Luxury Institute News

July 22, 2014

Luxury Institute Wealth Management Survey Shows Multimillionaires Favor Boutique Money Managers for Client Experience

(NEW YORK) July 22, 2014 – In the latest edition of its Luxury Brand Status Index Wealth Management (LBSI) survey, the independent and objective New York-based Luxury Institute asked investors with an average net worth of $15 million and annual average income of $800,000 to share detailed opinions of 39 leading firms in the wealth management business. LBSI scores (1-10) comprise respondents’ evaluations of each firm’s product quality, exclusivity, social status and ability to deliver special client experiences.

Set up in 1882 as the Rockefeller family office, New York-based Rockefeller Wealth Management earns the highest overall LBSI score of 7.94. Ranking closely behind Rockefeller are Atlanta-based Atlantic Trust Private Wealth Management (7.93), and Convergent Wealth Advisors (7.92). First Republic Private Wealth Management (7.82), Bessemer Trust (7.68) round out the top five.

“Wealthy clients tell us that expertise, trustworthiness and generosity are the critical elements in building strong client relationships in wealth management,” Luxury Institute CEO Milton Pedraza. “Successful wealth managers are relationship builders first, and, since few can beat the markets in the long run, money managers second.”

Additional firms evaluated include Ameriprise Financial, Bank of America, Barclays Wealth Management, BB&T Wealth Management, Bernstein Global Wealth Management, BMO Harris Private Banking, BNY Mellon Wealth Management, Boston Private Bank and Trust, Brown Brothers Harriman, Charles Schwab, Citi Private Bank, Credit Suisse Private Banking, Deutsche Asset & Wealth Management, Deutsche Bank Alex. Brown, Fidelity Investments, Fifth Third Private Bank, Goldman Sachs, HSBC Private Bank, J.P. Morgan Private Bank, J.P. Morgan Private Wealth Management, Merrill Lynch, Merrill Lynch Private Banking & Investment Group, Morgan Stanley Smith Barney Wealth Management, National City Private Client Group, Neuberger Berman, Northern Trust, PNC Wealth Management, SunTrust Private Wealth Management, U.S. Bank Private Client Group, U.S. Trust, UBS Private Wealth Management, Vanguard Personal Investors, Wells Fargo Private Bank and Wilmington Trust Wealth Advisory Services.

Please visit www.LuxuryInstitute.com and contact us with any questions, or for detailed information about specific brand rankings.

The Luxury Institute, LLC

luxinfo@luxuryinstitute.com

July 15, 2014

What’s The Best Investment Piece?

By: Laura Milligan
Vogue UK
July 15, 2014

The Real Real- which is on track to do $100 million in sales this year, The Fashion Law reports – has evaluated the 500,000 designer items from 500 brands on its database to find what holds its value, and what depreciates faster than a supercar. And some of the results may surprise you.

Most of the brands that hold their value probably won’t come as a shock – Chanel, Louis Vuitton, Hermès, Christian Louboutin, Cartier, Alaïa and Van Cleef & Arpels among them – but those that lose value are more unexpected. Tod’s, Versace and Etro are among those that lose their value fastest, while Marni, Alexander Wang, 3.1 Phillip Lim and Marc Jacobs are among the labels that retail for the furthest from their original retail price. Although they are relatively young labels, Victoria Beckham, Charlotte Olympia and Alexander McQueen all resale for very close to the original value. Whether they will have Chanel or Hermès’s longevity when their pieces become vintage, however, remains to be seen.

Aside from buzz about a new designer (Phoebe Philo having rejuvenated the resale value of Céline, for example), the most important factor in a piece holding its value is availability.

“Brands have to be careful where they allow their product to be sold,” Milton Pedraza, CEO of the Luxury Institute, a industry research group, told Fortune- adding that brands that hold their value generally do not discount or sell widely online. “In that sense, it creates a perception of purity, [which the brand will then] back up with design quality and heritage. If I buy something, I will think, ‘Wow it has long term investment value.’”

One little footnote though before you go forth and shop: no piece is actually an “investment” unless you plan to ever sell it. Just saying.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://www.vogue.co.uk/news/2014/07/15/investment-buys-hermes-chanel-cartier-christian-louboutin

July 7, 2014

The Value of Luxury Poseurs

By: Paul Hiebert
The New Yorker
July 7, 2014

Bellezza mentioned Tiffany & Co. as a good example of a company executing the policy outlined in her and Keinan’s report. Some store locations offer side entrances and private viewing rooms to physically separate the élite shoppers from those looking to purchase a seventy-five-dollar Heart Tag Charm. The core Tiffany users, Bellezza says, are therefore defined by their access to privileged retail space, while the company can still grant a degree of access to the masses without tarnishing the brand. In 2013, the Luxury Institute, a research and consulting firm, conducted a survey that revealed that Tiffany was the jewelry brand most widely purchased by American women with a minimum net worth of five million dollars.

As Amy Merrick noted in April, Burberry recovered from its overexposure problem. Following the arrival of Angela Ahrendts as its C.E.O., in 2006, (who has since left for Apple), Burberry began scaling back its licensing agreements and removing its signature check from about ninety per cent of its items. A sense of sustainability has returned, thanks to a clear balance of insiders enjoying their cachet and outsiders looking in.

