Luxury Institute News

April 25, 2016

Inside the Hermès Birkin Bag That Sold For Record $298,000

Forbes
By: Eustacia Huen
April 26, 2016

It has only been ten months since an Hermès fuchsia Birkin bag was sold at Christie’s handbag auction in Hong Kong for record-setting $221,846. But earlier this month, an extremely rare 35cm Hermès braise shiny porous crocodile Birkin bag with 18-karat white gold and diamond hardware became the most expensive resold Birkin bag at $298,000.

Aside from being one of the rare few handbags that has ever been produced in the world, what makes this particular Birkin bag so special is how it represents the pinnacle of luxury handbag craftsmanship, according to Dirk DeSouza, Spokesperson of Privé Porter. Featuring the “finest crocodile skin treated with the most decadent, deepest red color imaginable, it takes a craftsman (with at least two years of apprenticeship experience at Hermès) about 50 hours to singlehandedly assemble this bag, perhaps even more when considering the diamond inlays and gold hardware,” he said. As for the condition, this $298,000-handbag which Privé Porter acquired in 2015 was unused, in “store fresh” condition and in its original packaging.

But beyond all the labor, material cost and exclusivity, another factor that could explain this hefty price tag may boil down to preference, according to DeSouza. “Marked by the fact that one could only buy a Birkin after developing a long, verified financial relationship with the brand, showing loyalty through spending roughly around $10,000 or $20,000, some of the notable challenges of landing a Birkin bag include the multi-year long waiting list and stringent quota that only allocates even Saudi princesses only two Birkin bags per year,” he said. And “with stores being allocated only a very small number of bags discreetly held in the back,” DeSouza continued, “odds are slim for customers to get a particular color, material, and size upon first try.” Hence, this may be why the anonymous buyer was willing to splurge much more for the exact bag he or she coveted.

Unlike previous record-breaking sales, this particular bag was not auctioned off at Christie’s ($221,846 in 2015) or Heritage Auctions ($203,150 in 2011). It was sold by Privé Porter—the world’s largest curator of unused Hermès Birkin bags which exclusively posts their inventory on Instagram. Typically, most buyers would review the inventory, request for additional photos, details, and verification of original documentation before making the purchase with Privé Porter. But the anonymous buyer of this $298,000-handbag actually first took note of the luxury bag in the press coverage of the World’s First Pop-Up Yacht that contained $2 million in Birkin bags during the 56th Fort Lauderdale International Boat Show in November 2015.

While this deviation from previous record-breaking auctions by no means indicate a shift in the way people shop for luxury goods, it does highlight how shoppers are more readily able to access coveted luxury items beyond notable auction houses and vintage stores. Nevertheless, Milton Pedraza, Founder and CEO of the Luxury Institute believes the increasingly fierce market would still have room for auction houses such as Christie’s and Sotheby’s, as consumers could generally trust them more for authenticity. Ultimately, Pedraza noted, “So long as you could trust the seller, ensure that the transferal of funds is safe and sound, and verify the product’s authenticity, it almost doesn’t matter whether you first gain knowledge of the product from an auction, a boat show, Instagram or Snapchat.”

Source: http://www.forbes.com/sites/eustaciahuen/2016/04/25/inside-the-hermes-birkin-bag-that-sold-for-record-298000/2/#34e3347f74ba

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April 21, 2016

The Future of Luxury Is Now, as Heritage Brands Meet New Demands

Robb Report
By: Booth Moore
April 19, 2016

The world’s most exclusive brands—many of which cling to tradition—are reshaping their long-standing practices to provide smarter, more immediate, more sustainable, and healthier products and services. Yet technological advances and innovative new business models are not the only forces driving the rapid evolution of the luxury marketplace. At the heart of these changes are dramatic shifts in the values, attitudes, priorities, and expectations of you—the consumer.

It was one of the most exclusive fashion shows of all time. When Tom Ford debuted his comeback women’s collection in September 2010, he invited only 100 people to watch Lauren Hutton, Julianne Moore, Daphne Guinness, Beyoncé, and his other famous muses model sexy python-print gowns and fringed coats on the runway. The event took place months before the clothes would arrive in stores, and no photographs were allowed.

When Ford introduces his latest fall/winter collection this September, by contrast, anyone will be able to view the pieces online, and those with sufficient means will be able to purchase items as soon as they come down the runway. This is part of a new see-now-buy-now approach that Ford is testing. Burberry, Diane von Furstenberg, and several other fashion brands have launched similar programs.

“In a world that has become increasingly immediate, the current way of showing a collection four months before it is available to customers is an antiquated idea,” said Ford in a press release. “Our customers today want a collection that is immediately available.”

Ford’s about-face is telling. New technology, market trends, and changing social attitudes have brands and companies catering to customer demands in an unprecedented manner. Now you can acquire nearly any item (a new Zenith watch from Mr. Porter, for example) the same day or engage any service, even a private jet charter, immediately, with the swipe of a finger, and have practically anything customized to your preferences. Even so, we want more than that.

“People still buy luxury products,” says Claudia D’Arpizio, a partner at the management-consulting firm Bain & Company, which reports that the global luxury industry grew by 5 percent from 2014 to 2015 and surpassed $1 trillion in retail sales. “But they value the experience around them more than the products themselves, since the experience is more shareable.”

More of us, in other words, seek meaning from our means. “We have gone from ‘extra’ values to ‘intra’ values,” says Olivier Abtan, a partner and managing director at the Boston Consulting Group, another management-consulting firm. “That means spending good time, sustainability, health, and family.”

Thus, luxury could be a private meeting at the base of the Himalayas with an oracle ordained by the Dalai Lama, arranged by the travel company Cox & Kings; or waking up to sunrise yoga on the rooftop helipad of the Four Seasons Beverly Hills. It could be a Ralph Lauren necktie that warns you when your heart rate accelerates too rapidly, a Bentley whose interior is lined with a material made from non-animal protein leather, or your own mouse avatar, on which doctors can test cancer treatments to determine which would be most effective for you.

Technical Support

As Ford notes, you want immediate access to items, and digital platforms provide that. They also enable you to make informed purchases more easily and to engage conveniently with brands on a personal level. “Technology is a driver of shopping and customer experience,” says D’Arpizio.

According to Joshua Schulman, president of Bergdorf Goodman and NMG International at the Neiman Marcus Group, 75 percent of his company’s customers do research online before buying an item. Saks Fifth Avenue recently launched a service through which associates are available online around the clock, and they can curate personalized virtual boutiques for you on the company’s website.

E-commerce, once thought to be only for mass-market brands, is becoming critical to the luxury sector. “In the U.S., some fashion brands have 20 to 30 percent of their sales online,” says Abtan. He predicts that within the next year or two every luxury brand will be selling online, including such holdouts as Chanel and Harry Winston. Regardless of the nature of the purchase, it seems everyone enjoys the convenience of shopping online.

