Luxury Institute News

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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February 25, 2016

SURVEY REVEALS THE 5 LUXURY BRANDS RICH GUYS BUY MOST

D’Marge
By: Elyse Romano
February 25, 2016

When you finally get around to making that billion dollar app idea, what will you do with your new-found wealth?

First you’ll build a Scrooge McDuck money pool and take morning dips. But once that’s taken care of, your closet will need a big-money makeover. A new study by the Luxury Institute reveals the luxury brands that wealthy men love most.

Each brand was rated on quality, exclusivity, social status, and self-enhancement. Of 42 famous menswear purveyors – including Alexander McQueen, Salvatore Ferragamo, Prada, Paul Smith, and Gucci – Calvin Klein topped the list of brands that moneyed men have purchased from in the last year. Calvin also scored highly on name recognition, taking a second top spot on the list of brands men are most familiar with.

Rounding out the top five brands rich guys like to buy are Ralph LaurenHugo BossBurberry, and Giorgio Armani.

Source: http://www.dmarge.com/2016/02/survey-reveals-the-5-luxury-brands-rich-guys-buy-most.html

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Affluent men most apt to recommend Isaia, Loro Piana to close connections: report

Luxury Daily
By: Sarah Jones
February 25, 2016

Being popular does not always lead to strong word of mouth, according to a recent survey of affluent men conducted by the Luxury Institute.

The top five brands listed in the men’s consideration sets were not the same as the five they would be most keen to endorse to family and friends. With luxury consumers, particularly those in emerging markets, becoming more sophisticated shoppers, smaller boutique labels have the opportunity to expand awareness by leveraging the recommendations of existing clientele.

“With technology and information at the tip of everyone’s fingertips, customers are becoming much more aware and interested in the boutique and ‘in-the-know’ brands,” said Milton Pedraza, founder and CEO of Luxury Institute. “The customer is better informed not only about the product, but also every aspect of a company’s brand values down to the supply chain.

“The most recognizable brands still have a major advantage, but with the customer’s ability to access product and brand information like never before, these companies are held under a microscope and their clients are willing and able to move to another brand at any moment.”

Luxury Institute’s latest Luxury Brands Status Index polled 3,900 affluent men from the top seven wealthiest nations about 42 menswear brands. Individuals had annual household incomes of at least $150,000 in the United States; 60,000 pounds in the United Kingdom; 50,000 euro in France, Germany and Italy; 1 million yuan in China and 150 million yen in Japan.

Public perception
Consumers were asked how much they agreed with four statements about each brand in question: “This brand delivers consistently superior quality,” “This brand is truly unique and exclusive,” “This brand is purchased by people who are admired and respected” and “This brand makes its buyers feel special across the full customer experience.”

The resulting LBSI ranges from one to 10 and represents an average of all respondents’ scores for the label.

According to the study, Isaia is the most effective at making consumers feel special across the entire purchase experience. The brand is perceived as being a label respected, admired men wear and buy.

While the Italian label is not widely known, with only 3 percent of those surveyed aware of the brand, the relatively small population that is familiar feels very strongly about the brand’s quality. Seventy-five percent of those who know Isaia would recommended it to other consumers.

The top five brands based on status were all small Italian designers with comparably limited awareness. Besides Isaia, men are most willing to endorse Loro Piana, Brunello Cucinelli, Brioni and Ermenegildo Zegna.

Loro Piana Gstaad illustration
Illustration by Loro Piana

On the opposite side of the spectrum is Calvin Klein, which men were most likely to have purchased in the past year. Despite its popularity among affluent male shoppers, Calvin Klein’s LBSI score is lowest among the brands studied.

Next in popularity is Ralph Lauren, which topped the list of brands considered for the next apparel purchase. Rounding out the top five most well-known and frequently purchased labels are Hugo Boss, Burberry and Giorgio Armani.

When it comes to high prices, affluent men feel that Hermès, Brioni, Ermenegildo Zegna and Loro Piana are the most worthy of premium price points. Armani, which came in fifth, was the only brand ranked at the top of the list for price justification and purchase intent.