Click the link to read the entire article: http://www.newyorker.com/online/blogs/currency/2014/07/the-value-of-luxury-poseurs.html

Used Chanel bags are worth a lot, but Marc Jacobs? Not so much

By: Erin Griffith
Fortune
July 7, 2014

They’re all considered investments, but which luxury brands hold their value the best may surprise you.

There’s a reason they call them “investment pieces.” At $22,000 for a Proenza Schouler tote or $9,000 for a Ralph Lauren dress, luxury goods are meant to last a lifetime and hold their value. That’s why the market for used designer goods is the most attractive category for online consignment.

One such marketplace, a website called The RealReal, is on track to do $100 million in sales this year. (The company takes a cut of each sale.) The RealReal recently tapped its database of 500,000 luxury goods from 500 designer brands to find which brands have the highest resale value, and which ones hold their value the longest. The startup found that Chanel, Christian Louboutin, and Hermès hold their value the longest. Tod’s and Versace lose their value the fastest.

Perhaps more surprising is which brands carry the highest and lowest resale value. Items from Givenchy, Victoria Beckham, Charlotte Olympia and Alexander McQueen all sell for much closer to their original price than goods from Marni, Alexander Wang, 3.1 Philip Lim, and Marc Jacobs.

Resale values of fashion or luxury goods can fluctuate depending on buzz around a certain designer, particularly if a fashion houses hires a a new creative director or chief executive, according to Rati Levesque, Chief Merchant at The RealReal. “When Phoebe Philo joined Céline as the creative director, it added more resale value to the brand,” she says.

But more important than buzz is availability and discounting. If a luxury brand frequently discounts its goods at outlet stores or online via flash sales, consumers will perceive that they don’t have to pay full price for that brand, says Milton Pedraza, CEO of Luxury Institute, a luxury industry research group. While baby boomer shoppers tend to research something online and then buy it in the store, millennials do it the other way around. They “showroom,” the term for checking out an item in the store before finding the best deal for it online.

“These days you can find ways to arbitrage the brands, because you have so much information and the market is inefficient,” Pedraza says. “Brands have to be careful where they allow their product to be sold.”

For example: Chanel and Hermès do not hold sales in their stores and they have a limited number of outlet stores. Chanel doesn’t even sell its goods online, with the exception of beauty products. “In that sense, it creates a perception of purity,” Pedraza says.” The brands then “back it up with design quality and heritage,” he says. “If I buy something, I will think, ‘Wow it has long term investment value.’”

Below are some luxury brands that fall on both sides of the spectrum.

Click the link to read the entire article which includes quotes from Milton Pedraza, CEO of Luxury Institute:http://fortune.com/2014/07/07/which-luxury-brands-have-highest-resale-value/

July 4, 2014

America becomes absolutely fabulous

By: Laura Chesters
The Independent
July 4, 2014

Striding down Fifth Avenue clutching a monogrammed black Gucci leather satchel, François -Henri Pinault stands out among many of the trackpant-clad visitors to America’s most expensive shopping street.

Americans might still be better known for their casual fashions but Mr Pinault, the chief executive of Gucci’s owner, Kering, is betting that the millions of domestic and international tourists who descend on New York each year want to snap up European labels on their shopping sprees.

The Frenchman, who is married to the Mexican-American actress Salma Hayek  and whose family owns more than 40 per cent of the Paris-based luxury goods giant, says: “Over the last few years we have talked about the growth engine of luxury being in Asia – but it is important to remember the size and potential of America.”

According to market research from Bain/Alta­gamma on the luxury goods industry, the Americas actually passed China as the growth leader last year. The researchers estimate that the continent’s luxury goods market will grow 4 per cent, and the US alone is valued at €66bn (£52bn) this year.  Other European brands, including the UK’s Burberry and Mulberry, have also been steadily building up their presence across North America.

Mr Pinault is in the US to visit Kering’s American luxury division, which launched three years ago, and its flagship Gucci store in New York, the biggest in the world.

Kering, which owns 17 luxury brands including Saint Laurent and Christopher Kane, now plans to invest huge sums renovating some of its 180 US stores and expanding into new areas, as well as into Mexico and South America. Sales at it luxury division rose 8 per cent last year.

Mr Pinault is also betting that wealthy Americans are beginning to change their habits.  “The way of life here has been to not dress up, but the US shopper is becoming more sophisticated.”

Sarah Willlersdorf at ­Boston Consulting Group  agrees that the wealthy millionaires and billionaires in the States have traditionally spent their cash on cars and experiences rather than expensive clothes, but that now what BCG calls the “personal goods” sector is about to enter a boom period.

She says: “The aspirational masses here do want to spend on luxury – they want to spend on brands, and it is growing. There is a huge change in the desire to buy brands.”

BCG expects that by 2020 the US will have more than a third of the luxury market and  will still be bigger than China’s high-end sector. Japan will account for 7 per cent and the rest of Asia about 23 per cent of the global luxury market. Milton Pedraza, chief executive of the Luxury Institute, a consultancy, agrees: “There are big opportunities for European luxury brands in the US.”

America already makes up 18 per cent of Kering’s group sales, and Mr Pinault is keen to make sure its brands have the best stores in the best locations across the US – not just in New York, which has always had Sex and the City-style fans of European labels.

Ms Willlersdorf adds: “It is not just about East and West coast. The middle and south are very wealthy. European brands are under-represen-ted, particularly in second-tier cities.”

Click the link to view the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://www.independent.co.uk/news/business/analysis-and-features/america-becomes-absolutely-fabulous-9585525.html