But as larger luxury brands proliferate on the web and open stores in every city, smaller boutique brands are filling a niche by providing individualized experiences and access. Human contact, when it’s on your terms, can be the height of luxury.

In February, just hours after his fall/winter-collection runway show in New York, the women’s-wear designer Joseph Altuzarra spent an entire afternoon at Bergdorf Goodman greeting clients as part of the store’s Right from the Runway initiative. He explained his inspiration for the collection (Jim Jarmusch’s vampire film Only Lovers Left Alive), described the work involved in the soutache braided embroidery on the back of a coat, and offered suggestions on how to style different looks. One woman, who was visiting from Europe, planned to buy a green ombré tie-dyed dress from the collection. After chatting with the designer, she purchased several additional pieces. “Women love having a relationship with the product they buy, and part of that is having a relationship with the designer,” says Altuzarra. “Some designers are able to do that through digital and Instagram, but usually that’s a relationship with a younger, more aspirational client. At the price point we’re selling at, with $5,000 dresses, our customers are digitally aware, but they are not influenced by it. They are not on Instagram 24/7 looking at runway shows.”

At his showroom in Manhattan, jeweler James de Givenchy works with each of his clients to create a one-of-a-kind piece. The average wait time for completion is eight weeks, and no one complains. “We have 12 manufacturers downstairs, and we serve a small market of people who want to have things made especially for them,” de Givenchy says. “It’s the experience of meeting and discussing what their needs are.”

Have It Your Way

The travel industry also recognizes the value of individual attention. Companies understand that you want to personalize trips and experience your passions. This could mean attending a sold-out baseball game in Osaka, Japan, or shopping for a Ferrari at the automaker’s headquarters in Maranello, Italy, according to Scott Wiseman, president for the Americas at Cox & Kings. “It used to be that luxury had to do with being first to a new property or destination,” he says. “Now people want to be part of something instead of watching it.” Wiseman says his clients can overnight in a Maasai mud hut, for example, and learn something of the local culture.

Neil Jacobs, CEO of Six Senses Hotels Resorts Spas, sees a demand for nontraditional travel experiences from his company’s clients. “We never talk about exclusivity,” he says, “we talk about inclusivity.” He cites the appeal of the organic free-range chicken farm at the brand’s Yao Noi property in Thailand, where you can collect your own eggs for breakfast. “It’s about experience and community engagement,” says Jacobs. “Customers who are spending north of $1,000 a night want more than just good service and a great bed.”

Community engagement can extend to guest rooms. Gone is cookie-cutter hotel design: “People are preoccupied with the personality of spaces,” says Ian Carr, co-CEO of the hospitality and residential design firm Hirsch Bedner Associates. “They don’t want generic or transient. They want curated, personal, locally connected.”

Hospitality companies also recognize guests’ desires for seamless service and freedom from awkward, time-consuming social interactions. Technology can help address those demands. “More and more, people don’t want to talk to anyone,” says Herve Humler, president and COO of the Ritz-Carlton Hotel Company, which has a GPS-enabled service in the works. It is expected to allow guests at the brand’s resorts to use their mobile devices to order lunch from the beach, for example, and have a server locate their chaise longue on the sand.

Sustainable Efforts

That lunch likely will not arrive in Styrofoam, and it could well include meat from animals that have been responsibly raised or produce that has been sustainably farmed. Cited in 2010 by the Harvard Business Review as a corporate mega-trend that would rival the impacts of mass production and electrification, sustainability is making its way into the luxury world. The luxury-industry conglomerate Kering’s first Environmental Profit and Loss report, published last year, set targets for reducing emissions and waste from its production and supply chain. Jewelry brands Chopard and Tiffany & Co. have begun using ethically mined gems and recycling gold, silver, and platinum, because an increasing number of customers demanded that they do so.

In the luxury-auto market, the SUV, with its relatively low mileage rating, has remained popular enough for Jaguar, Maserati, and Bentley to launch, or prepare to launch, their first models. However, according to a March report by Donatas Bimba of the market-research firm Euromonitor International, sales of plug-in electric vehicles are set to bounce back in 2016 and record solid growth from 2017 onward thanks to upgraded models and improved charging infrastructure. Bimba cited plug-in hybrid vehicles as “the most dynamic new car segment in the U.S.” and pointed to the BMW i8 and Mercedes-Benz S500e. He also noted the potential impact of the Model X all-electric SUV from Tesla, which is aiming to woo customers away from their Porsche Cayennes and Range Rovers.

“The electrification of the drivetrain is not a temporary phenomenon; it is the future of mobility,” says Gorden Wagener, the chief designer at Mercedes-Benz, which has plans to offer 10 plug-in hybrid models by 2017 and recently announced a new policy requiring top managers to drive electrified, as opposed to gas-powered, company cars.

In addition to offering more environmentally friendly models, luxury carmakers may begin adding sustainable materials to their vehicles’ cabins. “People on the top level of society—our customers—sooner or later won’t order a Bentley with 20 hides, because as a, say, vegan person, they will not accept it,” says Stefan Sielaff, director of design for Bentley Motors. “On the other side, they are not going to accept artificial leather, because it is oil based, so you really have to start experimenting with alternative, organic materials, such as textiles made of animal-free protein leather, silks, even stone.” Bentley is already offering stone veneers, made of rocks sourced from quarries in India, in its Mulsanne models.

The transition to autonomous-driving vehicles could have an even more profound effect on car design. “Maybe in the future, the car is a sitting room, a living room, a conference room, and you use the time in the car in a different way,” says Sielaff. “It becomes like sitting in first class of an aircraft.”

In BMW’s Vision Next 100 self-driving concept car, the steering wheel and center console retract so that the driver and front-seat passenger can turn toward each other. Another autonomous-driving vehicle, the Mercedes-Benz F 015 research car, is described as a “luxury lounge,” with chairs that can rotate to form a club-style seating arrangement.

The Balance Equation

Our own health is as important to many of us as the planet’s, and fashion and hospitality brands, along with hospitals and medical practices, are responding accordingly. Fashion labels are designing their own Fitbit devices (Tory Burch), activewear (Zegna), and connected clothing. Ralph Lauren’s PoloTech shirt works with an iPhone or Apple Watch to put real-time workout data in your hand. A smart suit or necktie that could advise the wearer on heart rate and body temperature may not be far off. “Living a luxury lifestyle isn’t just the dream of having a better life,” says David Lauren, executive vice president of global advertising, marketing, and communications at Ralph Lauren. “It’s also how technology can help you live a healthier, better life now.”

The country’s leading hospitals have long offered executive health programs that work with patients on preventive health care, nutrition, and stress management. The programs were initiated in the 1960s to protect C-level managers and board members considered valuable assets by corporations. “But now, the real growth segment has been in individuals motivated toward this kind of health-care surveillance,” says Dr. Benjamin Ansell, the director of UCLA’s Executive Health Program, which provides personalized, in-depth evaluations. Private practices offer similar programs.