“Quality, while extremely important, is only one factor that contributes to the success of a brand,” Mr. Pedraza said. “While Loro Piana and Gianluca Isaia scored highest in the Superior Quality LBSI score, they were also among the lowest ranked in Brand Familiarity.

“The consumers’ considerations for next purchase coincide closely with brand familiarity, likely because customers want certainty in their purchases, especially in a downward economy,” he said. “The trusted and familiar brands provide that.”

A similar Luxury Institute survey of affluent women yielded complementary results, showing that both male and female clientele may have more esteem for the labels they are not currently buying from (see story).

Spreading word
Affluent consumers still care about a brand’s rarity, with less common labels having better appeal.

Exclusivity and desirability go hand in hand for China’s wealthy, with the same brands ranked in the top five for both characteristics in a recent study by Promise Consulting and BNP Exane.

Hermès takes home top prize for exclusivity, which measures the consistent quality of goods, the brand’s prestige, the valuation of the brand’s customers and its ability to justify a high price point. Chinese consumers are generally becoming more sophisticated luxury consumers, making for tougher competition between labels for their attention and affection (see story).

For brands with a strong, loyal following, social media makes it easier for word-of-mouth recommendations to spread. Particularly among luxury consumers, a referral can have a large impact on purchase decisions.

According to a recent report by The Future Laboratory, the luxurian demographic relies heavily on the recommendations of friends and family. Many respondents shared that they ask for information and opinions of their peers before purchasing a luxury good or service.

Overall, 23 percent of respondents refer to peers when contemplating a purchase, showing that word of mouth remains powerful in the luxury goods sector (see story).

“Isaia has an incredible opportunity to increase recognition and awareness through relationship building at the front-line level, referral programs and word of mouth generation,” Mr. Pedraza said. “Using social media platforms to appeal to millennials and producing information for customers to review will draw in new consumers.

“Because of their exceptional ranks in quality and customer experience, they have an advantage that will allow brand referrals to spread quickly.”

Source: http://www.luxurydaily.com/affluent-men-most-apt-to-recommend-isaia-loro-piana-to-close-connections-report/

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February 24, 2016

What Are The Best Luxury Brands?

Luxury Institute 2016 Global Survey Utilized Those Who Know, Voted – Affluent Men From Seven Countries Rank 42 Luxury Fashion Brands, Rate Each on Multiple Criteria

Pblicty
February 24, 2016

The New York-based Luxury Institute surveyed 3,900 high-income consumers from seven countries who met the following income thresholds in local currencies: United States ($150,000); United Kingdom (£60,000); France, Germany, Italy (EUR50,000); China (1 million CNY); and Japan (¥150 million).

Interestingly, “smaller brands now more than ever are finding it easier to make a big impact on the fashion industry in a relatively short period of time as they use the latest technology to bring their designs to a global stage,” says Luxury Institute CEO Milton Pedraza. “In this kind of landscape, both bigger and smaller fashion houses need to monitor the degree to which their brands resonate favorably with their target customers.”

Respondents rated 42 men’s fashion brands (0-10) on quality, exclusivity, social status, and self-enhancement. In addition, affluent shoppers weighed in on whether they are willing to recommend specific brands to family and friends. They also indicated which fashion brands are worth the premium prices, and which brands they are most likely to consider for upcoming fashion purchases.

Luxury Brand Status Index scores range from 0-10, and are an average of respondents’ degree of agreement with each of the following four statements:

- “This brand delivers consistently superior quality.”

- “This brand is truly unique and exclusive.”

- “This brand is purchased by people who are admired and respected.”

- “This brand makes its buyers feel special across the full customer experience.”

Worldwide popularity does not equate to higher brand status. In fact, each of the top five men’s fashion brands are smaller Italian designers with which only a very few affluent men were familiar.

