Luxury Institute News

June 5, 2015

When is Luxury not Luxury?

PYMNTS
June 4th, 2015

When Lilly Pulitzer released an exclusive line for Target in April, the entire collection sold out at some physical locations within hours. Good for the designer, good for the store, good for the buyers. A resultant Target website crash aside, good for everybody…right?

“No target shouldn’t collaborate with Lilly just no ew ew ew keep Lilly Pulitzer classy people” – Katherine (@kathhlambert)

“lilly pulitzer collaborating with target is probably the worst news I will get in all of 2015” – Marisa Lyn Friedman (@marisalynnnn)

“Lilly pulitzer for target?! Holy hell What’s next?! the apocalypse??! affordable clothing for the masses!? Disgusting” – Pamela Beesly (@trillprincess47)

Those tweets (the third of which, c’mon, has to at least be partially sarcastic) went out not after “Lilly Pulitzer for Target” was released, but actually when the line was first announced, back in January.

The perception among Lilly Pulitzer devotees outspoken in their disapproval of the Target collaboration, then and now, seems to be that the value of Lilly Pulitzer clothing (and other items) is directly related to their cost. And if the cost goes down (Lilly Pulitzer dresses, which often sell for $200, were available at Target for $40), the brand itself diminishes in value.

It wasn’t only semi-anonymous Twitter users who expressed their disdain for Lilly Pulitzer’s availability to bargain shoppers. In an op-ed for Bloomberg, columnist Megan McArdle – having expressed her belief that Lilly Pulitzer clothes are in fact quite ugly and worn only as a statement by people too rich to care – wrote that “actually wearing Target’s Lilly Pulitzer line…signals the exact opposite of what it is supposed to.” That is to say, if you had to make an effort to buy those clothes, you don’t really deserve to wear them.

Crossovers between high-end brands and mass-market retailers – and the potential image risk to the former – are by no means a new phenomenon. In 1983, the designer brand Halston released a collection exclusive to J.C. Penney, and lost some luxury partnerships as a result.

Halston’s experience aside, the particular backlash to the Lilly Pulitzer/Target collaboration seems a bit out of step with the norm, as Target’s own partnerships with brands like Isaac Mizrahi and, as recently as this year, Missoni, or the recently-announced deal between H&M and Balmain, did not raise such a volume of ire among self-appointed consumer protectors of the luxury ideal.

While there is a risk of brand dilution in partnerships, a study from the Luxury Institute (which, you have to figure, knows a thing or two about this topic) showed that affluent shoppers are not turned off by luxury brands partnering with mainstream brands.

With specific regard to the Lilly Pulitzer/Target hookup, the Harvard Business Review crunched the numbers and viewed the outcome as purely positive.

“Unlike the market saturation and brand extension strategies that have de-valued other luxury brands like Michael Kors and Coach,” states the HBR’s report, “the Target collaboration was a smart move for Lilly Pulitzer. The limited-item, limited time collection allowed the company to expand the brand while maintaining its exclusive appeal.”

Given the success of the arrangement on almost every count (save, again, that unfortunate website overload), it is more than likely that more collaborations between high-end brands and mainstream retailers are on the horizon. Will there be outcries from those who, holding luxury in high regard, look down their noses at mass-market consumers? It’s likely. But it’s just as likely that such complaints won’t have much an impact on the bottom line.

After all, haters gonna hate.

Or, as Lisa Birnbach put it more eloquently in New York Magazine, Lilly Pulitzer herself “would not have approved of her ‘defenders.’” Referencing the Alexander Theroux quote, “Hypocrisy is the essence of snobbery, but all snobbery is about the problem of belonging,” she concludes that “Pulitzer, despite her last name, was no snob.”

Source: http://www.pymnts.com/news/social-commerce/2015/when-is-luxury-not-luxury/#.VXGbUs9Viko

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June 3, 2015

7 Rules for Peak Performance in Luxury Client Relationships

Posted in Uncategorized

Luxury Institute
By: Milton Pedraza, CEO of Luxury Institute, LLC
June 2, 2015

Through the first five months of 2015, luxury firms have reported operating results and issued forecasts for the remainder of the year that look dismal for the most part. Global economic growth has been underwhelming but it is certainly not the only culprit for disappointing performance. The luxury industry is also rife with self-inflicted wounds. Many brands cling to outdated management practices that prevent transformation of sales channels from low-loyalty transactions into centers of humanistic, high-performance relationship building. My experience advising executives at hundreds of luxury brands over the decade is that poorly performing firms fail to follow a set of true best practices for building better client relationships consistently, correctly, or at all. Those who have made the successful transformation from transactions to relationships have fundamentally changed the way that they approach their business in several key areas. Based on our successful Luxcelerate High Performance Client Relationships System, here are seven rules for changing the way you manage and measure your business if you want to create more loyal, meaningful, and profitable customer relationships.

 Rule #1: From Corporate Functions to Client Relationship Systems

Luxury brands are broken, literally. Despite all the omni-channel chatter you hear today, brands are broken up into departments and functions more fit for the factories and universities of the industrial era than fashion and luxury retailers of the digital age. Managers build fiefdoms at the expense of client loyalty and the company’s bottom line. All too often, executives from marketing, communications, retail operations and e-commerce fail to work together to deliver a coherent and optimized client experience. Instead they produce a dysfunctional set of activities. The solution is creating a mind-set of systems-thinking that recognizes how all parts and people in a company are organically interconnected and affect each other profoundly. To align competing interests, you can place all the silos that touch the client under one client relationship executive, and base compensation at all levels on achievement of relationship targets such as client data collection, conversion, recovery, retention, and referral rates.  A system cannot be divided artificially into independent parts and be effective, any more than a human body can be split into its parts, and still function.

Rule #2: From Competitive Benchmarking to Competitive Breakthroughs

Benchmarking is the process of comparing business processes and performance metrics to those of the best practitioners. Benchmarking has a small role to play in luxury; however, complex situations that involve creativity and human behavior call more for differentiation and efficiency than trying to emulate an imperfect comparison. Who did Apple benchmark in inventing retail stores, or the Apple Genius concept, or the iPhone? Who did Net-a-Porter benchmark when they invented edited luxury online shopping? One reason that the luxury industry is stalling is a lack of breakthrough innovation. The result has been the rapid commoditization of the industry. If you want your luxury brand to be highly valuable and profitable you need to move beyond benchmarking. Luxury brands need to go from continuous improvement to discontinuous improvement, which demands breaking the rules through innovation. If you are playing the benchmarking game your brand is destined to become a race-to-the-bottom commodity.

