Luxury Institute News

May 8, 2013

Neiman Marcus sale could build more customer-focused brand

Posted in Customer Culture,Customer Experience,Fashion,Finance,Luxury Brands,Retail
Tags: Amazon, Customer Experience, Michael Kors, Milton Pedraza, Neiman Marcus, Nordstrom, Private Equity, Randall Ray, Zappos —

By Danielle Abril
Dallas Business Journal
May 7, 2013

While private equity investors of Neiman Marcus Group Inc. consider their exit strategy, a luxury retail expert predicts a move that could result in an increased emphasis on customer relations.

Milton Pedraza, CEO of The Luxury Institute LLC, said he belives that the next logical step for Dallas-based Neiman Marcus is to go public. The move would allow Neiman Marcus the freedom to focus on building relationships with its consumers.

“Neiman will have a very solid structure if they go public,” Pedraza said. “It will be customer-centric rather than shareholder-centric.”

Bloomberg reported earlier this week that TPG Capital and Warburg Pincus LLC, Neiman Marcus’ private equity investors, were considering selling the company or taking it public. The firms held their investment for eight years, 60 percent longer than the norm, according to Bloomberg.

Neiman Marcus declined to comment.

Neiman Marcus could take four different directions, according to Randall Ray, partner with Munck Wilson Mandala LLP. Ray has spent almost 25 years dealing with corporate legal matters and said one thing is clear in this situation: TPG and Warburg will choose the path that ends with the highest profit for them in the least amount of time.

The four options, according to Ray, are: filing an initial public offering, selling to a private equity firm, selling to a strategic buyer and choosing a dividend recapitalization.

Pedraza said it was “less likely” that the firms would sell to another private equity firm.

“It would take a very special private equity firm to do the things Neiman Marcus needs,” he said. “You need patient money to rebuild the brand.”

Pedraza cites online retailers Amazon and Zappos as companies that have benefited from answering solely to the consumer. He also said that other retailers, such as Nordstrom and Michael Kors, have been successful in their transformations to becoming publicly owned.

Pedraza also said the recovering economic climate offers an opportunity for TPG and Warburg Pincus to sell to the general public.

“It’s a good time to go public,” he said, adding that a booming economy would offer the best conditions for the move. Whatever road Neiman Marcus chooses, there will be few clues as to its direction until the transaction is complete.

“Unless Neiman Marcus feels compelled to make this information public, there won’t be a lot of transparency in the process,” Pedraza said.

http://www.bizjournals.com/dallas/news/2013/05/07/sale-of-neiman-marcus-could-impact.html

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February 5, 2013

Wealthy Customers Sing Praises of Shopping Experiences at Bergdorf, Nordstrom and Barneys

Posted in Customer Experience,LCEI,Luxury Brands,Press Releases,Retail,Wealthy Consumer
Tags: Barneys, Bergdorf Goodman, Customer Experience, Luxury Market, Milton Pedraza, Neiman Marcus, Nordstrom —

(NEW YORK) February 05, 2013 – U.S. shoppers earning at least $150,000 a year share detailed opinions and evaluations of seven leading luxury retailers in the 2013 Luxury Consumer Experience Index (LCEI) conducted by the independent and objective New York-based Luxury Institute. Based on an average of seven customer experience components rated on a 1-10 scale, Bergdorf Goodman (8.58) ranks first, but wealthy consumers are far more likely to shop at second-place Nordstrom (8.36).

Visited by 34% of wealthy shoppers in the past 12 months, Nordstrom is the most popular luxury retail chain, and it is also most likely (92%) to be recommended favorably to family and friends. The affluent shoppers who have visited Bergdorf Goodman’s two stores in the past 12 months rave about it, ranking it first on six of seven experience criteria, including having polite, trustworthy, knowledgeable and enthusiastic employees, as well as stores that are appealing and well maintained. Bergdorf’s parent, Neiman Marcus, ranks first for being the retailer that high-income shoppers say, “completely satisfies my needs.”

Despite the high praise for its people and its stores, wealthy shoppers perceive Bergdorf’s merchandise as a bit too pricey, ranking it last (63%) on the question of whether its products are worth premium prices. Barneys New York ranks first (85%) for deserving premium pricing.

“Bergdorf Goodman retains the cachet of a classic boutique that delivers outstanding experiences,” says Luxury Institute CEO Milton Pedraza. “On a larger scale, Nordstrom deserves credit for replicating great experiences with a customer centric culture across its entire network of stores.”

Wealthy shoppers also evaluated Saks Fifth Avenue, Burberry, Bloomingdale’s and Brooks Brothers.