Craig Venter, one of the first people to map the human genome, offers an executive physical at his latest venture, the La Jolla, Calif.–based Human Longevity. For $25,000, the company will sequence your DNA and run a full complement of tests to determine your risk for heart disease, melanoma, dementia, and other ailments. “Having the ability to control health and life outcomes is the ultimate luxury,” he says. (Some experts argue that genome sequencing alone may not be sufficient to detect health risks, and that further research is needed.)

Venter’s company is focused on advanced preventive care; others provide exclusive treatments. Champions Oncology is among the companies offering a mouse avatar to cancer patients. For a price starting at $10,000, Champions will remove a portion of the patient’s tumor, inject it into the mouse, and have the animal undergo different treatments to determine which will work best for the patient. (Doctors disagree on the efficacy of such practices when compared to human clinical trials.)

In the hospitality realm, hotels and resorts are providing health and wellness services that go far beyond facials and massages. The comforts of home on the road now include nutritious foods, fully equipped workout facilities, yoga, and spin classes. “It’s a luxury to have normalcy when you travel,” says Michael Newcombe, general manager for the Four Seasons Los Angeles at Beverly Hills. He oversees all 38 Four Seasons spas in the Americas and has partnered on services with local fitness professionals, dermatologists, and medical providers.

Health retreats offer increasingly sophisticated medical services, such as Alzheimer’s prevention through cognitive stimulation, sleep recovery programs, and couples counseling. “The old-fashioned notion of going to a health spa involves weight loss and plastic surgery,” says Alejandro Bataller, a vice president at the SHA Wellness Clinic near Alicante, Spain. “But now, it’s so much more.” The SHA experience includes classes at the clinic’s health academy, where visitors learn how to manage stress and cook healthy meals. And Bataller is working with a Spanish university to develop an app that will keep track of guests’ progress after they leave. “We are going to be able to support you through technology wherever you are,” he says.

But for all the ways luxury companies are employing new technologies to meet your demands and enhance your life—providing instant access to the latest fashions or seamless service at resorts and hotels or cutting-edge wellness programs—their ability to forge relationships with you and other clients may ultimately determine whether they succeed or fail, says Milton Pedraza, CEO of the Luxury Institute, a research organization in New York. “What wealthy people want is empathy, trustworthiness, the emotional elements of humanity,” he says. “It’s not a points program or Champagne when you walk in the store that matters. It’s doing little things that mean so much more.”

Accordingly, Pedraza says, the luxury industry is paying particular attention to women, and not just with marketing initiatives such as Bergdorf Goodman’s Right from the Runway. “[Women’s growing influence] is a big trend in luxury,” he says, citing Gucci’s Chime for Change charity campaign, supporting girls around the globe, and the LVMH-owned Champagne house Veuve Clicquot’s Business Woman Award as strategic outreach programs.

“Women have the say and the money,” he observes, “and we will see that grow as more millennial women get into higher levels of corporations. How will it manifest itself? Maybe a nicer world.”

Certainly that would be the most welcome change of all.

Source: http://robbreport.com/sports-leisure/future-luxury-now-heritage-brands-meet-new-demands#sthash.dNjDZXhF.dpuf

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April 12, 2016

Travel Professionals Identify 15 Luxury Travel Trends For 2016 And Beyond

Travel Market
By: Harvey Chipkin
April 12, 2017

Luxury travel buzzwords like authentic, local, curate, and, of course, experience may be overused, but they have become buzzwords because of their phenomenal staying power. While some trends fade with time, some just seem to resound with customers from one year into the next. Here’s how a group of luxury travel professionals and other experts see the trends shaping up at the high end of the market for the rest of this year and into the next.

1. Doubling down on local
“Travelers want to be with locals,” said Jack Ezon, president of Ovation Vacations in New York. “They want to be immersed in a destination. Instead of guides who know a lot of facts, they want insiders who can really give them the lowdown. Or they want a nightlife host who can take them to the coolest bars and nightspots and tell the story from their own perspective.”

At The Nines Hotel in Portland, OR, director of sales and marketing Laura Van Daal said, “Everyone in the hotel is a concierge and a local expert. They are trained to listen to the specifics of what a guest likes or is looking for, because everyone wants a different experience. We have contacts all over the city, so we can get to visit the rare books department of Powell’s Books, or we can get people into the Nike or Adidas employee store where they can get great discounts.”

Milton Pedraza, CEO of The Luxury Institute, said, “It’s not just about getting a table at the best restaurant, but it might be getting the right table. There’s a popular restaurant in Paris where all the tourists are on the second floor and the locals are on the first floor. If an agent knows a concierge, he might be able to get the client to a first-floor table.”

2. Authentic, but maybe not too authentic
Authenticity can be taken too literally. Said Ezon, “You really have to be clear with clients about what they’re getting. When they say they want a ‘sense of place,’ that really means they want to be in a hotel they can use as a springboard from which to see their surroundings. If guests get to a ranch and there’s no air conditioning, they might not be happy.”

3. Personalization: It’s the little things that count
Personalization doesn’t have to be a big deal. Ezon said he had a couple going to Africa for a honeymoon. After a long week of travel, they arrived at their camp and entered their tent to find pictures of their family on the “walls” and their wedding song playing. “They couldn’t believe it,” said Ezon. “It’s the agent’s job to provide that kind of information to the people on the ground.”

Matteo Della Grazia, owner of tour operator Fuoritinerario — Discover Your Italy, said, “We are seeing increasing demand for local and authentic experiences that allow clients to create their own local product. For instance, they can work for a day at a top Tuscany vineyard with a wine- maker to create a personalized wine, which will then be aged, bottled, and shipped to them. We call it Adopt A Barrel. We have a similar program for perfume.”

4. Hip at the high end
Hotels brands like Ace prove that travelers will spend more to be around people and things they perceive as hip. Still, said Van Daal, while “hip and real luxury can go hand in hand, being hip is not enough. You still need great service to truly be luxury.”

5. Whimsical wandering
It may be a generational thing but there are travelers who like to arrive at their destination without any plans beyond their first hotel stay. Ezon, for example, has a couple spending $100,000 on their honeymoon and doing it day by day, consulting with him continuously about what to do next.

6. Speaking meaningfully
“Access is one thing,” said Susan Farewell of Farewell Travels, “but an experience that satisfies a greater sense of purpose is the ultimate luxury.” Farewell is putting together a trip for a family of five going to southeast Asia, for example, that will include an elephant encounter, though they are not interested in anything that exploits the animals for tourism. “They are interested in a non-profit ethical elephant experience, where they see the animals but are not riding them or enabling any exploitation of them.”

7. Unexpected pairings
Travelers are combining destinations and experiences that are very different from one another. Farewell is working on one trip where the couple is spending five days doing a cooking program in Tuscany and then moving up to Lake Garda for a few days of sailing lessons.

