 brands covered. Furthermore, 100% of Von Maur’s wealthy customers plan to shop there again.

“Wealthy consumers don’t confine their shopping to luxury retailers. In fact, they spend much more with mainstream brands,” says Luxury Institute and Customer Culture Institute CEO Milton Pedraza. “As in luxury, brands that differentiate themselves with a customer centric culture are the ones that rank highest.”

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.

February 18, 2013

Chris Burch Becomes a Billionaire as Fashion Stock Surge

By Seth Lubove
Bloomberg
February 15, 2013

J. Christopher Burch, the former husband of designer Tory Burch, has become a billionaire amid a bull market for fashion companies.

Burch, 59, controls a portfolio of fashion and technology companies through investment firm Burch Creative Capital. His biggest asset is a 15 percent stake in Tory Burch LLC, the New York-based retailer that sells high-end women’s clothing and accessories, including popular ballet flats adorned with the company’s double-T logo.

His stake in Tory Burch is valued at $530 million, according to the Bloomberg Billionaires Index, giving him a net worth of more than $1.2 billion. He is at least $200 million wealthier than his ex-wife.

“There’s a sense of optimism out there,” said Milton Pedraza, chief executive officer of Luxury Institute LLC, a New York-based research and consulting firm, in a phone interview yesterday. “All these companies have a very robust market to draw from.”

Fashion stocks have surged in the past year. Italy’s Prada SpA (1913) is up 67 percent and New York-based Michael Kors Holdings Ltd (KORS). shares have risen 47 percent. Germany’s Hugo Boss AG (BOSS) is up 23 percent.

Burch declined to comment on his net worth, said Devon Spurgeon, a spokeswoman for him at H&K Strategies in New York. Frances Pennington, a spokeswoman for Tory Burch LLC, didn’t return an e-mail message seeking comment.

Disputes, Divorce
Burch also owns stakes in Poppin, an online office supplies retailer; Powermat Technologies Ltd., a maker of wireless chargers for electronic devices; and Jawbone, which makes Bluetooth headsets, wireless music speakers, and wristbands that track its wearer’s physical activities.

His first success came with Eagle’s Eye, a designer sweater company he started with his brother Bob in 1976, with a $2,000 investment. The brothers sold the company in 1998, at a value of $60 million, according to the Burch Creative Capital website. He reinvested the proceeds into more than 50 startup companies.

The couple opened the first Tory Burch retail store in New York in February 2004. They divorced two years later. Burch sold about half of his stake in Tory Burch on Dec. 31, settling a three-month legal dispute between the couple.

In the suit, Burch alleged his ex-wife impeded the success of C. Wonder, a fashion retailer he started in 2011 that sells blouses, blazers and shoes at 10 retail stores and four pop-up shops in the U.S. Burch accused her of sending staffers to interrogate C. Wonder employees. She responded in a counter- claim that C. Wonder produced a “cheapened, lower quality” knockoff.

‘Strategic Asset’
Women’s Wear Daily reported on Feb. 5 that Burch sold 10 percent of C. Wonder to FMR LLC, the parent of Fidelity Investments, for $35 million, valuing the company at $350 million. Sophie Launay, a Fidelity spokeswoman, declined to comment.

Burch also owns homes in New York, Southampton on Long Island, Nantucket, and on the Indonesian island of Sumba.

Omar Saad, an analyst with International Strategy & Investment Group LLC, says Tory Burch could sell shares in an initial public offering in the future. He wrote in a January research report that the retailer could also be “a highly prized strategic asset” to a buyer such as Coach Inc.

“Look at the economic power of women,” Pedraza said. “Accessories, even more than clothes these days, make the statement of who you are. They help define you.”

http://www.bloomberg.com/news/2013-02-15/chris-burch-becomes-a-billionaire-as-fashion-stock-surge.html

Consignment site helps ‘snobs’ swap high-end goods

By Abha Bhattarai
Washington Post
February 15, 2013

The search for a used Chanel bag led Elise Whang out of her job as an attorney and into a new career as co-founder of Snob Swap, a Web site that allows users to buy, sell and swap pre-owned designer goods.

Whang was pregnant with her second child when she had the idea for an online consignment shop. She decided to quit her job at the Federal Trade Commission to start Snob Swap with her sister.

“I got a little tired of chasing the mythical work-life balance,” said Whang, 37. “I just thought, it’s time for a change. I was tired of that flea-market feel of consignment sites. And I was also tired of half the stuff in my closet.”

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute:
http://www.washingtonpost.com/business/capitalbusiness/consignment-site-helps-snobs-swap-high-end-goods/2013/02/15/c2d429c4-749f-11e2-aa12-e6cf1d31106b_story.html

February 14, 2013

What Recession? Americans Regain a Craving for Luxury

By Nadya Masidlover and Christina Passariello
Wall Street Journal
February 13, 2013

PARIS—While all eyes have been focused on luxury-goods growth in China, another market has quietly been bolstering the business of high-end goods purveyors: the U.S.