Gianluca Isaia is a worldwide standout for being purchased by people who are admired and respected, and was also named the best brand at making buyers feel special across the full customer experience. In addition, 75% of men who are familiar with the Isaia brand would recommend it to others. Despite being held in high esteem by affluent travelers, Isaia is not a well-known name, identified by only 3% of men surveyed.

Calvin Klein is the brand that men around the world are most likely to have purchased in the past year, even though Calvin Klein ranks last in overall LBSI score among all brands evaluated. Ralph Lauren is the brand most likely to be considered the next time a fashion purchase is made, and it is among the three most popular brands along with Calvin Klein and Brooks Brothers among affluent U.S. men.

Worldwide, the top five fashion brands with which affluent men are most familiar, and most likely to have purchased in the past year, are Calvin Klein, Ralph Lauren, Hugo Boss, Burberry, and Giorgio Armani. Armani is also one of the top five brands that affluent men from around the world view as most worthy of premium pricing. The top four are Hermès, Brioni, Ermenegildo Zegna, and Loro Piana.

The willingness of affluent shoppers to recommend a brand to family and close friends may be the best overall measure of satisfaction. On a global basis, wealthy men are most likely to recommend Gianluca Isaia, Loro Piana, Brunello Cucinelli, Brioni, and Ermenegildo Zegna.

Below are all 42 men’s luxury fashion brands under consideration in the 2016 LBSI survey:

1. Alexander McQueen

2. Balenciaga

3. Bally

4. Bottega Veneta

5. Brioni

6. Brooks Brothers

7. Brunello Cucinelli

8. Burberry

9. Calvin Klein

10. Canali

11. Dior Homme

12. Dolce & Gabbana

13. Dunhill

14. Ermenegildo Zegna

15. Etro

16. Faconnable

17. Salvatore Ferragamo

18. Giorgio Armani

19. Gianluca Isaia

20. Givenchy

21. Gucci

22. Hermes

23. Hugo Boss

24. Jil Sander

25. John Varvatos

Source: https://www.pblcty.com/article/12645/what-are-the-best-luxury-brands

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Dollars & Ssense

A Montreal computer engineer has built one of the world’s most successful designer fashion platforms. Marina Strauss goes behind the scenes to learn how Ssense’s Rami Atallah coaxes shoppers into $860 sweatpants

The Globe and Mail
By: Marina Strauss
February 24, 2016

In Montreal’s shrinking Chabanel garment district where businesses increasingly struggle to stay afloat, an unlikely fashion player has emerged. Fast-growing Ssense (pronouced “essence”), which stocks hundreds of luxury brands ranging from the established Alexander McQueen to up-and-coming Vetements, is headed not by a fashion professional but a computer engineer. Rami Atallah, its chief executive officer, caters to a global clientele by selling goods mostly online (he has one store in Old Montreal), while many tony rivals have been slow to embrace e-commerce. In doing so, he is set on shaking up the estimated $396-billion international luxury fashion segment, one pair of $860 sweatpants at a time.

“[The luxury market] is definitely changing,” says the slender Atallah, clad in black Saint Laurent jeans – a label he favours for its slim fit – and Eytys sneakers. He’s sitting at a sleek marble boardroom table at Ssense’s expanding head office, where large windows provide an unobstructed view of the city centre and Mont Royal in the distance. “There is a shift from pure luxury to something more experiential. There has to be a strong message, at the end of the day. It has to bring an added layer to the conversation that is happening around fashion.”

Ssense’s customers are big spenders like marketing executives, musicians and athletes who don’t think twice about dropping an average of $900 on a piece of clothing (its priciest sale to date was a $30,000 black limited-edition Rolex). Though its roots are in men’s wear, Atallah is predicting that women’s apparel will soon dominate.

Less affluent shoppers buy single items – a $375 Marc Jacobs sailor blouse, perhaps – and mix it up with lower-priced staples, he says. Only 18 per cent of the clientele is Canadian, his figures show. Almost half live in the United States and 10 per cent in China (others are in places as far-flung as South Korea, Australia, Hong Kong and Japan). And almost 80 per cent are coveted millennials, between 18 and 34.