8. Fun with food
Everybody talks about cooking lessons or meeting the local chefs, but some want to go further. Farewell notes that in Ho Chi Minh City, you can take a Foodie Tour by Vespa, where a driver takes each traveler from one food venue to the next. It’s a high level of curated street food options, coffee houses, etc. The experience is off-the-charts fun but also informative and delicious.”

Della Grazia said some clients visit local homes where they cook and eat with the residents; sometimes those hosts act as local guides to explore the neighborhood.

9. Long-term trip planning
“I work with clients long term,” said Farewell, “seeing their travel needs in terms of five-year chunks. We develop a five-year travel plan for them, which we revisit every year. So I get questions like, ‘Where are we going this summer?’ They assume I have already thought it through for them based on their past trips, their kids’ ages, and the five-year plan we designed.”
 
10. Destination roulette
While everybody tries to figure out the “hot destinations,” sometimes it’s just random or based on a magazine article or news event, or even a shift in currency. Douglas Easton, managing partner at Celestielle Travel, said, “Maybe a new hotel will open or there’ll be an article in a travel magazine and suddenly bookings will come in. We had not a single Namibia booking last year and suddenly had four separate ones. That’s why you just have to be prepared for what comes up.”

Also, it’s long been known that even the wealthy like to get the best possible value in their vacations, and one way to do that is by staying on top of exchange rates with the dollar. Said Ezon, “If your client is going to spend $40,000 on a trip and there’s a big swing in the currency, they could save a third or more on that. That is why Europe has remained popular.”

11. Exotic emerges
Pedraza noted that younger travelers are heading for more exotic places, like Cambodia and Bali. “They have already been to the more traditional destinations so there is a real opportunity here.”

And Scott Wiseman, president of Cox & Kings, said, “Whether it’s requesting tickets to a sold-out baseball game in Japan, taking a motorcycle journey through Patagonia, textile shopping in remote India, or taking a private polo lesson in Argentina, today’s travelers are limited only by their imagination.”

12. Convenience is king
Luxury clients are flocking to buy ancillary services that make their travel experience easier. He Ezon said that over the past three years Ovation has had a 37.4% increase in ancillary travel products including: luggage shipping, airport greeters (to assist with connections, arrivals, and departures), and park guides (VIP guides in amusement parks to help deal with lines, logistics, etc.)

13. The human touch
“Even young people don’t just want to be digital beings,” said Pedraza. “They want to engage with other people—whether it’s tour guides, people on the street, or other travelers. It’s like when electricity was invented. You would flick the switch on and off because of the novelty. Now the novelty of digital has faded and people want emotional connections.”

14. It’s nice to share
The quality of sharing accommodations—whether it be Airbnb or sharing options introduced by hotel companies—is improving, said Pedraza. “This might lend itself to the local trend, as well, “because your sharing host might for a small fee become your local guide.”

15. Art is the new cuisine
While food has taken a central place in luxury travel, said Ezon, so too has art. “So many properties are recruiting an artist-in-residence and turning their public spaces into evolving galleries from local artists,” he noted, with revolving art exhibits. The new Faena Hotel in Miami Beach kicks up the art theme with a whole art district, art programs for guests, and a children’s art immersion experience where local artists inspire kids to create their own masterpieces. The Ritz-Carlton Toronto has an in-house artist who designs plates for the hotel’s restaurant and works with guests to design their own.

Source: http://www.travelmarketreport.com/articles/Travel-Professionals-Identify-15-Luxury-Travel-Trends-For-2016-And-Beyond

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April 1, 2016

Heritage brands must amplify tradition of innovation to reach today’s consumer

Luxury Daily
By: Forrest Cardamenis
April 1, 2016

NEW YORK – Understanding the relationship between heritage and innovation is the key to appealing to today’s new consumer, according to panelists at the FACC Luxury Symposium on March 31.

Heritage brands have been successful for decades or centuries because within the heritage is a history of innovation around a core group of principles. While touting history could suggest to younger consumers that a brand is “old and stodgy” or the brand of their grandparents, focusing on innovating with products that appeal to today’s consumers will let the puzzle pieces fall into place.

“If we are heritage and brands that means we have stood the test of time, and we have stood the test of time because we have a tradition of successfully innovating,” said Trent Fraser, vice president Dom Pérignon, LVMH Wines & Spirits.

“We don’t make things that are required to sustain life; we have to find ways to fulfill people’s dreams and make them fall in love, and this requires innovation,” he said.

“Innovative companies ought to aspire to be heritage brands, because heritage brands have a history of innovation.”

FACC Luxury Symposium was organized by the French-American Chamber of Commerce.

Past and present
Before the commencement of the “Strong Heritage Brands: Artisans, Ateliers & Métiers” panel, a poll of the luxury executives in the room revealed that 81 percent believe the millennial attitude toward heritage brands is considerably different than their predecessors.

dom perignon.atelier bottle tasting
Dom Pérignon

“It’s not that surprising, but I think one of the most important things is desirability, not just in terms of millennials but for everyone,” Mr. Fraser said. “ One of my greatest challenges when I first joined was that there was this history and tradition of the brand’s story that needs to be told, but sometimes what comes with that is ‘old and stodgy, that’s my grandfather’s drink.’

“Telling that story today is quite difficult but we really need to bring it to life,” he said.

For Dom Pérignon, that story has been revitalized for younger consumers through the “Power of Creation” platform, which partners declared vintage wines with creators in different fields, bringing a fun, edgy and modern twist on the Dom Pérignon story.

For Baccarat, the sea change came on the level of how the product itself is marketed with “Everyday Baccarat,” which encourages consumers to extend their day by drinking from the brand’s crystal for breakfast and after dinner, not just for weddings and special occasions.

Baccarat Harcourt
Baccarat tumblers

“I was walking home on my first day, and it occurred to me, ‘We all have designer shoes, we all have designer handbags that we use everyday, yet we’re afraid to chip our glass so we don’t use it,’” said Jim Shreve, president, USA at Baccarat. “But look at the bottom of my shoes. Look at my watch with all the scratches – and these cost much more than some of our products.”

Everyday Baccarat appeals to all consumers, but with millennials being particularly skeptical about buying a product they will use infrequently, the proposition of crystal for everyday use could sell them on the brand.

The focus on the product is particularly important in fashion and jewelry, where brands must not shy away from being different or departing the norms.

robb.dec2014 chanel jewelry
Chanel jewelry ad

“Chanel as a heritage brand has been supported and carried by Mademoiselle Chanel through one word, for me, which is ‘disruptive,’” said Olivier Stip, senior vice president fine jewelry & watches, Chanel USA. “We are always trying to find what is the right balance between creation for the sake of the creation and the creation for a use for the customer.

“Heritage brands are the best place to be innovative,” he said. “When creative comes first and the marketing follows just to do the orchestration, that’s how you can create the blend, the innovation, and communicate the proper way.”