Rule #3: From Top-Down Leadership to Front-Line Empowerment

Most luxury executives believe that their job is to create a vision, communicate it, and convince their followers to execute it. If you work at a luxury brand, you need no examples to prove this; just step outside of your cubicle. The successful 21st century luxury leader knows how to engage and empower people to apply their talents and passions towards a worthy goal and recognizes that strong human relationships harness collective wisdom and innate genius to adapt and shape the future. Designing a client culture requires that leaders relax into success, and trust people profusely to adapt continuously. It is an imperfect process, but it works. Three leaders today who exemplify the best of luxury are Angela Ahrendts at Burberry (now at Apple), Natalie Massenet at Net-a-Porter (now at Yoox), and Marco Bizzarri at Bottega Veneta (now at Gucci). We could all do well to emulate these leaders in their capacity to trust front-line colleagues to achieve outstanding results, and provide them with the resources to do it.

Rule #4: From Big Data to Actionable Wisdom

Omni-channel client relationships are the coolest thing around now and they are fed by Big Data. Despite Big Data, Luxury Marketing campaign response rates have hardly moved from microscopic levels over the past decade, and offline client conversion and retention rates are stalled in the low teens. The problem is that Big Data is rarely transformed into actionable wisdom. Data is not information, information is not knowledge, and knowledge is not understanding, nor is understanding wisdom. Wisdom remains the domain of humans. Injecting human wisdom, and empowering your store and call center associates to use their judgment, along with data, to create appropriate one-to-one client communications might not be as sexy as developing an algorithm, or pushing a mass campaign button, but it can be far more effective in building client relationships. By leveraging Big Data with wisdom, one sales or call center associate, and client, at a time, luxury can finally go from doing the wrong thing right, to finally doing the right thing right.  

Rule #5: From Aggressive Selling to Genuine Human Relationships

With sincere love to Daniel Pink, author of “To Sell is Human,” whom I believe to be one of the most enlightened researchers on organizations, I completely disagree with the title and premise of his book. “Selling” even in its most well intentioned versions, is not human. As practiced today, selling reduces associates to being clerks ringing up transactions instead of brand ambassadors building long-term relationships. Selling is one key reason luxury brands, with their robotic “sales ceremony” concept, are so poor at client conversion and retention, never mind referrals. Thankfully, humans are wired to build relationships in order to survive and thrive. For the most part, we love the process. It does not require a game-face or pretension to execute. In Luxury Institute surveys over the past decade, consumers across all generations have repeatedly told us that they want three major over-arching qualities in a sales associate: expertise, trustworthiness and generosity. Without these, even a parent-child relationship falters. Let the mass brands do what they will, but luxury brands should immediately discard the aggressive selling playbook, and embrace the art and science of high-performance client relationship building, where value is created not from transactions, but from consistently and continuously outperforming and outbehaving the competition. Creating clearly measurable functional and emotional mutual value through a relationship is inherently imperfect, but alternative forms of selling are surely dead. 

Rule #6: From Front-Line Associate Training to Front-Line Associate Mastery

Top-tier luxury brands have instituted elaborate training programs and skyrocketing costs to prove it, but rates of client conversion and retention remain stuck in neutral. Luxury brands need direly to redefine training into education, and elevate education into mastery of building high-performance client relationships. Training is something you do to people, and people reject being trained into success, which is why all the talking-head training is ineffective. When it fails, brands keep adding more old-school training, but this only compounds the problem. It is often said that in a college classroom, the only one learning is the teacher, so part of the secret lies in transforming everyone from a trainee into a learner, and a teacher. It is also true that online education, when used in a humanistic and empowering way, such as is done by the Khan Academy, combined with daily one-to-one, metrics-based coaching, peer-to-peer learning techniques, and inspirational reinforcement, can make learners, teachers and relationship masters out of all your front-line associates.

Rule #7: From Front-Line Managers to Front-Line Coaches

The store manager is the spine of the luxury brand. Since 75% of the people who work in a luxury brand are front-line associates, the front-line leaders who engage them daily are critical in ensuring that employees consistently apply the brand’s relationship values and standards to drive results. How much time do store managers spend on the floor? In the more enlightened luxury brands, about 50%, and in far too many cases, they’re on the floor less than 30% of the time. That means that store managers are store administrators and back-of-house experts. Many who do spend a great deal of time on the store floor have absolutely no clue how to coach high performance client relationships. All they know is bossing and selling. Coaching is an art and a science backed by research. Coaching relationship building is a craft that requires expertise. The solutions are to hire experts to run the store operations, perhaps regionally, and to redefine the store manager job into coaching and client relationship building. The store manager should spend 90% of their time observing and coaching associates and/or engaging with top clients to develop experiences where they can bring their friends and family. Innovative, empirically-based coaching programs need to be developed to educate our armies of store managers in the art and science of coaching for client relationship building. Until that happens, expect your costs to go up while results falter because more of the same harder won’t work this time around.

Capture Opportunities With A Client-Focused Culture

Despite sluggish economic growth, the ranks of the wealthy around the world continue to grow. Luxury brands are faced with a tremendous opportunity, as the world’s wealthy people have the capacity and the desire to spend lavishly where they choose. The only companies that stand to capitalize, however, are those that approach their business from the perspective of these customers and create systems that cultivate relationships instead of simple transactions. No less than long-term survival for luxury firms depends on the ability to effect key transformations in the seven areas addressed here.

 About Milton Pedraza and Luxury Institute, LLC

Milton Pedraza is the CEO of the Luxury Institute. Over the past 12 years, Milton has established the Luxury Institute as the most trusted global luxury research provider, and the proven high performance luxury client relationships consulting firm. Known globally as the foremost resource for affluent and wealthy consumer insights and client experience best practices, the Luxury Institute has served over 1,000 global luxury goods and services brands across dozens of luxury goods and services categories.

Milton advises and coaches luxury CEOs and serves on the Boards of top-tier luxury and premium brands, and luxury startups. He is sought after worldwide for his practical, innovative and humanistic insights and recommendations on luxury and is the most quoted global luxury industry expert in leading media and publications.

Milton is also an authority on CRM Technology, Analytics and Big Data. Prior to founding the Luxury Institute, his successful career at Fortune 100 companies included executive roles at Altria, PepsiCo, Colgate, Citigroup and Wyndham Worldwide.

Milton was born in Colombia, raised in the United States, has lived in several countries, conducted business in over 100 countries, and speaks several languages.

