Luxury Institute News

January 18, 2012

Wealthy Consumers From Seven Nations Define What Constitutes Luxury and How They Shop and Rank Brands; Superior Quality, Craftsmanship and Customer Service Remain Essential but Many Firms Fall Short

Posted in Customer Service/CRM,Press Releases,WealthSurvey,Wealthy Consumer
Tags: Branding, China, France, Germany, Italy, Japan, Marketing, Milton Pedraza, UK, US, Wealthy Consumer —

(NEW YORK) Jan 17, 2012 — The independent and objective New York City-based Luxury Institute just released “Luxury Branding and Marketing: A Global Comparison of Wealthy Consumers in Top Markets,” a comprehensive survey of wealthy consumers in the United States, United Kingdom, France, Germany, Italy, Japan and China.

Topping the list of attributes that define luxury brands are superior quality (73%), craftsmanship (65%) and design (54%). Nearly half (47%) of wealthy shoppers worldwide cite customer service as a key consideration, with Chinese especially likely to judge a brand based on service.

Potentially distressing for luxury brands is the global perception by wealthy consumers that firms are getting worse at executing on these top criteria. Twice as many wealthy U.S. shoppers (34% vs. 17%) say that customer service and product quality have deteriorated in recent years. Japanese, German and U.K. consumers bemoan a slip in craftsmanship.

The good news is that satisfaction levels across criteria remain high in the world’s most rapidly growing luxury market, China, where 63% of consumers say that service has improved. A vast majority applauds higher quality, craftsmanship and design.

“With signs of cooling in luxury retail, top-flight firms worldwide realize that fostering a customer-centric culture is essential for retaining and growing relationships with current customers and gaining new ones,” says Milton Pedraza, CEO of the Luxury Institute.

Respondents had minimum annual income of $150,000, or the local currency equivalent.

For details from this WealthSurvey and others, visit LuxuryInstitute.com.

About Luxury Institute (www.LuxuryInstitute.com)
The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

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October 17, 2011

China Leads World in Luxury Spending

Posted in China,Europe,Luxury Market,Retail,Travel & Leisure,WealthSurvey
Tags: China, France, Germany, Italy, Japan, Luxury Market, Travel, U.K., U.S., WealthSurvey, Wealthy Consumers —

By Anthony DeMarco
Forbes
October 14, 2011

Affluent consumers in the U.S. and much of the world are pulling back on their spending and attitude toward luxury. However, in China, affluent consumers are choosing luxury in every aspect of the lives, according to a seven-country survey of households earning at least $150,000.

About 57 percent of wealthy Chinese shoppers say that the economic environment has prompted them to spend more on luxury in the past year, and 50 percent plan to boost spending in the next 12 months, according to the survey by the Luxury Institute, a New York-based consulting firm. Restraint is more evident in the U.S., where 10 percent of the wealthy stepped up luxury spending in the past year and 6 percent plan to spend more in the next 12 months. U.S. consumers are twice as likely as those in China (32% vs. 16%) to have trimmed luxury spending last year.

Meanwhile, in Europe the currency crisis did not stop 14 percent of wealthy shoppers in France and 17 percent of those in Italy from boosting luxury spending this year, according to the survey, which represents the top 10 percent in household income. However, 38 percent of high-income shoppers in both countries plan to cut back in the coming year.

In Japan, the March earthquake and tsunami dampened enthusiasm for luxury shopping, with 7 percent of wealthy Japanese consumers reporting higher levels of spending and 34 percent cutting back.

The most widespread retrenchment comes in the U.K., where 38 percent of wealthy shoppers have pared back luxury spending, and 41 percent plan reductions in coming months. Germany shows more stability compared to other rich nations: Only 17 percent of wealthy German consumers say that they are spending less on luxury now and 29 percent plan to trim luxuries in the coming year.

Across all seven markets, luxury travel is the category in which most wealthy consumers anticipate stepping up spending, with China far and away showing the strongest appetite, according to the survey.

In China, 58 percent of the wealthy plan to spend more on leisure travel, followed by 28 percent in Italy and 22 percent in Germany who say the same. A total of 16 percent of wealthy consumers in the U.K., and 18 percent in the U.S., Japan, France and Italy, plan to spend more on travel.

Spending plans across the board in each of the 26 luxury categories were substantially higher in China than in Europe and the U.S., with some of the biggest disparities showing in apparel, watches, jewelry and gifts where Chinese consumers were six to seven times more likely to boost spending, according to the survey. Also strong in China are luxury auto sales, with 43 percent of the wealthy planning to spend more on cars, compared to 11 percent in the U.S., U.K. and Japan.

Attitudes towards luxury are far more positive in China than they are in other rich nations, with 78 percent of those surveyed saying that luxury goods and services are more important in today’s economy. The reverse is true in the U.S. where 80 percent of wealthy shoppers say that luxury has become less important.

More than 75 percent of Chinese say that luxury expenditures are prudent purchases, while 78 percent of wealthy consumers in the U.S., U.K., and Germany find them to be an extravagance. Similarly, 78 percent of China’s wealthy shoppers say that luxury goods and services are an important part of their lifestyle in today’s economy, compared to 25 percent in U.S. and Germany and 20 percent in France who agree that luxury remains central in their lives.