French silk-scarf maker Hermès International RMS.FR -0.36%SCA said Tuesday that fourth-quarter sales rose 21% in the Americas to €184.6 million ($247.5 million). That comes on top of a slew of strong U.S. performances for its peers, such as LVMH Moët Hennessy Louis Vuitton SA MC.FR -1.20%and Cartier owner Cie. Financière Richemont SA. Gucci parent PPR SA PP.FR -0.44%could confirm the pattern when it reports full-year profits on Friday.

Click the link to read the entire article including a quote from Luxury Institute’s CEO Milton Pedraza:
http://online.wsj.com/article/SB10001424127887324880504578300291357105904.html

February 12, 2013

One in 7 Washington households in the top 5 percent

By Carol Morello and Ted Mellnik
Washington Post
February 11, 2013

High-income households account for one in every seven in the Washington region, according to new census figures that underscore how the nation’s corporate, financial and government capitals thrived during the recession.

Nationally, Washington ranked third among all metro areas with high concentrations of households in the top 5 percent, a group that begins at $191,500.

Many of the richest households are clustered in the Northeast, from Washington to Boston. The New York City suburbs around Bridgeport, Conn., including several towns that are hubs for investment firms and hedge funds, have the biggest concentration of 5 percenters. The Silicon Valley area of San Jose is second.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute:
http://www.washingtonpost.com/local/one-in-7-washington-households-in-the-top-5-percent/2013/02/11/8dc7e258-745d-11e2-95e4-6148e45d7adb_story.html

Applying Best Practices Of High-End Retail, Luxury Institute Founder Launches Customer Culture Institute To Help Mainstream Brands Build Better Relationships, Boost Sales

(NEW YORK) February 12, 2013- Milton Pedraza, founder and CEO of the Luxury Institute (www.luxuryinstitute.com), the leading global independent research and consulting firm in the luxury industry, has launched the Customer Culture Institute (www.customercultureinstitute.com). The objective Customer Culture Institute is focused on helping mainstream brands across all industries and geographies to rapidly design, deploy and reinforce customer-centric cultures that leverage their unique competitive positions.

“Customer acquisition, conversion, and retention rates for most brands are dismal,” says Pedraza, one of the world’s most respected and independent CRM experts since 1997.  “Digital technology, social media, Big Data, and multi-channel access are getting all of the attention these days.  However, the most important element in order for brands to outperform and, more importantly, outbehave their competition is a customer culture.

Pedraza has developed and licensed a proprietary Customer Culture process to the Luxury Institute and will do the same with the Customer Culture Institute. The newly formed institute will provide clients from diverse industries with Pedraza’s collaborative seven-step process that includes developing relationship-building techniques, education, incentives and measurement for customer facing employees and ultimately drives higher sales.

“A great deal of business today is purely transactional when it should be relationship-driven and more humanistic,” says Pedraza.  “At the Luxury Institute, we have proven through engagements with world-class clients that customer data collection, conversion, retention, recovery and referrals go up dramatically as a customer culture takes hold.”

The Customer Culture Institute is presently adding staff and seeking more like-minded and passionate individuals specialized in particular industries to represent the institute in the U.S. and in key overseas markets. For information, please visit www.customercultureinstitute.com to fill out a contact form.

February 11, 2013

US stores luxuriate in Chinese cash

By Yu Wei
China Daily
February 8, 2013

Yu Yang, from the central China city of Wuhan, was laden with shopping bags and beaming, surprised at the ease of his retail excursion in New York State.

Although Yu doesn’t speak English, Mandarin-speaking store clerks at some of the Woodbury Common outlet mall stores made him comfortable by explaining products and converting international sizing charts to US sizes.

“Our customer-service supervisor at Woodbury Common is Chinese. We have several designer stores that also employ sales personnel who speak various dialects of Chinese,” said Jean Guinup, a marketing executive with Simon Property Group Inc, which operates the outlet mall, about an hour’s drive south.

The mall, which opened in 1985 and is filled with more than 200 designer-label stores that sell clothing and housewares at reduced prices, has long attracted busloads of tourists visiting New York City. Now Woodbury Common and its retailers court Chinese shoppers with services in Mandarin and Cantonese, including currency exchange, public-address announcements and other information.

“Last year, we saw increases in the number of Chinese visitors who visited our centers, including during Chinese New Year,” Guinup said.

Based on that experience and inquiries from potential shoppers, Simon is expecting greater numbers this Chinese New Year, to factory outlets such as Woodbury Common and the company’s other properties, including the high-end Mills malls.

“We have been aware of the increased volume of Chinese visitors arriving to the United States over the past several years, as well as the projections for continued increased growth,” Guinup said. “The relationship with our Chinese shoppers is very meaningful and we continue to develop programs to entice and excite this key audience.”

According to a report by Bain & Co, an adviser to the global luxury-goods industry, Chinese consumers now make up half of all luxury purchases in Asia and nearly a third of those in Europe. Globally, one in four purchases of personal luxury goods is made by a Chinese consumer.

Although retailing of luxury brands isn’t new to China, customers there still prefer to buy high-end goods during trips abroad. Research firm McKinsey & Co reports that two-thirds of luxury consumers on the Chinese mainland travel overseas to make purchases, thus avoiding China’s high sales taxes.