 

For more information please contact:

CEO, Milton Pedraza

Luxury Institute, LLC

115 East 57th Street, 11th Floor

New York, NY 10022

mpedraza@luxuryinstitute.com

 

 

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May 29, 2015

All this $500 million “house” needs is a buyer

CBSMoneyWatch
By: Jonathan Berr
May 28, 2015

Although media reports have called the $500 million property that real estate investor and film producer Nile Niami is developing a “home,” that doesn’t really do it justice.

While it does have a 74,000-square-foot main residence, it also includes three smaller residences on the four-acre property in Los Angeles’ exclusive Bel Air neighborhood. The property features sweeping views of the Pacific Ocean along with 5,000-square foot master bedroom, a “Monaco-style casino” and four swimming pools. Bloomberg News, which first reported this story, calls it “one of the biggest homes in U.S. history.”

In an interview with CBSMoneyWatch, Niami argued that the asking price on a square-foot basis is competitive with smaller luxury homes in the area. He purchased the hilltop property two years ago and doesn’t have a buyer lined up yet, though “we do have a couple of people who have been circling,” he said.

He added that he thinks the Southern California real estate market is undervalued. “There is a demand,” he said, “These guys need the space for their staff.”

As Gawker noted, the property has almost twice the square footage of the White House and is 100 times the size of the average Brooklyn apartment. Jonathan Miller, president of appraiser Miller Samuel, told Bloomberg that he broke out laughing when he heard Niami’s asking price.

“I am skeptical,” he told the news service. “But we’re in this perpetual state of surprise as new thresholds are broken.”

 MCCLEAN DESIGN

It’s more than double the second-highest priced property on the market, the $195 million Beverly Hill estate being offered by billionaire real estate investor Jeff Greene.

Niami’s timing could be auspicious. The luxury real estate market is hot, with prices in 33 cities now about 33 percent higher than they were in 2009, more than doubling the 14 percent increase seen in the rest of the market.

Although a $500 million home may strike some as overly pricey, it might be a good investment for someone who lives outside the U.S. and is looking for a safe haven for their cash, according to Milton Pedraza, the head of the Luxury Institute, which analyzes the spending habits of the well-to-do. He figures about 1,000 people in the world can afford Niami’s property and probably 10 of them would be willing to write the big check needed to buy it.

“Stocks are overvalued by any measure. Bonds aren’t yielding much,” he told CBS MoneyWatch. “Real estate is an asset that may lose value, but the downside to it is limited.”

In a nod to California’s severe drought and other environmental problems, Niami noted that the lush green grass on the property will be artificial and that he’ll use energy-efficient LED lighting.

Source: http://www.cbsnews.com/news/all-this-500-million-house-needs-is-a-buyer/

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May 12, 2015

Niche marketers target the 1% – at their peril

Crain’s New York Business
By: Anne Field
May 11, 2015

Last year, Steven Abt decided to overhaul the business model of Caskers, his five-employee craft-spirits company in Manhattan. He focused his marketing on two segments: the original customers who bought curated spirits on Caskers’ website, launched in 2012, and new, even more affluent buyers, who would receive one-on-one, concierge-style service.

A significant portion of his higher-end clientele was interested in such an approach. “It seemed like an opportunity to tap the luxury market, which is growing in general,” he said.

Five months later, the new offering generates about 2% of the firm’s annual revenue, which is just under $10 million, according to Mr. Abt. He expects that figure to increase to as much as 15%, with pretax margins of 20% to 30%, compared with 10% to 20% for the original service.

Mr. Abt is one of a growing number of small-business owners in New York City who are embarking on a two-tiered strategy in their marketing. That’s the result of a variety of factors: healthy demand for high-end goods and services, postrecession changes in the spending habits of affluent consumers, capabilities made possible by digital technology and the need to ramp up volume.

In some cases, it means branching out into a more upscale market, as Mr. Abt has done; in others, expanding from an affluent clientele to the mass market. Regardless, said Daniel Levine, a consumer-trends expert and director of the Manhattan-based Avant-Guide Institute, “these businesses are just following the money.”

Certainly, there’s a time-honored tradition in such sectors as fashion to bring a luxury brand to a mass audience. Take Lilly Pulitzer—known for its connection to Jacqueline Kennedy Onassis and the very rich—which recently began selling a line of clothing in Target stores.

But such a strategy can be a gamble. The premium brand that expands to a less-affluent market may dilute its cachet. Even trickier is going after a higher-end customer. Companies often are reluctant to admit to doing so, fearing they’ll alienate potential buyers in either market. And it can be difficult to convince more elite customers that their product or service is top of the line.

“It’s always harder to go upmarket,” said Milton Pedraza, CEO of the Luxury Institute, a consumer-trends research firm in Manhattan. He points to British-based Mulberry, a maker of high-end leather bags. It recently stumbled, with declines in profits, during an international expansion that included a flagship store in SoHo; it also increased prices to an ultraluxury level.

Many factors are contributing to the two-tier trend. For small businesses in New York pursuing wealthier customers, one of the most important is postrecession spending by upper-income households. From 2009 to 2012, the total growth in U.S. consumption, adjusted for inflation, happened mostly at the higher end, according to Steven Fazzari, an economist at Washington University in St. Louis.

Two ways to grow

Among those at the bottom 95% of income distribution, there was 2.8% growth during that time period, compared with a 16% increase among the top 5%. That trend has likely continued in recent years, according to Mr. Fazzari. “Growth in consumption has been exclusively driven by the top,” he said.

Companies have also been reacting to significant changes in the buying habits of affluent customers since the recession, according to Jim Taylor, a senior adviser at YouGov.com, a Waterbury, Conn., firm that conducts surveys aimed at better understanding public views about products and current affairs. He is the co-author of The New Elite: Inside the Minds of the Truly Wealthy.

He divides the affluent into two categories: those who seek “worth” and are willing to pay a premium for the things they buy, but go through a rigorous vetting and shopping process. Others are “discounters,” focused more on price. “They derive pride from squeezing their vendors,” he said.

Using technology platforms strategically has also helped some companies expand smoothly from a premium-only service to a larger market. Kofi Kankam co-founded Manhattan-based Admit Advantage seven years ago to provide advice to graduate-school and college applicants. He charges about $200 an hour, with packages running as high as $10,000.

About three months ago, the company launched Admit.me, an online platform that is more affordable to a wide audience. It allows applicants to interact with current students and alumni at schools where they are applying and for admissions offices to search for potential recruits. The basic service is free, but customers can pay about $10 a month for additional capabilities.