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 11, 2012

Ultra-Wealthy Shoppers Spend More On Luxury Where They Maintain Personal Relationships; Pentamillionaires most likely to be close with specific sales professionals at Barneys, Bergdorf Goodman

(NEW YORK) October 11, 2012 – U.S. consumers with at least $5 million in assets and $200,000 in annual income share detailed opinions and observations about their relationships with salespeople in six luxury categories in the new 2012 Luxury Customer Relationship Index survey from the independent and objective New York-based Luxury Institute.

High-ticket categories show higher rates of customers who deal with a specific salesperson. Watches (49%) lead all categories in terms of proportion of customers who maintain relationships with salespeople, followed by jewelry (40%) and men’s ready-to-wear (38%). There is a noticeable drop-off in rates of personal relationships at luxury retailers (30%), handbag brands (27%) and women’s ready-to-wear (21%).

Across categories, 70% of ultra-wealthy customers who transact and communicate with a specific salesperson say that this relationship causes them to spend more on goods and services in stores and on the Web. The biggest positive impact on sales comes when customers maintain relationships with salespeople in luxury retail, and in both men’s and women’s ready-to-wear categories.

In luxury retail, Bergdorf Goodman (51%) and Barneys (49%) enjoy the highest rates of maintaining relationships with ultra-wealthy customers, with larger chains like Bloomingdale’s and Nordstrom seeing lower incidence of relationships. In the middle are Brooks Brothers (36%), Neiman Marcus (32%), Lord & Taylor (30%), and Saks (26%).

“Luxury retailers know that relationships drive sales,” says Luxury Institute CEO Milton Pedraza. “The right hiring, education programs and Customer Culture help to promote more productive relationships and higher sales.”

About the 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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September 11, 2012

Wealthy Shoppers Rank Experiences At Online-Only Luxury Retail Sites Ahead Of Traditional Brands; Barneys is best among brick-and-mortar but MR PORTER, SSense prove more pleasing

Posted in Customer Experience,E-Commerce,Fashion,Internet/Web,LOCEI,Press Releases,Wealthy Consumer
Tags: Barneys, Intermix, Milton Pedraza, MR PORTER, Neiman Marcus, Nordstrom, Online shopping, Saks Fifth Avenue, SSense, Zappos —

(NEW YORK) September 11, 2012 – Wealthy shoppers with minimum annual income of $150,000 rate the online experience at websites of 10 traditional luxury retailers and 16 online-only retailers in the 2012 Luxury Online Experience Index (LOEI) survey by the independent and objective New York-based Luxury Institute. LOEI scores include evaluations of a site’s navigation, visual appeal, selection of products, ability to deliver product feature information, ease of purchase, availability of human help and trustworthiness to keep personal data.

It appears that upstarts have made quick inroads. One-year old men’s luxury site, MR PORTER, earns the highest score (86) of all retailers, online and traditional, followed by fashion site SSense (85) and My-Wardrobe and Shopbop (both 84). NET-A-PORTER and Zappos Couture earn scores of 83 and 82, respectively.

Barneys New York earns the highest LOEI score (84) among luxury retailers that also operate physical stores, followed by Neiman Marcus, Saks Fifth Avenue, Intermix and Scoop all with 82.

Nordstrom is the brand most likely to be recommended (92%) and the site that most wealthy shoppers plan to return to for their next online shopping experience. Among online-only sites, Zappos is the most recommended (88%) and eBay Fashion Vault (95%) enjoys the highest rate of return visits.

“Online luxury retail proves that smaller and newer brands can shake up incumbents with the right technology, product mix and site design,” says Luxury Institute CEO Milton Pedraza. “The proliferation of web and mobile shopping truly creates opportunity.”

Respondents reported average income of $310,000 and average net worth of $3.6 million.

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August 6, 2012

As Nordstrom’s arrival looms, rival stores sharpen up

By Marina Strauss
The Globe and Mail
August 5, 2012

Erik Nordstrom likes to boast about his employees going the extra mile at the upscale U.S. retailer that bears his name.

Recently, the great-grandson of the founder of Nordstrom Inc. told the story of a maintenance staff worker who discovered a Nordstrom shopping bag filled with $800 worth of goods in the parking lot of a Farmington, Conn., store.

Flight information in the package helped the employee identify the customer, whom he dialled three times.

She failed to pick up because, she said later, she didn’t recognize the number on her mobile’s call display. Realizing her flight was leaving soon, he drove 200 kilometres – two hours – to John F. Kennedy Airport in New York, and after having her paged at the airport, triumphantly handed her the bag.

She offered him money for gas, but he refused.

“We don’t nail it all the time, by any means, but we’re fortunate to have some really terrific people in this company who care a lot … about their customers,” Mr. Nordstrom, the company’s president of stores, told the retailer’s annual meeting in May.

