Luxury Institute News

September 30, 2013

Wealthy homeowners want open floor plans, automation

By Lauren Beale
Los Angeles Times
September 28, 2013

Flexible spaces, tech-savvy features and outdoor-oriented living are popular with well-to-do U.S. homeowners, a pair of recent surveys show.

Among the 300 wealthy consumers polled, open floor plans, full automation/wiring and swimming pools topped the list of important amenities, a study by Coldwell Banker Previews International and the Luxury Institute found. Lower priorities for households earning at least $250,000 annually were staff quarters, tennis/sports courts and catering kitchens.

Architects also are seeing high interest in wireless and energy-efficient systems, results of an American Institute of Architects second-quarter survey show. And homeowners are still seeking outdoor living rooms and home offices.

http://www.latimes.com/business/money/la-fi-mo-home-amenities-20130928,0,6355914.story

Coach and Michael Kors and the Japanese Fashion Market

By Sarah Deschamps and Hiroshi Saito
Modern Tokyo Times
September 29, 2013

Michel Kors ventured into the competitive fashion market of Japan in 2009 and since this period this brand continues to consolidate. The handbag market is just one angle to the products sold by Michael Kors but this area alone is worth a staggering amount each year throughout Japan. Now it is becoming clear that inroads are being made in this area and other important segments of the fashion sector in the land of the rising sun.

Coach may be on the horizons of Michael Kors in Japan because this company is firmly established and highly desired. Indeed, the reputation of Coach is known internationally for being extremely creative and where vibrancy is maintained year after year. Therefore, with Coach being firmly established in Japan and with this nation ranking highly within the profits of this company, the impact of Michael Kors in the handbag market is extremely intriguing.

In the United States it was stated about Coach that their customer service is second to none. This angle is certainly important throughout Japan and noticeably in major cities like Tokyo and Osaka where the fashion market is enormous. According to the data of the Luxury Institute in America 25% of wealthy women had purchased a Coach bag. Equally powerful is that the same statistic was given for buying a new handbag in the next twelve months. No other company came close to Coach in America in other types of surveys.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute:
http://moderntokyotimes.com/2013/09/29/coach-and-michael-kors-and-the-japanese-fashion-market/

September 26, 2013

Strategy emerges from customer culture: Luxury Institute CEO

By Joe McCarthy
Luxury Daily
September 25, 2013

NEW YORK – The CEO of The Luxury Institute at the Luxury Interactive 2013 conference said that luxury brands should focus on building a culture of relationship building and sales will follow.

The executive said that many conventional paradigms of behavior should be flipped to create an environment steeped in meaningful purpose. In his “7 Paradoxes of Luxury Marketing” talk he verified the profitability of such strategy suggestions with hard evidence.

“If you want to create a great customer culture, you have to think in terms of paradox,” said Milton Pedraza, CEO of The Luxury Institute, New York.

“Some people say culture trumps strategy, but I don’t believe that’s true,” he said. “Strategy emerges from culture.”

Internal paradigms
Mr. Pedraza discussed several remedies for poor strategies that have become entrenched in business culture.

The first paradox dealt with shifting a brand’s focus from commodities to meaningful purpose. This objective reaches beyond revising product development to facilitating a better society.

Mr. Pedraza at the Luxury Interactive 2013 conference

Next, companies should switch the tone of their command style from hierarchical and militant to empowering and creative.

Mr. Pedraza said that employees are more responsive and more likely to create innovative ideas when given liberty to act without constraints. An example of this would be giving in-store employees technology to pursue friendly relationships with customers post-purchase.

Third, Mr. Pedraza said that decision-making should incorporate employees from all levels of operation as well as consumers. When decisions are cloistered among high-level executives, simple or uncanny solutions can be overlooked.

Looking out
Educating employees should not resemble a classroom. Rather, Mr. Pedraza insisted that employees will quickly adopt brand values when trained in a gradual, interactive and personal manner.

A skill-based hiring process should be tempered with value-based merits. A candidate selected after an assessment of values will likely assimilate into brand culture with more ease.

Mr. Pedraza urged brands to incentivize the right behavior. Employees will likely be more proactive if they know their behavior is recognized.