“We want to build a scalable business,” said Mr. Kankam, whose profitable, five-employee company has $2 million to $4 million in annual revenue.

The big benefit of expanding to a mass audience is increased volume—especially for small-business owners who have made their name providing time- and labor-intensive, hands-on service. Take Joey Healy, founder of a three-year-old company in Manhattan that bears his name. At Joey Healy Eyebrow Studio, which provides eyebrow-shaping services, Mr. Healy spends about an hour working with each client. He charges $135, up from $85 three years ago.

More recently, Mr. Healy formed a partnership with hair-removal specialist Spruce & Bond to train eight employees in his eyebrow-shaping techniques. They were placed at all four Spruce & Bond stores (three in Manhattan, one in Scarsdale). Called Browlab, the service at the stores costs clients $50; customers also can buy from Mr. Healy’s line of products. “It brings me a new audience,” he said.

Underwriting expansion

About 10% of Mr. Healy’s total revenue, which is “just under $1 million,” now comes from Browlab, but that should increase as Spruce & Bond expands to more locations in Manhattan. Also, in October, Mr. Healy plans to move from his 500-square-foot studio to a bigger space, which will serve as what he calls “more of a flagship” for the profitable company.

In some cases, small businesses regard their premium market as a way to underwrite expansion to a larger mass clientele. Four years ago, Kim Caspare, who has a doctorate degree in physical therapy, opened PHlex Health and Wellness Studio in Manhattan, where she treated patients who were able to pay out of pocket and were mostly referred by doctors.

Since then, she has added such services as acupuncture and meditation and expanded from 1,500 square feet to about 2,200, with plans to increase to 4,600. She recently started treating a new group of patients with insurance coverage, too. Her premium clients, who pay from $160 to $300 an hour for a variety of services, “subsidize everyone else,” said Ms. Caspare. Her profitable, nine-employee company has $1 million to $3 million in annual revenue.

For those adding a higher-end tier, the key is retooling the product or service to make it attractive—and worth the price—to a wealthier clientele. That generally means not moving too far upstream from the company’s original segment.

At Caskers, Mr. Abt had already sold pricey spirits, usually in the $40 to $60 per-bottle range, to affluent buyers. Although his concierge clients have paid as much as $27,000 for an order, “moving to the high end has been a natural extension of the business,” he said.

Another notable example is concierge medicine, through which doctors provide extra services to their patients, who pay an annual fee. About a year ago, Dr. Herbert Insel, a cardiologist and internist in Manhattan, introduced this option.

He charges a $2,500 annual fee to cover services, such as a lengthy physical exam not reimbursed by insurance, longer visits and a direct telephone number to the office. So far, 10% to 15% of patients have signed on. Many of them “are very busy executives in their 40s and 50s who are used to this type of approach,” said Dr. Insel. “They were champing at the bit.”

Source: http://www.crainsnewyork.com/article/20150511/SMALLBIZ/150509841/businesse

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May 5, 2015

The latest fashion trend among millennial men? Luxury cologne

Fortune
By: Shivani Vora
May 1, 2015

These four luxe fragrances are part of a growing market for younger male shoppers.

Luxury men’s fragrances are no longer mass produced bottles priced in the high double-digits and available at every department store; the latest upscale scents for men are sold selectively at boutiques, usually cost several hundred dollars, and are often blended by hand in small batches with top quality ingredients sourced from around the world.

According to the Chicago-based market research company Euromonitor International, sales in the U.S. of men’s premium fragrances, classified as labels sold in department stores, grew from $1.28 billion in 2004 to $1.47 billion last year. Those numbers are still dwarfed by the $3.7 billion of sales last year for women’s fragrances in the same category, but the segment is growing as it increasingly appeals to younger consumers.

Milton Pedraza, the founder of the New York City-based luxury research and consulting firm The Luxury Institute, says that men, particularly those in the millennial generation, are becoming enamored with expensive colognes in the same way that they are with fashion. “There is a big movement today of men who have spare money to spend are using it to look good, and fragrance is part of that trend,” he said.

Here are four of the latest luxe colognes to try this spring.

Reckless by Roja Parfums

Courtesy of Roja Parfums

British perfumer Roja Dove, who is known for statement-making scents that often run into the four figures, wanted to create a blend for men who aren’t afraid to take risks, and this spicy and fresh rendition is it. Black pepper, musk, clove, and cedar wood are the most prominent notes, and in a nod to the luxury Dove is famous for, the plaque on the bottle is dipped in 18 carat gold while the cap is made of hand-cut Swarovski crystals. $480, bergdorfgoodman.com

Akkad by Lubin

Courtesy of Lubin

Parisian perfumery Lubin, which dates back to the 18th century and handcrafts fragrances today in its Left Bank atelier, introduces this heady scent, the sixth in its collection for men. It’s named for the ancient and powerful empire part of Mesopotamia and has prominent notes of spicy amber, citrusy mandarin and bergamot; woody and rich patchouli and sweet vanilla are also evident but more subtle. $180, luckyscent.com

New York Sandalwood by Bond No. 9

Courtesy of Bond No.9

The more than decade-old New York City-based brand has a cult following for its upscale women’s fragrances, but this new unisex version is sure to win some male fans too. Like the name suggests, warm and smooth sandalwood, derived from the fine-grained wood of tropical trees, is the main attraction while earthy carrot, spicy cardamom and ripe figs figure into the background. Whether you’re into the scent or not, the attractive gold bottle it’s in is a keeper. $330, bondno9.com

Charming California 215 by Krigler Perfumes

Courtesy of Krigler Perfumes

New stores call for new scents—at least according to the more than century-old New York City and Monte Carlo-based label that’s a favorite of royals around the world and introduced this fresh and light fragrance in celebration of the recent opening of its boutique at the Four Seasons in Beverly Hills. Inspired in part by the jacaranda, a blue flowering tree that flourishes in both Los Angeles and the French Riviera, the perfume is a pick-me-up combination of coriander, orange blossom, green tea and cedar wood. $315, krigler.com

Source: http://fortune.com/2015/05/01/luxury-mens-cologne/

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April 28, 2015

Luxury Panel: What Millennials Want

Previews Inside Out
Topic: Life & Style
April 27, 2015

When you hear the words “affluent millennial,” do you picture a 30-something tech mogul buying a trophy home in the hills of LA? Or a hashtag-happy celebrity starting a lifestyle brand? Clichés aside, millennials—more than 74 million adults ages 18 to 34 in the U.S.—are changing the luxury landscape as we know it. For our “Luxury: The Next Generation” issue, we decided to go straight to the experts—the Luxury Institute’s Milton Pedraza, Luxury Daily editor Mickey Alam Khan and Forbes’ millennial reporter Larissa Faw—to find out what this increasingly influential group really wants when it comes to luxury.