Click the link to read the entire article: http://www.theglobeandmail.com/report-on-business/as-nordstroms-arrival-looms-rival-stores-sharpen-up/article4464192/

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June 29, 2012

Nordstrom to get New York store at last

Posted in Luxury Brands,Luxury Market,Retail
Tags: Department Stores, Luxury Market, Milton Pedraza, Nordstrom —

Nordstrom Inc is set to open its first department store in New York City in 2018, ending a 25-year search for a spot on the luxury world’s premiere stage.

By Phil Wahba
Reuters
June 28, 2012

The Nordstrom store will be 285,000 square feet and occupy seven stories at the base of what will become Manhattan’s tallest residential building, to be built on 57th Street, near 7th Avenue. The store is part of a deal with Extell Development Co, the upscale chain announced at a press conference on Thursday.

A full-service New York department store will give the chain exposure to the millions of tourists who flock to Manhattan and have bolstered business at rivals such as Saks Fifth Avenue, Macy’s Inc Bloomingdale’s, Neiman Marcus Group Inc’s Bergdorf Goodman and Tiffany & Co.

“It’s our desire to make this the absolute best Nordstrom store there is because we need to do that to be able to compete on this stage,” Pete Nordstrom, the chain’s president of merchandising, told reporters. He expects the Manhattan store to be the department store chain’s highest grossing location.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute: http://www.reuters.com/article/2012/06/28/us-nordstrom-newyork-idUSBRE85R1A220120628

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June 26, 2012

Social Responsibility Is Nice But Not Worth Paying for in Today’s Economy, According to Wealthy Consumers Surveyed by Luxury Institute

(NEW YORK) June 26, 2012 — In a new survey by the independent and objective New York-based Luxury Institute, “Corporate Social Responsibility: The Wealthy Consumer’s Viewpoint,” U.S. consumers earning at least $150,000 per year define socially responsible corporate behavior, rate companies and divulge importance of socially responsible practices in shaping purchase decisions. Responses were compared to those from the same survey in 2007.

Most (82%) wealthy Americans define social responsibility by a company behaving ethically with employees, customers and suppliers. Environmental behavior and philanthropic actions are both named by respondents as an essential component of CSR (58%).

Almost half (45%) of wealthy consumers say they seek out brands with high ethical standards, but only 39% of these shoppers would be willing to pay a premium. That’s down from 56% who would pay a premium in 2007. Apple, BMW, Coach, Lexus, Mercedes-Benz, Nordstrom, Starbucks and Whole Foods are frequently cited as highly ethical standouts.

Twenty-seven percent of wealthy consumers learn about companies’ socially responsible behavior via Facebook or Twitter. That’s up from 8% who received their information from social media in 2007. Reading news articles is the most popular (52%) way to learn of CSR efforts, down from 64% five years ago.

“Even wealthy consumers have de-emphasized social responsibility as this economy focuses everyone on price/value and away from social issues,” says Luxury Institute CEO Milton Pedraza. “Nevertheless, we see that luxury and premium brands that are socially responsible do better even during recessions because doing well by doing good is a universal and timeless concept.”

Respondents reported average income of $307,000 and average net worth of $3.1 million.

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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May 9, 2012

Nordstrom Tops Luxe Experience Index

Posted in Customer Experience,LCEI,Wealthy Consumer
Tags: Barneys New York, Bergdorf Goodman, Milton Pedraza, Nordstrom —

By Evan Clark
WWD
May 8, 2012

Nordstrom Inc.’s intense focus on customer service seems to be paying off.

The Seattle-based retailer ranked highest in the Luxury Institute’s 2012 Luxury Consumer Experience Index, a survey that tracks U.S. shoppers earning at least $150,000 a year and takes into account a retailer’s store personnel, shopping experience and the consumer’s overall satisfaction…

Click the link to read the entire article (subscription required): http://www.wwd.com/retail-news/department-stores/nordstrom-tops-luxe-experience-index-5899721?src=nl/mornReport/2012050

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May 8, 2012

Nordstrom Ranks First in Luxury for Wealthy Shoppers; High-End Retailer Earns Top Scores on Multiple Measures of Customer Experience and Loyalty

Posted in Customer Experience,LCEI,Press Releases,Retail,Wealthy Consumer
Tags: Barneys New York, Bergdorf Goodman, Nordstrom —

(NEW YORK) May 8, 2012 — Wealthy U.S. shoppers earning at least $150,000 a year rank Nordstrom highest among luxury retailers in the 2012 Luxury Consumer Experience Index (LCEI) survey by the independent and objective New York-based Luxury Institute. LCEI scores are based on customers’ evaluations of a brand’s store personnel, shopping environment and degree of satisfaction with the total experience.