Finally, a meaningful brand culture should be reinforced daily to ensure its fortitude. Lexus and The Ritz-Carlton were two luxury brands that Mr. Pedraza acknowledged as pioneers of meaningful brand culture.

For instance, Toyota Corp.’s Lexus is promoting the 2014 IS vehicle with a collaboratively created, stop-motion Instagram film that draws on the perspectives of 212 fans to show the vehicle in a range of angles and tones.

Under the orchestration of a directorial team during Instagram’s #WorldwideInstameet, car enthusiasts and Instagram users from a variety of background blended their personalities in a film that colorfully animates the IS. By leveraging Instagram in this unifying fashion, Lexus will likely grab the attention of a younger demographic and potentially trigger more collaborative, stop-motion films (see story).

Ultimately, if employees are infused with a sense of purpose, they will likely be more effective sales agents.

“Employees that believe companies have strong sense of purpose versus companies without purpose perform much better,” Mr. Pedraza said.

http://www.luxurydaily.com/strategy-emerges-from-customer-culture-exec/

September 24, 2013

Younger Buyers to Dominate Luxury Market

Realtor Mag
September 23, 2013

A new survey by Coldwell Banker Previews International and the Luxury Institute finds that wealthy younger buyers are driving the luxury real estate market, and they are willing to pay more than similar wealthy buyers age 55 and older.

The survey looked at Americans age 21 or older with a minimum gross annual household income of $250,000. It found that 43 percent of younger wealthy consumers are considering purchasing residential property in the next 12 months, compared to 21 percent of those age 55 and older. These younger, wealthy buyers spent an average of $2.1 million on their most recent purchase of residential property, approximately twice the average amount spent by older and similarly wealthy buyers.

“Luxury homes are for more than successful and retired empty nesters,” says Milton Pedraza, CEO of the Luxury Institute. “Today’s luxury buyer is both dynamic and diverse, and it’s reflected in the homes and products they’re buying.”

So what are these younger buyers looking for? The survey found they are significantly more likely than wealthy buyers age 55 and older to want homes with amenities such as a pool, outdoor kitchen, home gym, home theater, wine cellar, and four or more garages. They are also more than twice as likely to value green or LEED-certified properties.

“This trend toward younger luxury buyers is leading a change in desired home amenities,” says Betty Graham, president of Coldwell Banker Previews International NRT. “Whether these younger buyers have young families or are single without children, they are looking for homes that fit their active and unique lifestyle.”

For most luxury buyers, location is the most important factor when considering the purchase of residential property. And though they may travel internationally, only 6 percent of wealthy homeowners surveyed own residential property located outside the U.S.

http://realtormag.realtor.org/daily-news/2013/09/23/younger-buyers-dominate-luxury-market

Here Are The Amenities Rich Americans Want Most In Their Mansions

By Megan Willett
Business Insider
September 23, 2013

“Open floor plans” is the newest buzz phrase for wealthy real estate buyers.

A new survey from real estate franchise Coldwell Banker Previews International and research firm Luxury Institute asked 300 Americans with an annual income of more than $250,000 about their real estate shopping habits.

In response to a question about the most important residential amenities, 39% said a home with an open floor plan was more important to them than it was three years ago, and 32% said a fully automated home that they could control via remote or voice activation was more important.

Of less importance to today’s wealthy buyers were tennis courts, safe rooms , and multiple garages:

Here are a few other interesting points from the study:

  • Thirty-eight percent of those surveyed own two or more homes. Only 6% own another home outside of the U.S.
  • The average purchase price for wealthy consumers’ most recent residential property was $1.6 million.
  • The most important factor when purchasing a home was by far its location, with 70% of respondents saying it was the most important factor in their last real estate purchase.
  • Younger buyers are driving the luxury real estate market: Forty-three percent of Americans aged 21 to 55 with a household income of $250,000 are considering another residential property in the next year, and spent almost twice the amount on homes than those aged 55+ ($2.1 million compared to $1.1 million).
http://www.businessinsider.com/what-wealthy-buyers-want-in-a-mansion-2013-9#ixzz2fltHpZ9U

What are your brands doing to customize communications based on what you know about each customer?

By Ben Popken
NBC News
September 23, 2013

Paper towels embossed to look like cloth. Tampon packages with a glossy metallic sheen. Designer ice cubes for $75 a bag. Marketers are going glam with everyday products, taking them upscale as they give up on selling to the middle class.