Contrary to the merchandising strategy of many other luxe outlets, the product selection at Ssense prioritizes statement pieces over everyday basics. Recent arrivals include looks by (from left) Sacai, Yeezy, Roksanda and Vetements.

 

Contrary to the merchandising strategy of many other luxe outlets, the product selection at Ssense prioritizes statement pieces over everyday basics. Recent arrivals include looks by (from left) Sacai, Yeezy, Roksanda and Vetements.

At just 33, Atallah shares a demographic with his customer. He got the e-commerce itch as an engineering student in the early 2000s when he bought a $200 pair of Diesel jeans and sold them on Ebay. They fetched $350, so he bought more posh denim and made $15,000 in a month. He was so enamoured with the process that he decided to build an e-commerce platform as his engineering thesis. His brothers, Firas (who now serves as chief financial officer) and Bassel (chief operating officer) joined him in launching the business. His family, who immigrated from Syria when Rami was 15, invested tens of thousands of dollars in the company.

Founded in 2003, Ssense stands out not only as a Canadian player in the luxury e-commerce field, but also for its fashion-forward merchandise mix. Spring’s women’s-wear selection includes Sacai’s contemporary lace pieces, Yeezy’s moth-eaten knits and tailored streetwear by Acne Studios. Ssense’s influence on suppliers is such that it can work directly with a label like Vetements – whose following includes Rihanna and Kanye West and whose creative head, Demna Gvasalia, recently took the reins at Balenciaga – to develop exclusive capsule lines. “Ssense are great partners and our most important account as of today,” says Vetements’s CEO Guram Gvasalia.

The website’s edgy, anti-fashion tone sets it apart in a competitive marketplace where retailers struggle to make a profit while vying with big brands that increasingly sell from their own sites.

Ssense started with a focus on men’s wear and still sells a good chunk of its inventory to fashion-forward guys. Its new campaign features Majid Jordan – the producing and recording duo signed to Drake’s OVO Sound label – photographed at the University of Toronto wearing minimal sportswear by labels such as Miharayasuhiro, Calvin Klein, Lanvin and Reebok Classics.

 

Ssense started with a focus on men’s wear and still sells a good chunk of its inventory to fashion-forward guys. Its new campaign features Majid Jordan – the producing and recording duo signed to Drake’s OVO Sound label – photographed at the University of Toronto wearing minimal sportswear by labels such as Miharayasuhiro, Calvin Klein, Lanvin and Reebok Classics.

“It’s a tough business,” says Darrell Kopke, foudner of business accelerator Institute B and former CEO of Kit and Ace, a high-end casual-wear chain. “Young people who are willing to buy a brand online that they haven’t previously experienced are not into luxury fashion.”

The online market is dominated by Net-a-Porter, which was bought late last year by e-commerce titan Yoox. But even Net-a-Porter had been in the red. Other consolidation has hit the industry in a bid to boost the bottom line. In January, Hudson’s Bay Co. snapped up Gilt.com for $250-million (U.S.), a far cry from the $1-billion valuation it received following a 2011 round of funding, while a few years earlier, Nordstrom swallowed HauteLook.com. Fashion e-tailer Nasty Gal recently cut about 10 per cent of its staff.

“There will continue to be consolidation among all these players and some will go under,” predicts Milton Pedraza, CEO of the Luxury Institute in New York.

Atallah says privately owned Ssense has enjoyed 82-per-cent compound annual sales growth since its inception, with a projected five million monthly visitors by the end of 2016. Industry estimates suggest its total annual sales are in the nine figures. What’s more, Ssense turns a profit, pouring only the money it makes back into the business rather than investing more by raising venture-capital or other outside funds, as rivals do, he says. With more than 200 full-time employees today (more than double the number it had two years ago), the company plans to expand to more than 300 this year.

Atallah used his computer engineering background to build the e-commerce platform.