When telling a heritage story, brands must remember to keep the history on the present. The goal is not to sell consumers on a past success but rather on a tradition of quality still visible today.

For Van Cleef & Arpels, a museum exhibition must build a bridge between past and present.

Van Cleef & Arpels TEFAF 2016
Van Cleef & Arpels TEFAF 2016

“We go to a museum, we organize an exhibition, but the whole point is to prove craftsmanship is a living art and it doesn’t stay stuck in time,” said Alain Bernard, president and CEO of Van Cleef & Arpels Americas. “Many people, many brands organize exhibitions in museums where they show pieces without any connection to what’s happening now.

“We need that heritage – the branches of a tree are never longer than the roots, so you need to have strong, deep, long roots before branching out – but the whole point of the exhibition is to show the evolution,” he said. “What we do today, what we do everyday, is inspired by what we have done before, and the exhibition shows that.”

Even in the service industry, where the ability to sell a consumer on an experience rather than on a product they don’t strictly need seems different, the principle is the same. Across all sectors, brands must adapt, whatever their service is – whether it is providing a place to stay or providing clothing and jewelry of a high quality that will last a lifetime – to the contemporary mindset.

“At Ritz-Carlton we absolutely believe exceptional service is timeless, it never goes out of style,” said Tina Edmundson, global officer of luxury and lifestyle brands, Marriott International. “What that actually means continues to evolve.”

Ritz-Carlton Chicago Deca Restaurant
Ritz-Carlton Chicago Deca Restaurant

Rather than fear these changes, whether it is mindset about what qualifies as a desirable product, a different purchase journey or something else entirely, brands selling either goods or services must find the proper blend of change and heritage. To that effect, 71 percent of executives in the room believe that brands should communicate CSR guidelines in an explicit manner to connect with millennials.

Shifting emphasis
In the case of personal luxury goods, another balancing act is the one between online and in-store channels. More than half of polled executives say that with new business models and a new generation of luxury consumers, the retail store is more important than before.

Despite the continued importance of the bricks-and mortar store, they are still generally operating in an out-of-date fashion, creating obstacles for sales staff, according to the Luxury Institute.

The consultancy conducted a focus group with 40 store managers who oversee multi-brand, premium and luxury stores, and found that there are a number of improvements that companies could make to help their in-store staff be more productive and effective. From updating technology and CRM systems to reallocating employee resources, there is room for improvement that needs to begin at the top (see story).

By the same token, some brands should opt to play up heritage, especially as they make a move to enter the new market. In these situations, connotations of datedness or stodginess will be displaced by curiosity about national heritage.

British brands looking to gain a foothold in the United States would do well to emphasize their “Britishness,” according to panelists at “GREAT Britain on Madison Avenue” held on Nov. 5.

British identity is wrapped up into ideas of elegance, heritage and wit. Brands venturing out of the United Kingdom into the U.S. or other countries need to find ways to inform consumers not just of the brand but also of the significance of its home country (see story).

“The challenge for our brand is the challenge for any brand – to continue to evolve based on the environment,” said Alex Bolen, CEO of Oscar de la Renta. “We need to evolve around a core set of standards and principles that should remain unchanged, but how those are expressed will change as our environment changes.”

Source: https://www.luxurydaily.com/heritage-brands-must-amplify-tradition-of-innovation-to-reach-todays-consumer/

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March 24, 2016

Younger affluents with higher incomes more willing to pay for fine wines

Luxury Daily
By: Jen King
March 24, 2016

As a consumer’s income bracket increases, the likelihood of drinking wine once per week also rises, according to a new survey by the Luxury Institute.

The “Premium Wine Luxury Brand Status Index (LBSI)” survey found that 90 percent of affluent consumers in the United States self-identify as wine drinkers, with 58 percent drinking wine at least once per week. How often an individual indulges in a glass of wine and how much they are willing to spend on bottles is directly linked to income, insights that may provide the oenology industry an understanding on how to best market to this demographic.

“Wine is experiential. Consumers are purchasing wine at higher volumes because they enjoy the restaurant and at-home dining experiences that include a great quality wine,” said Milton Pedraza, CEO of the Luxury Institute. “Consumers will continue to spend more on experiences rather than products. Not only will they consume more wine but they will consume wine of higher quality and at a higher price.

“Wine continues to be more popular than beer or spirits, and it is acquiring a greater share in the beverage market; this trend has been evolving over the years,” he said. “Women and millennials, in particular, are consuming at a much higher rate as their buying power and connoisseurship evolves.”

The Luxury Institute’s Premium Wine Luxury Brand Status Index surveyed consumers 21 and older from households with an income of at least $150,000 a year.

Wine or reason
For the survey, affluent consumers were asked to evaluate 21 premium domestic wine brands based on the four pillars of brand value. Luxury Institute defines these pillars as superior quality, exclusivity, enhanced social status and an overall superior consumption experience.

The survey also asked participants to share which winemakers they feel are worth paying a premium price for, those they would recommend to friends and family and which wines they plan on purchasing next.

Luxury Institute found that of the 90 percent of affluents wine drinkers, 58 percent drink wine once a week, and 78 percent drink wine at least on a monthly basis. Affluent women are also more likely to be wine drinkers, with 61 percent drinking wine at least once a week compared to only 55 percent of men, who also tend to spend more on fine wine.

As consumers age, the frequency of weekly wine drinking also increases, notably after age 55, and peaks at 65 and older. Of this older demographic, 63 percent consume wine at least weekly.

Puiforcat Sommelier
Puiforcat Sommelier collection 

Similarly with age, as income rises so does the likelihood of enjoying a glass of wine during the week. Luxury Institute found that 53 percent of respondents earning less than $200,000 drink wine weekly or more frequently, with the statistic rising to 67 percent for those earning $500,000 or more in annual income.

Understandably, the price a consumer is willing to pay for bottles of wine is dependent on their income demographic. Willingness to pay for higher priced bottles increases with income and surprisingly decreases with age.

Consumers earning less than $200,000 spend $24 on average, compared to an average of $41 per bottle for those with incomes of $500,000 or more. Additionally, consumers under the age of 45 years old spend $33 on average for fine wine, but those 65 and older purchase bottles at retail stores for $23.

These averages are also dependent on occasion, with consumers typically purchasing  $28 at retail stores, $36 for a casual weekday dinner at a restaurant and $48 for weekend dining or during a special occasion of some sort.

Silversea Culinary Arts & Wine Voyages
Silversea Culinary Arts & Wine Voyages

In regard to purchasing wine at a restaurant, the survey found that seven out of eight affluent consumers do so. Twenty-eight percent do so at least once a week, with 62 percent of purchases being by the glass rather than the bottle.

The higher the income, the more likely it is that a consumer will opt for a bottle. Those with $500,000 or more in income are 63 percent more likely to buy wine by the bottle in a restaurant, spending on average $70 for special occasions and $55 for a weekday dinner.