Previews Inside Out: What does the next generation of luxury consumers want from brands today?

Milton Pedraza: Across the generations, millennials, Gen Xers and boomers all want the best in design, quality and craftsmanship, along with great service.

Mickey Alam Khan: The next generation of luxury consumers want to build stronger emotional connections with brands. They not only want to experience the products in-store, but also via digital media such as online and mobile. They also want to feel good about their luxury acquisitions from an ecological standpoint. In other words, the next generation of luxury consumers want to see authenticity, digital savvy and environmental nobility from their favorite luxury brands.

Larissa Faw: The key words are “make them feel special.” They want to be the only ones able to experience that product or opportunity. The worst thing in the world is to be mass and beige. Everywhere and generic. Coach got itself into trouble because it opened up an outlet shop in every city. It became overly accessible to everyone. The worst thing for luxury buyers is when some downscale shopper has the same item. That is the kiss of death for affluent shoppers. That brand is no longer luxury.

Milton Pedraza: Hey, and also respect brand heritage! But only as long as the brand stays relevant to them.

Previews Inside Out: There was a recent survey published in Luxury Daily that found the majority of affluent consumers have a different definition of luxury than they did five years ago. What do you think the definition of luxury is today?

Mickey Alam Khan: One of the biggest changes in the last few years has been the shift in the luxury-consumption mindset from “I have” to “I experience.” So it’s gone from simply material acquisition to a collection of exquisite memories to be cherished for a long time from unique experiences. That said, as defined by Luxury Daily, luxury must have these time-proven qualities: exceptional craftsmanship and customer service, brand authenticity, limited distribution and high perceived value. That hasn’t changed.

Larissa Faw: Once upon a time, luxury meant price. You almost just knew something was a luxury product because it was insanely expensive. Now, luxury means exclusivity and authenticity. One-of-a-kind items that come from a true place. A product can be $5, but if it is the only one and rare, that is luxury.

Milton Pedraza: Today’s luxury consumers also demand demonstrated expertise, trustworthiness and generosity from the brand ambassadors. These days, they also prefer a brand with a social conscience that treats associates, clients, suppliers and the less fortunate in society like human beings. Along with the best product, that is what creates an extraordinary experience for most.

Previews Inside Out: Do you think millennials are partly responsible for this shift? How so?

Mickey Alam Khan: Yes, the millennial generation is quite responsible for the shift in luxury’s definition. This generation is digitally savvy and is responsible for the evolving approach in marketing and retailing. Presence on social media enables brands to stay connected with their younger customers and prospects, dialoguing with them in the lingua franca of the day.

Milton Pedraza: Yes, the millennials, with their more humanistic values, are influencing the business world to deliver extraordinary product innovations, but also extraordinary human empowerment with kindness.

Larissa Faw It is great that millennials have moved beyond the materialistic nature of what has been considered luxury. Many traits that typically define luxury—like fawning treatment or rich, indulgent services—are no longer acceptable or cool. Can you imagine being served by someone wearing a uniform and white gloves? I shudder at the thought.

Previews Inside Out: Beyond that, how are millennials transforming the luxury industry?

Milton Pedraza: They tend to take the design, quality, and craftsmanship and service for granted. They want customized, personalized solutions “now, now.” As Four Seasons says, “Show me you know me.”

Mickey Alam Khan: Four words would reflect the transformation in the luxury business: high touch, high tech. Millennials want that kind of experience with their brand, and so do Gen Xers and, to some extent, digitally savvy baby boomers. Luxury brands are being shepherded along a digital path where online and mobile are the start of the research process that may or may not culminate in a store sale.

Larissa Faw: They are making everyone rethink what it means to be a luxury brand. Just because you charge $5,000 for a bag does not mean you are luxury. Just because you operate a nice hotel does not mean you appeal to affluent millennials. What was once considered top-flight treatment—like that white glove treatment—does not necessarily align with younger generations. This presents opportunity, but it is also challenging, because what once worked, no longer does. You don’t earn five stars by doing what you did for decades. That said, I also think millennials take for granted a lot of what is known as luxury. Like top-sourced leather goods. They expect all brands, even discount ones, to offer that. They expect great service, like immediately tending to their demands. Those services used to separate luxury brands from regular ones.

Mickey Alam Khan: Also, for many young people, it’s not simply about flashy identification with a lifestyle or a product, but a reflection of their values. Hence, the importance of storytelling and codes for luxury brand and luxury retailers to get their message across.

Previews Inside Out: Let’s talk more about this push toward authenticity in luxury, which is an important value for many millennials. In what areas of the marketplace have you seen authenticity play out most dramatically?

Milton Pedraza: They require authenticity across the board. But let’s face it—many product offerings are copycats and commodities, even in some luxury circles. So the authenticity is more about the founders, the brand purpose, the brand ambassadors and “how” they do what they do.

Mickey Alam Khan: I’d say authenticity continues to play a key role in leather goods and accessories. Look at Hermès. While other luxury brands such as Gucci are suffering from logo fatigue and endless line extensions, Hermès continues to post above-industry growth. What does Hermès do differently that attracts all generations to its brand? Attention to quality, to its codes, to its heritage, to its line of products. Its messaging is consistent. The equestrian and travel themes are embedded in most ads. And, most of all, the product standards have been maintained over the decades. Hermès is France at its best, and that’s what millennials and other consumers are buying. Pedigree continues to matter to millennials.

Larissa Faw: Fashion and watch brands are really overplaying their histories and design backstories in order to capture that authentic hook. Upscale alcohol brands are also trying too hard. I don’t need to see another old-timer posing with his dog on a farm to tell me a brand is authentic—and that this makes it okay to charge $300, since it has been aged in a barrel for 100 years. This authenticity does matter to millennials, but I see it becoming too commonplace.

Previews Inside Out: Can you identify any luxury brands you think are already starting to make this adjustment in their marketing? You know—moving away from exclusivity to authenticity.

Mickey Alam Khan: Well, let me just point out that exclusivity and authenticity can’t be mutually exclusive. You have to have both to survive long term as a luxury brand.

Milton Pedraza: Bottega Veneta is a prime example of expertise, trust and generosity with all constituents. And they have the numbers to prove it. Burberry is there, too. We see Van Cleef & Arpels moving in that direction. Sephora, too.