Nordstrom earns the top overall score of 8.41 out of 10, followed by Neiman Marcus’ Bergdorf Goodman subsidiary (8.37), and Barneys New York (8.23). It is also the most widely visited luxury retailer, with 36% of wealthy consumers reporting shopping at Nordstrom in the past 12 months.

Only 7% of shoppers have visited Barneys, and 6% have shopped at Bergdorf Goodman, but exclusivity helps with pricing: 76% of Bergdorf’s shoppers and 74% of Barneys’ say that goods in those stores are worth a significant price premium; 65% say the same about Nordstrom’s merchandise.

“Retailers, especially in luxury, are selling experiences to customers more than they are selling any particular good,” says Luxury Institute CEO Milton Pedraza. “In the case of a retailer like Nordstrom, we see that a program of continuous improvement in the customer experience can lead to higher degrees of loyalty and improved financial performance.”

In addition to its top overall LCEI score, Seattle-based Nordstrom ranks first on two critical measures of customer loyalty: 96% of high-income shoppers plan to shop at Nordstrom again, and 94% recommend Nordstrom to family and close friends.

Survey participants reported average income of $292,000 and average net worth of $3 million.

About the Luxury Institute ( www.LuxuryInstitute.com )

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March 27, 2012

67pc affluent smartphone owners use mcommerce: study

Posted in Luxury Market,Mobile,Mobile Commerce,Wealthy Consumer
Tags: Amazon, Milton Pedraza, mobile applications, Nordstrom —

By Rachel Lamb
Luxury Daily
March 26, 2012

More than two-thirds of affluent consumers who own a smartphone have used their mobile device to shop for products and services, but since they prefer the in-store experience, luxury brands have to start creating humanistic experiences on mobile.

Preference for the in-store experience, the cornerstone of luxury marketing, is the main reason why smartphone owners say they do not buy products through mobile. Mobile applications are the most common form of engagement for affluent consumers, indicating that luxury marketers need to step up the in-app experience.

“Consumers are becoming so much more mobile and we need to figure out how to translate that mobility into a humanistic experience,” said Milton Pedraza, CEO of the Luxury Institute.

“Apps are becoming ubiquitous, so it’s what we do with them that make the experience more extraordinary that will make the difference,” he said. “How the app is being used by the consumer or to contact someone who represents the brand is now where the real opportunity lies.”

The Luxury Institute study was conducted over the first quarter of 2012.

Respondents reported an average net worth of $2.8 million.

Complicated commerce
Of the 67 percent of affluent consumers who shop via mobile, 63 percent of them have made purchases in the past 12 months, according to the study.

Furthermore, wealthy consumers who made purchases spent an average of $628.

Event tickets, gift cards, food and technology/personal electronics are the most-common type of mobile purchase, according to the study.

Preference to the in-store experience is the most-used reason for not making a mobile purchase.

However, other issues include “privacy and security issues,” “it seems complicated,” “the brands I purchase from do not offer mobile shopping” and “I don’t know how.”

Of luxury consumers with smartphones, 28 percent of them own an iPhone, 22 percent own an Android, 16 percent own a BlackBerry and 2 percent own another smartphone.

Appetizing
Of the 60 percent of affluent consumers in the United States who have a smartphone, approximately 73 percent of them use apps at least once per day, according to findings from the Luxury Institute.

Affluent consumers are using apps including Facebook, Angry Birds and Words With Friends, making them a prime spot for luxury mobile marketing. However, most high-end brands are not fully grasping the urgency that they not only need to be in mobile, but the leading innovators.

Of affluent consumers who own a smartphone, 80 percent of wealthy U.S. consumers report that they have downloaded an app.

Navigational and entertainment apps are the types of apps most frequently downloaded, including Facebook, Angry Birds and Words With Friends.

That said, these apps provide opportunities for luxury marketing. In fact, some brands have already taken advantage.

For example, department store chain Nordstrom is targeting aspirational consumers through mobile banner advertisements for its Nordstrom Rack locations in the popular gaming application, Words With Friends.

In addition, New York-based department store Bergdorf Goodman used Words With Friends to drive foot traffic to its store with a location-based banner ad promoting an in-house event.

However, what these results are telling marketers is that it is not just young consumers who enjoy gaming apps. The respondents of the study – older, more affluent consumers – are still citing Angry Birds, Facebook and Words With Friends as their favorite apps.

However, there is a fine line between marketing to adults and aspirational consumers.

“Brands do need to be as engaging as social media, but they cannot be gimmicky – they must be honest and real,” Mr. Pedraza said. “It is surprising that Facebook and games have reached all consumers, not just the young.

“That said, it is hard to extrapolate data over the next few years when technology and behavior are spending so quickly,” he said. “The speed of change among all consumers, not just the young but the old and affluent, is very quick.”

http://www.luxurydaily.com/67pc-affluent-smartphone-owners-use-mcommerce-study/

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