This is much higher than the average of $48 per bottle for special occasions and $36 for weekday dining spent by affluent consumers.

It’s okay to wine a little
Recently, increased attention has been placed on the wine industry from luxury brands.

Four Seasons Hotels and Resorts, for example, is pursuing a different kind of California dreamer with its latest property.

Alongside Alcion Ventures and Bald Mountain Development, Four Seasons will open 85 guest rooms and 20 private residence villas in Napa Valley, CA in early 2018. Napa Valley’s allure to cultured luxurians makes it an obvious destination for the hotelier, which already has several California properties (see story).

Four Seasons Napa Valley
Four Seasons’ Napa Valley, CA property 

Also, Hermès-owned silver maker Puiforcat is paying homage to the ritual of wine tasting with the help of a duo of experts.

Together with sommelier Enrico Bernardo and designer Michael Anastassiades, the brand created a collection intended to bring a new experience to those who revel in the tasting or serving of the beverage. Working with external creatives helped Puiforcat go outside the expected, traditional wine glass (see story).

Winemakers should rely on experiential storytelling and outreach to pull consumers in their direction.

“Quality and experience matter tremendously,” Mr. Pedraza said. “Winemakers should use their winery and membership experiences to create a client experience that makes them feel special.

“Wine companies should also use the on-premise platform, restaurants, hotels, etc., and off-premise platform, wine and liquor stores, to deliver beyond the product and create an experience that is focused on a great quality product with a compelling story and an experience that creates a long-term relationship,” he said.

Source: http://www.luxurydaily.com/younger-affluents-with-higher-incomes-more-willing-to-pay-for-fine-wines/

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March 11, 2016

As Wall Street Bonuses Dip, New York Luxury Markets Are Feeling The Pain

International Business Times
By: Owen Davis
March 11, 2016

At Lane Jewelers in lower Manhattan, owner David Ostrow looked out the window. On the sidewalk, a man with a gray mustache peered intently at the necklaces in the display case. “This is his third time here this week,” Ostrow said. “He hasn’t bought anything.”

Business is down at the jeweler, a third-generation family-owned store just a block from Wall Street, whose clientele includes both C-suite executives and back-office bankers. The culprit: a lackluster season for big bank bonuses. “I can already tell you my numbers are down from last year,” Ostrow said.

When bonuses spike, Lane does brisk business on items like diamond earrings and tennis bracelets, purchases Ostrow called “pick-me-ups.” But the past few months have been a letdown. “Obviously there’s a trickle effect,” Ostrow said. “These guys’ whole year is their bonus check.”

Eight years after the financial crisis, Wall Street bonuses have yet to match the soaring peaks of 2006 and 2007, and recent gains in annual payouts have proved short-lived. The average New York investment banker’s bonus fell by 9 percent in 2015 to $146,200, the second down year in a row, according to New York Comptroller Thomas DiNapoli. And luxury markets are feeling it.

“The financial sector has been important for the New York economy since Peter Stuyvesant’s time 400 years ago,” said Lawrence J. White, professor of economics at New York University’s Stern School of Business. “There is no question there’s a ripple effect if bonuses aren’t going to be what they’ve been in the past.”

Of course, the smaller average bonus, which amounts to nearly three times the median American salary, is nothing to sneeze at. But in New York City, the world’s luxury capital, a wobble in bankers’ bonuses sends a shudder through markets for everything from Lamborghinis to $40 steaks.

Wages and salaries in the securities industry make up more than one-fifth of total New York City income, according to the comptroller’s office, although only 5 percent of New Yorkers work in finance. Overall, Wall Street bonuses add up to more than twice the incomes of all U.S. minimum-wage workers.

The total decline in 2015 year-end bonuses amounted to $1.7 billion, although not all of that sum will be felt immediately, since it includes deferred stock awards. But bonus season, which typically lasts from December to March, serves as a bellwether for luxury markets, according to Milton Pedraza, chief executive of the Luxury Institute, a high-end consulting goods and services consulting firm.

“Salaries are great, but bonuses are what really make the financial services industry,” Pedraza said. “It’s a performance-driven industry.”

Several factors combined to crimp bonuses in what DiNapoli called “a challenging year in the financial markets.” The seven-year bull market in stocks finally stumbled over the summer, catching some banks off balance. And the advance of new regulations has weighed heavily on some banking divisions, particularly bond trading, where revenue has fallen nearly 40 percent since 2010 at the 10 largest investment banks.

“The uncertainty that exists in the marketplace will make people store their nuts for the winter a great deal more this year than in previous years,” Pedraza said. The same global economic worries that battered the markets in the past nine months have also diminished high-end foreign demand, Pedraza said, estimating that luxury sales have dipped as much as 20 percent in the past year.

Robert Serrano is feeling the pinch. As manager of Manhattan Motorcars, Serrano sells the type of high-end cars financiers often splurge on: Bugatti, Porsche, Rolls-Royce. But in a disappointing Wall Street bonus season, few are moving. “We had an extremely slow January and February.” Serrano said. “If the market has any effect on high-end cars, then you’re definitely seeing it.”

Serrano, who said that around half his clients work in the financial industry, has had to accept multiple canceled orders already this year, a relatively rare occurrence. “The market has a direct effect,” Serrano said. “Our cars are wants, not needs.”

Wall Street weddings are also shrinking with the bonuses, according to Maya Kalman, CEO and creative director at Swank Productions, a luxury wedding planning and event design firm in the Chelsea section of Manhattan. Two clients who work in banking have recently approached Kalman to dial back on the number of wedding invites they can afford. For a Swank event, clients pay roughly $1,000 a head.

In a season that usually has clients looking forward to spring, sliding bonuses have put a slight chill on the planning business. “In March the weather gets better and people’s outlook gets brighter,” Kalman said. “But the first couple of months this year, bonus issues have definitely played a role in people being a little more skittish about their budgets.”

At Delmonico’s restaurant just off Wall Street, smaller bonus checks have meant fewer celebratory steaks for the bankers who work in the buildings towering overhead. “Naturally, when the bonuses are not what people expect them to be, we might see a slight decline,” said Carin Sarafian, the director of sales and marketing at Delmonico’s.

But business at the famed steakhouse, which opened in 1837, hasn’t suffered too greatly. The modest downturn in diners toasting big bonuses has been replaced by more morale-building team events, Sarafian said, as managers seek to assuage bankers whose payouts shrank in 2015.

And the restaurant has seen worse than this year’s disappointing bonus haul. “We’ve weathered all the ups and downs of markets, 9/11, Hurricane Sandy,” Sarafian said. “I don’t think the bonuses are going to really hurt Delmonico’s anytime soon.”

At Lane Jewelers, Ostrow expressed optimism that bonus season might end on a positive note. A smartly dressed man standing at the counter was hopeful, too. “I find out Friday,” he said, crossing his fingers.