Companies have reacted for years to the shrinking middle class by developing both top shelf and bargain versions of their product lines. Toyota has been successful with the Lexus. Frito-Lay has introduced Olive Coast, kettle-cooked chips with a Mediterranean flavor, as well as “Taqueros,” a discount tortilla chip. Apple’s new iPhone comes in both a $199 version and a $99 one with cheaper components.

For the wealthy, a 20 percent markup is a small price to pay for “luxury.” For some in the middle class, it’s a way to feel affluent, at a cost. For the poor? There’s the bargain brands. In an economic recovery that has magnified income inequality, consumers are either spending at the Family Dollar stores of the world, or at the Nordstroms.

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

http://www.nbcnews.com/business/luxury-tampons-companies-spurn-middle-class-4B11212163

September 23, 2013

Small Business Learns To Build Customer Loyalty Like Luxury Brands

Luxury Institute founder applies lessons learned in high-end retail to small and medium sized businesses.

(NEW YORK) September 23, 2013 – There are more than 27 million small businesses in the United States, according to the Small Business Administration, but 50% of them will fail within five years. While lack of capital is a major factor, also significant is the lack of a customer-centric culture.

“Many entrepreneurs launch businesses with a great product or service idea, and then proceed to focus on daily transactions rather than building long-term customer relationships,” says Milton Pedraza, CEO of the Customer Culture Institute. “Focusing on transactions over relationships does not breed customer loyalty.”

Successful smaller companies, says Pedraza, are organized at an early stage to deliver extraordinary experiences to every customer on a daily basis. The problem for most small businesses is a lack of expertise and a proven process.

To provide these companies with access to state-of-the-art methodologies and metrics to measure and boost customer satisfaction and loyalty, the Customer Culture Institute is launching a do-it-yourself, online software platform to help small businesses to create their own customer culture. Pedraza, who is also CEO of the highly-respected New York-based Luxury Institute, says the Customer Culture Navigator software enables business owners to communicate with and provide needed support and training for their employees in real-time.

Small business teams will use their creativity to custom design a cultural foundation with clear definitions of relationship values and standards. The software helps to train, measure and reinforce the culture daily, a process that has a track record of dramatically improved customer loyalty at large luxury and premium brands that Pedraza has previously coached.

“We help move companies away from a soulless transaction mentality to profitable long-term customer relationship building,” says Pedraza. “In essence, we teach them that outbehaving the competition leads to outperformance.”

One innovative approach Pedraza and his team have taken, is to use crowdfunding site Indiegogo to raise funds from investors in the project. The campaign can be viewed at http://www.indiegogo.com/projects/customer-culture-navigator/x/4837243.

“Online crowdfunding is an elegant win-win-win opportunity,” says Pedraza. “We have an opportunity to provide valuable resources to our funding contributors, while building a project that can transform small business culture and dramatically increase the success rate of small business.”

September 17, 2013

Regional Banks And Wells Fargo Deliver Winning Customer Experiences

(NEW YORK) September 17, 2013 – The Luxury Institute’s new survey asked wealthy U.S. clients with a minimum household income of $250,000 to rate multiple aspects of their primary bank from a list of national and regional banks.

Evaluations of convenience, staff, company principles, and products and services yield a composite Banking Customer Experience Index of 1-10. Wells Fargo stands out with the highest composite score and also leads in each of the four sub-indices.

Smaller banks beat out Bank of America and Chase for having knowledgeable, trustworthy and respectful staff. Bank of America earns the lowest overall score but still holds the biggest market share of high-income clients. Chase consistently ranks between Bank of America and Wells Fargo and has the second largest market share of all rated consumer banks.

Despite shortcomings of bigger banks, Bank of America, Chase, Wells Fargo and Citi Bank customers are far more likely (45% vs. 27%) to open a new account with their existing bank as compared to current customers of smaller banks.

“There is an opportunity for big banks to bridge the customer experience gap between themselves and their smaller competitors by focusing on developing a unique Customer Culture to deliver value for all segments of customers, and especially the top customers who deliver most of the profits,” says Luxury Institute CEO Milton Pedraza.

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.

September 11, 2013

Will new owners bring Neiman Marcus and Saks into the future of retail?