Wealthy Chinese consumers are also highly inclined to place a premium on exclusivity and quality, and discounting turns them off. More than half of wealthy Chinese and 49 percent of Japanese say that brands that discount their merchandise are not truly luxury brands. In the U.S. and Germany, one-third of wealthy consumers share the same dim view of discounting, as do 40 percent of wealthy shoppers in the U.K, Italy and France. Despite the dour attitude towards discounting, 56 percent of wealthy Chinese say that discounting has increased their overall spending on luxury and 50 percent plan to spend more on discounted luxury items in the coming months.

http://www.forbes.com/sites/anthonydemarco/2011/10/14/china-leads-world-in-luxury-spending/

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September 28, 2011

Luxury Spending Surge Continues in China Even as Wealthy Throttle Back on Purchases in Europe, Japan and U.S.; Half of Wealthy Chinese Plan to Spend More on Luxury This Year, Compared to Just 6% in the U.S., Japan and Germany

Posted in China,Europe,Luxury Market,Press Releases,WealthSurvey
Tags: China, Economy, France, Germany, Italy, Japan, Luxury Market, Milton Pedraza, U.K., U.S., WealthSurvey, Wealthy Consumers —

(NEW YORK) Sep 28, 2011- Wealthy shoppers from seven countries around the globe earning at least $150,000 (in local currency) reveal candid attitudes on luxury brands and personal spending plans in the “2011 State of the Luxury Industry: A Global Comparison of Consumers in Top Markets.” The just-completed survey conducted by the independent and objective New York City-based Luxury Institute shows strong increases in luxury spending continuing to come from China, while restraint is more widespread in the U.S., U.K., France, Germany, Italy and Japan.

More than half (57%) of wealthy Chinese shoppers say that the current economic environment has prompted them to spend more on luxury in the past year; 50% plan to boost spending in the next 12 months. This compares to just 10% of the wealthy in the U.S. who have stepped up spending recently and 6% who plan to spend more this year. In the U.S., consumers are twice as likely as they are in China (32% vs. 16%) to have trimmed luxury spending last year.

More than half of wealthy Chinese expect to boost spending on luxury travel, apparel, fitness, jewelry and shoes.

“China is clearly driving growth in global luxury brands,” says Luxury Institute CEO Milton Pedraza. “Exclusivity and prestige continue to be highly prized by wealthy Chinese consumers, even more than in the U.S. or Europe.”

For more details in the complete survey, visit LuxuryInstitute.com.

For Further Information, Please Contact:

The Luxury Institute, LLC
Martin Swanson
Vice President
(914) 909-6350
mswanson@luxuryinstitute.com

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June 1, 2010

Unemployment casts shadow on luxury recovery

Posted in Luxury Market
Tags: Coach, Japan, Luxury Market, LVMH, Milton Pedraza, Reuters Global Luxury Summit, Richemont, Saks, Tiffany —

(Reuters) – A rebound in U.S. luxury spending remains fragile due to high unemployment and the specter of higher taxes and stricter rules on how Wall Street operates, a top industry consultant said on Tuesday.

“The aspirants will come back when unemployment comes down to 5 percent,” Milton Pedraza, chief executive of the Luxury Institute, said at the Reuters Global Luxury Summit in New York.

He was referring to shoppers with an average household income of about $150,000 to $300,000 who helped prop up the industry, many by living beyond their means, during the economic boom of the previous decade. They were the consumers who cut back the most, suddenly and dramatically, during the more recent recession.

The U.S. unemployment rate is expected to dip to 9.8 percent when figures are released on Friday, but Pedraza cited estimates that a decline to 5 percent could take as much as five years.

While luxury spending has rebounded strongly in the first part of 2010, the European debt crisis and the potential for higher taxes in Western countries as governments there plug holes in their budgets could stop luxury’s comeback, Pedraza said.

But he added that some top luxury purveyors such as LVMH (LVMH.PA), Tiffany & Co (TIF.N) and Richemont (CFR.VX) took advantage of the turmoil in the past two years to win market share, gaining greater clout in negotiating with suppliers and luring more consumers to their classic brands.

Pedraza also said top companies would likely prune their portfolios, which often house dozens of brands, to focus on their most-established names and supplement them with a few smaller assets.

THINK GLOBAL

Some U.S. luxury retailers who are still sticking close to their home turf for exclusivity might be hurting themselves in the long run.

Pedraza, who termed the strategy as a “self-imposed limitation,” said overseas markets like China could be key growth engines for luxury players. He also sees Japan as a “cash cow” for those brands who can manage costs well.

While many upscale retailers like jeweler Tiffany and leather goods maker Coach (COH.N) have looked at fast-growing markets abroad to boost sales, many others like department store chain Saks Inc (SKS.N) are still very focused on their domestic markets.

“What is holding them back is their own perception of the world — meaning they don’t see themselves as global brands, they see themselves as regional brands,” Pedraza said.

He sees room for all luxury brands to go global.

“I would argue that all American brands that are luxury — Harley Davidson — have an opportunity to expand globally,” he said.

(Reporting by Dhanya Skariachan and Phil Wahba; Editing by Michele Gershberg and Matthew Lewis)

http://www.reuters.com/article/idUSTRE6503VN20100601

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