Source: http://www.ibtimes.com/wall-street-bonuses-dip-new-york-luxury-markets-are-feeling-pain-2332717

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March 7, 2016

Luxury Institute finds 7 improvements luxury retailers can make right now to improve sales

Luxsell
By: Victoria MacDonald
March 2, 2016

In the excellent article “Luxury Institute Reveals 7 Major Improvements Store Managers Recommend to Drive Sales Performance Right Now,” Milton Pedraza, CEO of Luxury Institute, LLC, shares results of an intimate focus group he conducted with  store managers of premium and luxury brands and shares their best practices and recommendations to improve sales.

“…luxury and premium retail store management today is configured for rigid Industrial Age operational efficiency, rather than highly-adaptive, relationship-building effectiveness.”

– Milton Pedraza, Luxury Institute

The seven improvements include:

  1. Store teams desire to be more relationship-centric and want to be freed from back-office tasks.
    The suggestion is to separate back-of-house and customer-facing staff. This way your sales associates can do what they do best – build relationships with your customers.
  2. Select and maintain the right-sized team to drive superior results.
    Managers shared that 40% of their employees are poor performers. Make sure you’re hiring the right people! When I worked at Tiffany & Co., we moved away from hiring associates based on their experience in the jewelry industry, to using a pre-hire assessment to find those associates who best demonstrated the personality traits and behaviors we valued.
  3. Better, smarter, and faster ways to manage inventory and client data are needed right now.
  4. Teaching fundamentals once a year is great, but what is really needed in stores is coaching on a much more frequent basis.
    Learning is a process, not an event. Managers must become part of the training process in order to support, encourage and sustain the learning. But that means managers may need help in developing their coaching skills. Take a look at a simple coach-the-coach program I outlined in an earlier post.
  5. Use social media and other tools to connect with millennials and drive them to stores.
  6. Empower local innovation since store teams know clients better than anyone else.
  7. Compensation is fair, but the goals are sometimes not.

Though luxury store results thus far for 2016 may be less than outstanding, the collected wisdom from these store managers can help you refocus, revamp and revive your store’s approach to luxury sales.

http://luxsell.me/2016/03/02/luxury-institute-finds-7-improvements-luxury-retailers-can-make-right-now-to-improve-sales/

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Saks extends associates’ knowledge, expertise to curated online service

Luxury Daily
By: Jen King
March 7, 2016

Department store chain Saks Fifth Avenue is personalizing its online shopping experience to transfer the service received in-store to anywhere consumers wish to shop.

In recent months, omnichannel strategy has taken hold over retailing, with brands coming to execute programs that enhance the relationship between in-store shopping and that conducted online. As such, the luxury industry will benefit from increasing personalized interaction online as a reflection, and continuation, of the experience while in a physical store location, thus offering its consumers a consistent presentation and level of service regardless of the platform.

“When it comes to luxury shopping, there is no substitute for the personalized experience offered by a knowledgeable Saks Associate,” said Joe Milano, senior vice president, general manager, digital retail and ecommerce at Saks Fifth Avenue, New York.

“Providing our customers with the same high-touch Saks experience and store environment online will not only help us strengthen relationships with existing customers, but also allow us to connect personally with the saks.com customer,” he said.

“Saks Fifth Avenue prides itself on the relationships and experiences built between its associates and customers. With this new technology, Saks has the ability to provide all customers the same 1 to 1 personalized experience no matter the channel.”

Personal shoppers online
Saks’ latest endeavor introduces a consumer offering that brings the retailer’s in-store experience directly to its online shoppers. Through the initiative, consumers can connect with Saks Associates around the clock, every day of the week, to reap the benefits of its personalized services.

For the online service program, Saks teamed with retail technology firm Salesfloor. As a software-as-a-service (SaaS) platform, Salesfloor works to connect local retail sales associates with online shoppers to create a personalized experience.

With quick integration that melds easily with a retailer’s existing CRM and client software, Salesfloor can be customized to fit with a retailer’s specifications. According to Salesfloor, retailers that partner with its SaaS platform see a tenfold lift in online conversations, and up to a 75 percent increase in average order value.

“In today’s world we have omni-channel customers, therefore associates in the store need to be omnichannel as well, so they can serve the customer even after they have left the store,” said Oscar Sachs, CEO of Salesfloor. “Salesfloor redefines the role of a sales associate so that they can directly drive the online business as much as the in-store business.

“With Salesfloor, retailers can empower associates to develop relationships at scale with customers and to personalize the online experience with curated product, content and live service,” he said.

Using Salesfloor’s SaaS, Saks now has the ability to create customizable saks.com boutique pages with the help of its team of dedicated Saks Associates. Each customized online boutique will be personally curated by a Saks Associate to include an assortment of merchandise and will be easily found through a dedicated URL.

Similar to a favorite in-store associate, consumers can continue to refer to the dedicated URL that houses their curated merchandise picks based on their personal taste and needs. The program also gives Saks Associates another way to connect with new and established consumers in the online space.

Connections can be had over hand-picked merchandise, styling expertise and industry knowledge. Further adapting to how the consumer wishes to shop, the Saks Associates can be reached via live chat, email or through scheduled appointments.

Additional touchpoints include the Saks Associate’s ability to showcase their online storefronts to consumers through email and social media tools built within a mobile application.

“Luxury brands depend on creating relationships with their customers and offering a high level of service,” Mr. Sachs said. “In-store, luxury brands do a great job at differentiating themselves from the competition through store design, sales associates and merchandising.

“However online the differentiation is much more narrow and retailers are struggling to maintain loyal online customers, which is increasingly becoming a large part of the retail business,” he said. “With Salesfloor, retailers can now leverage their trusted associates to better serve the online customer and to personalize the online experience.”

Furthering experience
The human element is going to be the top differentiator among luxury brands going forward, according to the CEO of Luxury Institute at Luxury Interactive Europe 2015.

As consumers increasingly experience the world through screens, they will come to crave the now-rare human connection. Here is where luxury brands can help themselves stand apart by outperforming their peers at relationship building and delivering a worthwhile personal touch (see story).

For instance, department store chain Neiman Marcus is changing the apparel shopping experience for consumers with a new digital mirror that remembers users.

The Memory Mirror takes a 360-degree video of a client modeling a particular outfit, allowing them to see clothing on themselves from all angles as well as save and share the visual. This interactive digital touchpoint will alter the in-store experience for Neiman Marcus’ consumers and further empower sales associates to provide customer service (see story).

Also, retailer Nordstrom expanded its mobile commerce capabilities with a new feature that enables shopping via text message.

The retailer claims its TextStyle is the first of its kind for a department store in the United States, allowing for a secure, one-to-one buying experience between a consumer and a sales associate. Consumers are constantly connected to their phones, so this enables Nordstrom to serve them in a personal way no matter where they are (see story).