Previews Inside Out: Why are some of the top luxury brands a bit stalled today?

Milton Pedraza: Their products are too common, too logoed, and they have disengaged brand ambassadors. So the customers become disengaged, too. The brands have become passive transactors rather than humanistic relationship builders.

Mickey Alam Khan: Gucci comes to mind for me. It’s had some turbulence over senior talent most recently with the departure of the CEO and creative director. While the successors are in place, what Gucci needs to do is rethink its positioning. It’s become rather common, which is the kiss of death for a luxury brand. If too many people have access to the product, it loses its allure. I foresee something similar with Louis Vuitton. Way too many people sport its handbags, thus diluting its exclusivity. It’ll end up catering mostly to aspirational consumers and risk alienating those with serious money. It pays to be slightly discrete in luxury. I know Louis Vuitton is working to scale back on plastering its logo everywhere. The wink-and-nod in luxury should be the styling that those in the know are aware of.

Larissa Faw: Millennials are like cats. If you try too hard, they don’t want anything to do with you. I know Honda isn’t a luxury brand, but its recent commercials featuring top toys from the 80s—like Strawberry Shortcake and Skeletor from He-Man—speaking to the camera to try to sell me a car were pathetic in how hard they were trying to appeal to millennials. My mom had no idea who that skeleton-looking toy was, since these toys were totally millennial-centric, but both my sister and I knew immediately. No one likes a desperate brand that is obvious with its advertising. Pretentiousness is another reason brands are toxic to millennials. Jewelry brands that continue to embrace that silly fairy-tale engagement proposal turn off a lot of millennials. That isn’t how our world looks, and we don’t want any part of it.

Previews Inside Out: When you look at the luxury market as a whole—travel, auto companies, fashion, jewelry—where are you seeing the most innovation when it comes to imparting authentic experiences?

Larissa Faw: I recently saw an ad for a jewelry brand that lets people create their own rings. That is exactly what it takes to reach millennials. Who wants a ring that his or her nemesis in high school might have? Everyone wants to brag he or she has the only one of something. Any company that is able to develop customized and personalized experiences will win them over.

Milton Pedraza: Electronics are the obvious answer. But since technology is invading every space, we see autos, apparel, accessories and really all luxury categories using technology online, in-store and after the sales to enhance the client experience and build a long-term relationship. The most interesting innovations, however, will come from empowering and enhancing the brand ambassadors to build human relationships with their clients. No algorithm can replace a powerful and kind human relationship.

Mickey Alam Khan: There is digital innovation across luxury sectors. Some of it is consumer-led, and some of it brand-driven. Travel and hospitality is a leader in the space. The sites, apps and social media are nonpareil—as are the unique culinary experiences, meet-and-greets with famous chefs and tours in the vicinity of hotel properties that respect the land and traditions. Fashion is also a leader in authenticity. See the abundance of live streams of runway shows that deliver the live experience to the desktop, lap or palm.

Previews Inside Out: In terms of real estate, where do you think the industry needs to move in order to cater to more affluent millennials?

Larissa Faw: Good question. The industry needs to make them feel special, by offering services that understand their life stage. For instance, maybe arrange for Uber accounts so they can have private car services. I recommend taking a page from luxury hotel brands and how they cater to them with dry cleaning, maid services, food delivery. If you come at millennials with the mindset to make them feel special, you can’t go wrong.

Mickey Alam Khan: I’d say real estate needs more digital moxie. Not just PC sites or mobile-friendly versions, but better social media and app executions. Younger luxury consumers are researching on tablets and smartphones, and real estate’s presence on those devices can be improved.

Milton Pedraza: Empower the agent through technology, data and coaching to enhance the client. Real estate is not a game of bricks and mortar; it is a game of hearts and minds.

Source: http://www.previewsinsideout.com/2015/04/luxury-panel-what-millennials-want/

 

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April 22, 2015

In $10 million home sales, Miami Beach a leader

Miami Today
By: Susan Danseyar
April 22, 2015

Miami Beach is in impressive company among the nation’s top cities for luxury home sales, third highest for sales of $10 million and over.

Miami and the Beach have high rankings in The Previews Luxury Market Report for 2015, released by Coldwell Banker on Tuesday, which lists the top 20 US cities’ property listings and sales in three price points: beginning at $1 million, $5 million and over and $10 million.

In 2014, Miami had 967 closed sales for properties $1 million and over, ninth on the list just behind San Diego (976 sales) and above cities including Santa Barbara (673 sales), Newport Beach (611 sales) and Honolulu (591 sales). Miami Beach, number 14 in this category, had 704 sales.

For properties $5 million and over, Miami Beach was fourth with 89 sales compared to New York City (182 sales) at the top of the list and and above San Francisco (64 sales) and Malibu (48 sales).

There were 26 sales in Miami Beach for properties $10 million and over, behind Beverly Hills (35 sales) and New York (56 sales). Miami Beach, third on the list, had more sales in this category than Los Angeles (26), Malibu (14) and San Francisco (7).

North Miami Beach, in zip code 33169, had the third highest number of active home listings for $1 million and over (460), behind New York’s zip code 10022 (465) and Park City’s zip code 84060 (611). Miami Beach’s zip code 33139 was fifth in this category with 355 listings.

For properties $5 million and over, Miami Beach’s zip code 33139 had 115 compared with 143 in Park City’s 84060, top of the list, and above Vail’s 81657 (69) and Beverly Hills’ 90210 (68).

In the highest category of $10 million and over, Miami Beach in zip code 33139 was ninth on the list (44 listings) compared with New York’s zip code 10023 at 84, top of the list, and Malibu’s zip code 90265 at 26, bottom of the list.

According to the report, the demographics are changing in the luxury housing market. “Many wealthy homebuyers have historically looked to leisure-rich spots like Hawaii, Florida and Arizona for second homes, or waited until they were finished working to make a move,” the report states.”That’s changing, with recent trends suggesting that younger homebuyers are not waiting until they retire to put down roots in places where they would love to live.”

Technology and ease of travel are rapidly transforming the workplace for wealthy professionals, the report states, creating flexibility in terms of work locations and the ability to choose where they want to live. “Millennials have come of age in this kind of environment and are accustomed to the idea of striking a work-life balance that meets their personal needs. As they achieve more wealth, their live-anywhere attitudes are likely to become more of a force in luxury real estate.”

According to the Previews Luxury Institute millionaire survey, 73% of those under 35 say that they expect to buy a home in the next 12 months, compared to 49% of 35- to 44-year-olds and 26% of 45- to 64-year-olds. Just 11% of millionaires 65 and over say that they’re planning a purchase.