By Erin Shea
September 10, 2013
Luxury Daily

The Neiman Marcus Group Inc. was purchased for $6 billion by investment firm Ares Management and the Canada Pension Plan Investment Board Sept. 9, which makes this the second United States-based department store after Saks Fifth Avenue that has new Canadian owners.

Neiman Marcus’ new owners now have the opportunity to further expand the brand and revamp it into a retailer that is ready to take on the next generation of consumers. With the recent purchases of both Neiman Marcus and Saks, both retailers are looking to expand their global presence while creating a loyal customer base.

“On behalf of the entire management team, we are delighted to be joining with Ares and CPPIB to continue enhancing our strong brands by offering our customers the best edited merchandise assortments as well as delivering a superlative omnichannel shopping experience,” said Karen Katz, president and CEO of Neiman Marcus Group, Dallas.

Next step
Neiman Marcus’ former owners, Warburg Pincus and TPG Capital, purchased the retailer in 2005 for $5.1 billion.

The companies sold the retailer on Sept. 9 for $6 billion, after ending a long struggle to sell it, according to Reuters.

With its new owners, Neiman Marcus is looking to expand while keeping its consumer’s satisfied with its omnichannel offers, which is similar to what Saks is aiming to do.

Saks’s new owner Hudson’s Bay Company will help boost its omnichannel experience as part of its portfolio of retailers.

Saks’ new Look campaign

Hudson’s Bay Co. purchased Saks July 29 for $16 per share in an all-cash transaction that is valued at $2.9 billion, which includes debt. This purchase is likely to help Saks reach its goal of becoming an omnichannel retailer and provide its customers with an enhanced shopping experience.

Both Saks and Neiman Marcus are likely to benefit rom new ownership so that they can focus on building up consumer relations.

“There has been a lot of capital accumulated in Canada in the last couple of years,” said Milton Pedraza, CEO of The Luxury Institute, New York. “I think that when the Canadians look around the world, they see the U.S. as a growth opportunity and they especially see luxury as a growth opportunity.

“The Canadians tend to be brand builders and there is a tremendous opportunity to build up customer culture since Neiman Marucs is lacking in this area,” he said.

“Neiman Marcus needs loyal customers and Saks does too.”

In addition, these new owners could help the brands reach other goals by expanding their presence in Canada.

“Neiman Marcus and Saks are great retailers and great brands that can easily extend to Canada, especially in ecommerce,” said Marie Driscoll, CEO and chief consultant at Driscoll Advisors, New York.

Just a coincidence
However, the purchases of Neiman Marcus and Saks could be looked at as just a coincidence happening around the same time.

Although, both of the sales do seem to indicate that the new owners have faith in the retailers to remain strong in the future.

“Investment companies are global,” said Chris Ramey, president of Affluent Insights, Miami, FL. “It’s serendipity that both Saks and Neiman Marcus will be owned by companies based in Canada.

“Saks and Neiman Marcus are the heart of American luxury,” he said. “The two brands escaped the recession unscathed.

“There is a continuum between when you’re purchased by a private equity group and when you’re sold by a private equity group that commences with optimism and a willingness to invest.”

http://www.luxurydaily.com/will-new-owners-bring-neiman-marcus-and-saks-into-the-future-of-retail/

Apple Unveils Faster iPhone, and a Cheaper One, Too

By Brian X. Chen
The New York Times
September 10, 2013

That is why Apple is releasing two new iPhones this month instead of just one, including a cheaper model aimed at less wealthy countries where new Apple phones have been desired but are out of reach because of their price.

The lower-cost model, the iPhone 5C (the C for color) comes in a plastic case and has the same features as the now-discontinued iPhone 5. The fancier model, the iPhone 5S, comes in aluminum and includes a faster processor and a fingerprint sensor for security, among other features. The iPhone 5S costs $200 with a contract, and the iPhone 5C costs $100 with a contract.

But at full price without a contract, which is how many overseas carriers allow people to pay for phones, the iPhone 5C costs $550 — only $100 less than the iPhone 5S. That is far higher than the range of $300 to $400 that many analysts believed could help Apple against lower-cost competition.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://www.nytimes.com/2013/09/11/technology/apple-shows-off-2-new-iphones-one-a-lower-cost-model.html

Older Posts »