“Retail’s landscape is changing –customers demand a seamless shopping experience across all channels,” Saks’ Mr. Milano said. “To capitalize on this, Saks Fifth Avenue found a digital solution that combines our highest trafficked channel with our highest converting channel, our stores. Now, Saks Associates can connect directly to customers 24/7 via this new technology.”

Source: https://www.luxurydaily.com/saks-extends-associates-knowledge-expertise-to-curated-online-service/

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March 4, 2016

Save the date May 4: Luxury Roundtable: Midyear Review 2016

Posted in Uncategorized

Luxury Daily
March 3, 2016

Please mark your calendar: Luxury Daily will host its Luxury Roundtable: Midyear Review 2016 conference in New York on Wednesday, May 4.

Confirmed speakers include senior executives from Rolls-Royce Motor Cars, XOJet, Redfin and the Luxury Institute, among others.

The daylong summit will focus on the state of luxury at the midyear point, what luxury brands and retailers have accomplished strategy-wise so far in this economy and what they expect to do to steer their companies through the rest of the year.

This is the only midyear luxury conference. It is part of Luxury Daily’s portfolio of events, including Luxury FirstLook, Luxury Insights Summit and the Luxury Retail Summit.

The agenda with more speakers and their talking points will be posted sometime next week.

Please check back in with Luxury Daily. We hope to see you at our event where you can learn and network with smart luxury marketers.

Source: https://www.luxurydaily.com/save-the-date-may-4-luxury-roundtable-midyear-review-2016/

 

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March 2, 2016

Retail store system is broken: Luxury Institute

Luxury Daily
By: Sarah Jones
March 2, 2016

Bricks-and-mortar retail is still generally operating in an out-of-date fashion, creating obstacles for sales staff, according to the Luxury Institute.

The consultancy conducted a focus group with 40 store managers who oversee multi-brand, premium and luxury stores, and found that there are a number of improvements that companies could make to help their in-store staff be more productive and effective. From updating technology and CRM systems to reallocating employee resources, there is room for improvement that needs to begin at the top.

“Currently, stores are designed to be points of sale rather than relationship building centers,” said  Milton Pedraza, founder and CEO of Luxury Institute. “Stores need to be redesigned aesthetically and digitally to be spaces that make clients feel special and inspires them to buy.”

In-store solutions
Store managers frequently find themselves off the sales floor as they work to fulfill organizational tasks in the back of the house, such as sorting inventory, generating reports and communicating with the corporate office. This time they spend in their offices takes away from time they could be spending creating a relationship with customers.

In addition, sales associates may run into the back to open boxes, leaving them frazzled and potentially dirty when they return to meet clients on the sales floor.

Apple, for one, has changed this division of responsibilities, separating the functions of operations and consumer engagement into different positions. In place of the store staff, a specialized team could take care of back of house operations for a small region.

Hugo Boss New York Fifth Ave store 400
Hugo Boss store on Fifth Avenue

This frees up sales staff to focus on client retention, data collection and conversion, which will add up to sales in the long term. In this environment, Luxury Institute found store managers would feel more comfortable having higher sales goals set.

More than half of managers said they have absolutely no control over hiring and firing their employees, and none have complete control, creating an environment where up to 40 percent of workers are underperforming.

While they do not have the ability to build their teams to their specifications, store managers are still held accountable for the results generated by their employees. These managers would like corporate to enact educational outreach to train managers and associates in employee selection, helping them to assess a candidate’s fit for the job outside of their skills and experience.

Size of staff is also a concern, as the managers polled agreed that just raising their employee number by 10 percent could boost sales by 25 percent.

Most managers appreciate the annual meetings that bring together store employees and corporate representatives to discuss products and store challenges. However, most feel that this one-time meeting is not enough, preferring a biannual schedule or a meeting per new season.

Gucci_Store_ Montenpoleone_handbags
Gucci Montenapoleone store

Managers are also concerned about their coaching of employees, something that many say they never received any training on. The efficacy and frequency of coaching from a manager to a sales associate can have a great impact on sales.

Corporate should also give store-level managers a certain level of freedom to respond and react to opportunities in their local market to drive growth. This may mean sharing best practices with a non-competitive brand or using insights to innovate the store experience.

Typically, corporate chooses to dictate down to the stores, allowing minimal room for flexibility.

In-store technology has not caught up to today’s omnichannel shopping patterns. Retailers could be missing out on 10 to 20 percent of sales by not sharing inventory across channels, as they are unable to offer another option to purchase an out-of-stock item in their store.

Another investment that would change client engagement is the implementation of a customer relationship management platform. Many retailers have no CRM system in place, choosing to store data gathered at point of sale in clunky spreadsheets, and only half have a CRM that they like.

DFS shopper3
DFS shopper

CRM platforms allow associates to access data more easily, helping them to spot opportunities for client engagement. Technology is a big deal to staff, and stores without upgraded platforms may see their top performers leaving to join a competitor who does have the necessary technology to help them be more successful.

“Brands have spent millions of dollars on the best technology and digitization in their stores, yet are seeing no return on investment due to low usage of the technology,” Mr. Pedraza said.

“However, these tools cannot help the associates increase their effectiveness if they are not actively engaged in using them,” he said. “Training and education dramatically increase the probability that the front line will use these tools to build client relationships and drive sales.”

Another step toward retaining staff is through compensation. Bonuses, which can be anywhere from 15 to 20 percent of a base salary, are hinged on reaching what are often considered unrealistic goals, particularly in the face of turbulent economies.

Instead, managers suggest incentives based on exceeding the previous year’s results.

Millennial mindset
Millennials are growing into luxury shoppers, but despite having the same income levels as their boomer parents at their age, the more youthful set are saddled with more debt. In addition, this group favors experiences over things, making for a tougher sell for those marketing hard luxury.

One of the engagement tools that managers feel is underused is social media. Often, they are not empowered to use Instagram or Pinterest to communicate with a potential client by letting her know about new products or by sharing inspiration.

Consumers social media
Millennial consumers turn to social media for research

Social media has opened the world up for millennials and for the first time has allowed luxury brands to directly interact with tomorrow’s affluent consumers.

During Luxury Interactive 2015’s panel “Millennial Marketing — Tapping Into the Social-Obsessed Segment” on Oct. 15, executives from brands not typically associated with the millennial consumer discussed the importance of reaching out to this demographic while they are young to establish a connection and cement a bond that will mature as they age. Social media has emerged as the driving force behind these connections as various platforms allow the creativity and personalities of millennial consumers to flourish as they share and embrace their interests and passions (see story).

Leaders feel they do not have the resources or time available to effectively court millennials, either through special events catered to them.

“A common misconception is that millennials do not want human interaction,” Mr. Pedraza said. “Like other generations, millennials value relationships with those who prove to be experts on the product and are empathetic, trustworthy and generous. Luxury brands need to drive consumers to the stores through social media, outreach and events.”

Source: https://www.luxurydaily.com/the-retail-store-system-is-broken-luxury-institute/

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