The report cites homebuyer surveys and the accounts of local realtors, stating they confirm ultra high-net worth individuals are highly mobile and flocking in growing numbers to areas once pegged as resort or second-home markets, as advances in technology, transportation and communication enable a “live anywhere” working-age population.

Florida, the report states, has a favorable tax environment that’s attracting live-anywhere high net-worth homebuyers, particularly those coming from the Northeast.

“The taxes on inheritance and estates are very high in some states, like New Jersey,” said Clark Toole, president of Coldwell Banker Residential Real Estate in Florida. “Florida is one of the most attractive places to live from a tax perspective, so we get quite a few people who decide to live here for at least six months and a day each year. People are saying ‘I want this money to go to my kids instead of to pay taxes.’”

Source: http://www.miamitodaynews.com/2015/04/22/in-10-million-home-sales-miami-beach-a-leader/

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April 20, 2015

Changing Tactics, Apple Promotes Watch as a Luxury Item

NY Times
By: Brian X. Chen
April 19, 2015

SAN FRANCISCO — Apple has scrapped its usual routine for releasing products with its new device, the Apple Watch. The company is instead taking a page from the playbook of another industry: luxury goods makers.

Gone are the long lines in front of Apple stores that would accompany a typical iPhone release. Gone is the flooding of a vast worldwide distribution network where Apple would make a new iPhone available. The company is selling the Apple Watch, which goes on sale on Friday, in just nine countries and exclusively through its own channels, not through third-party retailers like Best Buy. In contrast, Apple unveiled new iPhones in September in more than 30 countries and in numerous retail outlets.

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For the first time, Apple is also bringing personal attention and tailoring into the mix through a process for trying on the watch. While consumers typically couldn’t touch a new Apple device until it was publicly available, the company this month began inviting customers into its stores to see, wear and feel the watch.

Evan Weissbrot, a 33-year-old watch collector, experienced the sneak preview firsthand. After he arrived at the Apple Store in SoHo on April 11, an Apple employee took Mr. Weissbrot to a station and unlocked a drawer containing a variety of the watches. In between small talk, the employee showed Mr. Weissbrot different straps and cases — and even let him check out the gold watch, which costs more than $10,000 and typically requires a separate appointment to try on.

The amount of personal attention and the allure of the process “was a rip directly from a high-end watch store,” Mr. Weissbrot said.

All of this echoes the tactics of luxury goods makers like Burberry and Hermès. Giving consumers an early peek before they buy things is a familiar strategy in the fashion industry — as, increasingly, is tempting early adopters with the bonus of circumventing the shop. When Burberry shows new lines of clothing and handbags on the runway, the company lets customers order select items immediately after the show for delivery even before the products arrive in stores.

Apple also appears to be mimicking the scarcity-creates-desire approach, one that has served Hermès well with items like the Birkin and Kelly bags. They are rarely in stock, and customers sometimes wait months to receive one. That strategy has also worked for companies like Ferrari, which has loyal customers who pay thousands of dollars just to get on a list to wait as long as a year to own the next hot Italian sports car.

“They’re definitely treading on new territory,” Milton Pedraza, chief executive of the research firm the Luxury Institute, said of Apple. While high-end fashion brands, jewelers and luxury car brands often use selectivity and personal attention to generate interest when a product makes its debut, it is new for Apple, a company whose products typically speak to an enormous consumer audience as opposed to a privileged few, he said.

The strategy is a deliberate move by Timothy D. Cook, chief executive of Apple, and Angela Ahrendts, the company’s retail chief and a former chief executive of Burberry, to lay the groundwork for a successful introduction of the watch. The watch is the first entirely new device Apple has introduced under the leadership of Mr. Cook, who took the helm in 2011, and brings the company into the fashion market, as well as the luxury market, with the 18-karat gold version of the watch.

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In a recent letter to Apple’s retail employees, Ms. Ahrendts said the company needed to come up with the preview approach for selling the watch because “there’s never been anything quite like it.” In the memo, which was cited by the blog 9to5Mac, she said it was unlikely that people could buy the watch at Apple stores before June because of supply constraints.

An Apple spokeswoman, Amy Bessette, said Ms. Ahrendts was not available to comment on the retail strategy for the watch.

Apple’s top brass has been energetically promoting the watch over the last seven months, granting interviews about the creation of the device to The New Yorker and Wired. Apple has also invested significantly in advertising, spending an estimated $36 million since March 9 on a television campaign for the smartwatch, just slightly less than the $38.5 million that it spent on TV ads for new iPhones since mid-November, according to iSpot.TV, an analytics firm.

The watch’s success remains far from assured. Mr. Cook said on Apple’s financial earnings call in October that the company would report sales of the watch in a group with other products, rather than breaking it out into a separate category.

“I’m not very anxious in reporting a lot of numbers on Apple Watch and giving a lot of detail on it, because our competitors are looking for it,” Mr. Cook said.

Sales estimates for the watch are modest compared with Apple’s past best sellers. Toni Sacconaghi, a financial analyst for Sanford C. Bernstein, predicts Apple will ship 7.5 million watches in the second half of the company’s fiscal year, while tens of millions of iPhones fly off the shelves every quarter.

For now, Apple’s luxury experiment with the Apple Watch appears to be bringing in mixed results. At Apple’s London flagship store nine days ago, employees asked people if they wanted to sign up for personal appointments to get hands-on with the product. Several people were bemused that they could not handle the watches without appointments.

At an Apple store in Hong Kong, a Chinese tourist from Beijing, Scott Sun, took photos of the gold watches to send to his friends but said every version of the watch — which starts at $350 — was too expensive for him.

“There’s no way I’m going to buy one,” he said. “But for rich people, this gold one will definitely be popular.”

Another question raised by Apple’s luxury experiment with the watch is whether customers will believe it is worth the wait. While the watch will begin shipping to customers on Friday, some customers have reported that their shipping times have slipped to May or June.

For Mr. Weissbrot, the watch collector in SoHo, the wait was not a deterrent. He placed an online order for an Apple Watch Sport, which is the least expensive model and has an aluminum case, before the session in which he tried one on. The estimated date of arrival for his watch is May 13.

“It’s kind of a bummer,” he said, before adding that he was still excited to be among the first to have the device.

Source: http://www.nytimes.com/2015/04/20/technology/personaltech/changing-tactics-apple-promotes-watch-as-a-luxury-item.html?_r=0

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March 30, 2015

Digital channels influenced $1.5T in-store sales in 2014: report

Luxury Daily
By: Nancy Buckley
March 30, 2015

More than 70 percent of consumers expect brand digital channels to have knowledge of in-store product availability, according to a new report by L2.