 

Atallah used his computer engineering background to build the e-commerce platform.

What is key for Atallah is collecting data on shoppers who come to his site, tracking their habits and responding appropriately. For instance, the faster Ssense ships an order, the more likely customers are to shop again, he says (the site offers free next-day delivery in Canada). He’s also found that those who read the site’s extensive editorial content are more likely to eventually make a purchase.

Atallah recently hired Joerg Koch, a Berlin-based fashion guru and founder of the indie magazine 032c as the website’s first editor-in-chief.

Koch’s mandate is to focus not on touting products so much as ideas to reach the sensibilities of Ssense’s young, well-heeled customer – some of the stories are provocative. In a profile on Ian Connor, a member of Kanye West’s creative team and, purportedly, the pop culture icon’s style muse, the 22-year-old liberally uses the F-word and other potentially offensive language as he holds forth about the power of social media and creativity, while a photo shows him pensively smoking.

Kopke gives Ssense high marks for taking risks with its content. “That is the attention-grabbing headline you need to cultivate a tribe of followers,” he says. “It has to be divisive.”

Janet Bannister, a venture capitalist who was the CEO of online fashion startup The Coveteur, says Ssense is being bold by combining content and e-commerce. Many e-commerce players have tested marrying the two but abandoned it because generating editorial content is relatively expensive, she says. The content “does not necessarily result in incremental e-commerce transactions unless it is very tightly integrated with e-commerce.”

“It’s about earning the trust of the readers so they don’t perceive you as an advertisement but as media,” counters Atallah. Ssense’s data shows that consumers who click through editorial content spend 7 per cent more on their orders and return to the site 300 per cent more often than those who don’t.

Perhaps, surprisingly, Ssense’s growth strategy also involves upping the cachet of its physical stores. Currently, it operates a single flagship in Old Montreal (hanging on the rack during a recent visit: a $670 men’s camouflage T-shirt by Valentino). By next year, Ssense will move to a nearby six-storey building that’s eight times larger than its current shop. It has hired award-winning, London– based architect David Chipperfield to design the new outlet. More flagships in key international markets will follow.

Says Atallah: “We have really big ambitions.”

Source: http://www.theglobeandmail.com/life/fashion-and-beauty/fashion/the-montreal-company-shaking-up-luxury-fashion-one-pair-of-860-sweatpants-at-atime/article28845855/

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February 23, 2016

These Are the 5 Brands Rich Guys Buy Most

GQ Magazine
By: Justin Fenner
February 23, 2016

Know what gets between guys (with money) and their Calvins? Nothing.

A new study by the Luxury Institute has found that men with lots of discretionary income really, really like Calvin Klein and the wares created by its menswear designer Italo Zuchelli. Of 42 high-end purveyors of men’s clothes—including Brunello Cucinelli, Alexander McQueen, and Valentino—Calvin Klein is at the top of the list for brands that rich dudes have purchased something from in the past year.

Part of what makes Calvin so successful is its name recognition: the study also found that men of means are more familiar with Calvin Klein than any other brand, which means putting Kendall Jenner and Justin Bieber in all those ads is working.

The rest of the top five brands that rich guys like to buy includes Ralph Lauren, Hugo Boss, Burberry, and Giorgio Armani. Ralph Lauren is the brand that these men are most likely to think about first the next time they go shopping, and Armani is among the companies whose clothes are viewed as actually being worth their high prices.

To find out all of this, the Luxury Institute surveyed over 3,900 men from the United States, the United Kingdom, China, France, Germany, Italy, and Japan who had to meet different income requirements: men in America and China, for example, had to pull in a salary around $150,000 a year to take the questionnaire, but Brits only needed to bring in $85,000.

The results of the survey are a clear indication that regardless of what they make, wealthy guys aren’t afraid to spend money on luxe clothing—so long as it comes from a brand with an established track record of making high-quality stuff. And here we thought half the fun of fashion was taking risks.

Source: http://www.gq.com/story/5-brands-rich-men-buy-study

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