Although rich Chinese tourists don’t need to be told what to buy, they do benefit from having someone facilitate their purchases.

At the new Burberry boutique at the landmark Macy’s department store in Manhattan, a sales clerk named Jeniffer, who declined to give her last name, said six or seven Mandarin-speaking assistants are on the staff.

The British brand has put its red-colored products on display in the shop’s most prominent position and will hand out special red envelopes as a gift with purchases during the Chinese New Year.

Montblanc, which sells fine-quality fountain pens and writing accessories, has both red envelopes and window decorations done in a red floral motif with Chinese symbols at its US locations.

“We have a corporate policy to have at least one Chinese-speaking staff member in each of our boutiques,” said Nicole Dabaghian, a spokeswoman for Montblanc North America.

The retailer saw an influx of Chinese shoppers during the last Chinese New Year and is expecting even more this month.

“We most definitely value the Chinese tourist – so far as to have created special products such as a currency holder or wallet specifically for Chinese currency,” Dabaghian said.

China is one of the fastest-growing countries of origin for tourists in the US. A record number of Chinese – nearly 1.1 million – visited the country in 2011, and the US Commerce Department estimates that 1.54 million came in 2012.

“We have seen many Chinese visitors during last year’s Chinese New Year celebration, and we expect to see even more visitors this year,” said Matthew Bauer, president of the Madison Avenue Business Improvement District, a merchants association.

He said three-quarters of luxury stores on Madison Avenue between East 57th and East 86th streets accept China UnionPay, the most widely used card-payment system in the Asian country. Many of the association’s member retailers have special promotions planned for the upcoming holiday.

“To accommodate clients from abroad, Madison Avenue retailers have long maintained sales associates familiar with a variety of languages, and certainly many of our retailers have sales associates who speak Mandarin,” Bauer said.

Italian fashion line Emilio Pucci opened a store on Madison Avenue late last year and the boutique has a full-time Mandarin-speaking associate.

“This will be our first Chinese New Year in the location, and we very much look forward to welcoming Chinese tourists during the celebration,” said Katie Antonucci, the company’s retail director.

She said Pucci’s spring collection has a strong “Indochina influence”. “This collection will be in the store and large dragon tails – a theme used throughout the collection – will be on display in the window of the store,” she said.

The surge of Chinese visitors gives luxury-goods companies a chance to gauge the impact of their business strategies in China itself.

“The luxury brands need to understand that for the future, the purchasing power and discerning taste of the Chinese consumer will be important not just in China, but around the world, in major capitals of tourism and culture, as these highly educated world travelers eagerly discover the world and bring their vast purchasing power along with them,” said Milton Pedraza, CEO of the Luxury Institute, a New York-based research and consulting firm.

“The luxury brands must not only deliver great products,” he said, “but also associates who speak the language and who have the personality and skills to build long-term, mutually beneficial relationships with individuals, not just groups, of Chinese consumers.”

Chinese who travel and shop abroad have captured high-end retailers’ attention because they know what they want, buy in large quantities and are less interested in bargains than high-quality design, craftsmanship, and service, Pedraza said.

http://usa.chinadaily.com.cn/epaper/2013-02/08/content_16216681.htm

February 5, 2013

Wealthy Customers Sing Praises of Shopping Experiences at Bergdorf, Nordstrom and Barneys

(NEW YORK) February 05, 2013 – U.S. shoppers earning at least $150,000 a year share detailed opinions and evaluations of seven leading luxury retailers in the 2013 Luxury Consumer Experience Index (LCEI) conducted by the independent and objective New York-based Luxury Institute.  Based on an average of seven customer experience components rated on a 1-10 scale, Bergdorf Goodman (8.58) ranks first, but wealthy consumers are far more likely to shop at second-place Nordstrom (8.36).

Visited by 34% of wealthy shoppers in the past 12 months, Nordstrom is the most popular luxury retail chain, and it is also most likely (92%) to be recommended favorably to family and friends. The affluent shoppers who have visited Bergdorf Goodman’s two stores in the past 12 months rave about it, ranking it first on six of seven experience criteria, including having polite, trustworthy, knowledgeable and enthusiastic employees, as well as stores that are appealing and well maintained.  Bergdorf’s parent, Neiman Marcus, ranks first for being the retailer that high-income shoppers say, “completely satisfies my needs.”

Despite the high praise for its people and its stores, wealthy shoppers perceive Bergdorf’s merchandise as a bit too pricey, ranking it last (63%) on the question of whether its products are worth premium prices.  Barneys New York ranks first (85%) for deserving premium pricing.

“Bergdorf Goodman retains the cachet of a classic boutique that delivers outstanding experiences,” says Luxury Institute CEO Milton Pedraza. “On a larger scale, Nordstrom deserves credit for replicating great experiences with a customer centric culture across its entire network of stores.”

Wealthy shoppers also evaluated Saks Fifth Avenue, Burberry, Bloomingdale’s and Brooks Brothers.

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.