Accommodating both digital and in-store trends requires brands to adapt to e-commerce expectations of click-and-collect or free shipping, but also adhere to in-store demands. Many traditional brands face pressure from online retailers to offer better options for consumers turning to digital for both browsing and shopping.

“While luxury fashion in the past required a high touch, in person sale, things have changed,” said Eleanor Powers, director, Insight Reports, L2. “Overall fashion brands are still focused on online e-commerce conversion (e.g. by providing free shipping options).”

Channel options
Prior to interaction with a sales associate, 80 percent of United States consumers know what they want and how much they plan to spend. This knowledge stems from Web rooming, a concept that should be encouraged by brands because it leads to 40 percent higher conversions.

Digital channels effect 50 percent of in-store sales, despite direct-to-consumer ecommerce only accounting for 4 percent of sales.

Ecommerce is being challenged by larger online retailers. When British retailer AllSaints began accepting Amazon Payments there was concern among fashion brands, which escalated with the rumors surrounding Amazon and Net-A-Porter.

Amazon may be in talks to purchase Net-A-Porter, if reports that have been rumored are true.

The etail giant has been unsuccessful in entering the luxury industry in spite of attempts in recent years, and this potential acquisition could be significant for the future of both companies. The impact that this purchase could have on Net-A-Porter is unclear, but the retailer has been not been profitable despite its popularity (see story).

Amazon Prime’s rewards encourage consumers to shop online and receive free shipping for an annual fee. The Prime membership concept has been adapted by ShopRunner, a platform used by one-fifth of luxury brands.

Without ShopRunner, consumers are shopping to a minimum spending level to receive free shipping, but even with that many consumers are pulled away from luxury brands to find less expensive items online.

Some brands, especially in Europe, offer click-to-collect. Without these options, consumers are Web rooming for products and then purchasing in-store. Even with this option, consumers expect brands to have easily accessible information about store availability.

Generational thing
Difference in digital options also vary across generations.

Consumers are split on their willingness to download luxury brand applications, but when dispersed into generations, 72 percent of millennials are inclined to download a branded app, according to a report from The Luxury Institute.

Digitization of the luxury world is slowly evolving as younger generations grow into being affluent consumers. Luxury clients differ across more than just generations, but understanding the prime and upcoming consumer can prepare marketing teams for the future (see story).

Changing to adapt to generational and technological changes requires brands to look internally and adapt within every channel.

“Brands also need to support the hand-off from digital to in-store to support a seamless shopping experience,” Ms. Powers said. “This requires investments in infrastructure for local inventory visibility and providing options for click-and-collect and in-store returns.”

Source: http://www.luxurydaily.com/digital-channels-influenced-1-5t-in-store-sales-in-2014-report/

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March 25, 2015

Is this American-made leather bag really worth $10,000?

BBC News
By: Neil Koenig
March 25, 2015

Wander round a well-to-do shopping mall or district in any major US city, and you will see lots of stores offering luxury goods. But with a few notable exceptions, most will not be American brands.

Why? One reason, say observers, is that the country no longer produces luxury items on the scale that it used to.
That is partly because the pool of skilled talent needed to make those goods has shrunk enormously: “All that got hollowed out when things started to be outsourced in the 80s through into the 90s,” says Peter York, who has advised many large luxury companies.

This phenomenon has occurred across the Western world.
In France, for example, concern about the disappearance of craft skills has resulted in the industry setting up new training schemes, in the hope of reviving interest in artisanship.
So against this backdrop, what Chicago entrepreneur Steven Fischer is trying to do, seems somewhat reckless.

He is now selling a hand-crafted luxury leather bag, made entirely in the US. The cost? Just under $10,000 (£6,683).

It all came about when he spotted an old leather bag at an auction, and bought it on the spur of the moment.
“It just spoke to me emotionally,” he recalls.

Shortly afterwards he took the bag on a plane journey.

As he disembarked, he noticed that the flight attendants were lining up to talk to him: “I thought, ‘Oh, boy, I’m in real trouble now.’ But what they told me was: ‘Sir, we don’t know where you got that bag, but that is the most beautiful bag we’ve seen in a long time.’”

Mr Fischer says he received similar comments from other people. Eventually he began to ask himself: “What would it take to make a bag like this… not only make it, but make it 100% American?”

At the time, Mr Fischer was teaching a course about fashion at Northwestern University, Illinois. He was also providing advice to various organisations on the luxury industry.
Launching a luxury product, however, was a new departure.

He recalls that almost every supplier he spoke to told him he was crazy.
They said to him: “Look, Steven, if you really want to make money, don’t make [it] in the US,” he remembers.

Mr Fischer ignored the advice and set off on a quest to find supplies and craftsmen skilled in leather-work, spending months driving across the mid-West.

He began by talking to horse owners, asking them who made their saddles and harnesses.

As time passed Mr Fischer managed to build up a network of skilled leather and metal workers, who could make the various components to the exacting standards he was looking for.

Some of the craftsmen belong to Amish communities – Mr Fischer says he finds their work to be of exceptional quality.

However, there are challenges. Some Amish people are reluctant to use modern technologies, such as the internet, so communication can be difficult.

The leather for the bag comes from Horween tannery in Chicago, the last one remaining in the city.

All the effort, time and materials that go into making the bag do not come cheap, with a standard example priced at $9,995.

Mr Fischer says the cost is justified. He believes that if he can make a product of the highest quality, then there are customers out there who will buy it.

Although the business is still small, he hopes that he can make it grow. He is already expanding the product range to include belts.

But how much of a market is there for products like this?

Some experts say there is a growing interest in the provenance of goods generally, including luxury products.
“In every luxury market where there are already a lot of luxury consumers, there’s always an opportunity for a ‘made in’ that country [product]“, says Milton Pedraza of the Luxury Institute, a New York-based firm that advises large businesses.

However, he adds that skills shortages can make producing handmade, luxury items at scale very difficult.

Another challenge is intense competition. It is a field where the big players in the industry undoubtedly have an edge because they benefit from economies of scale.

Despite the challenges, Mr Fischer remains undaunted.

“This is a huge undertaking – I would never have imagined three or four years ago this is where I would be right now,” he says.

“But there’s something deep inside which is telling me to continue this and to demonstrate that we can create refined luxury here in the United States.”

Source: http://www.bbc.com/news/business-32027515

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