Luxury Institute News

January 22, 2015

Luxury Institute Analysis Shows Strong Potential for Firms Serving Wealthy Consumers as Ranks of High-Income Americans Swell to All-Time High

January 21, 2015
By: Luxury Institute

A surge in the number of high-income households signals a source of potential strength for firms selling high-end goods and services, according to a metadata analysis of the Federal Reserve’s 2013 Survey of Consumer Finances by the New York-based Luxury Institute. The number of U.S. families earning at least $150,000 has grown 25% from 10.6 million households in 2010 to 12.8 million 2013, but even as more Americans achieve “high-income” status, luxury merchants still face challenges in turning these high-earners into loyal customers.

Favorable trends in household finances, since 2010, have thus far failed to produce a broad-based rebound in luxury on par with the boom before the Great Recession. Despite rising levels of income, wealth, and recoveries in stocks and real estate to pre-recession levels, many providers of high-end goods and services continue to struggle with sales growth more than six years after the financial crisis that devastated asset values and consumer confidence.

Long memories of the crisis are partly to blame for restrained spending: 30% of consumers from households with at least $150,000 in annual income say that they spend more when their assets appreciate in value, but the wealth effect cuts both ways, and even more deeply when asset values decline. Two-thirds of high-income Americans say that when the value of what they own goes down so does their spending.

In addition, luxury marketers are also facing fundamental shifts in consumer shopping habits brought on by the ubiquity of tablets and smart phones, and the influence of social media.

“Compelling products and extraordinary experiences lead to long-term client relationships in luxury,” says Luxury Institute CEO Milton Pedraza. “Firms thriving today are those with systems and personnel in place to leverage new technologies into smarter ways of communicating and doing business with customers that reflect the new reality.”

Conducted every three years since 1983, the Survey of Consumer Finances provides detailed demographic profiles and insights into household wealth, income, saving, and spending. Since 2004, the Luxury Institute has mined the survey data to identify emerging trends that can impact companies serving a wealthy clientele.


December 29, 2014

Luxury Brands Often Misidentify Their Target Consumers

MediaPost Communications
December 26, 2014
By: Steve McClellan

Luxury brands lose 50% of their top customers annually because they routinely misidentify their demographic and economic profile while also failing to create a personalized sales experience for them, according to new research from global marketing and crm agency Epsilon and research and consulting firm The Luxury Institute.

Epsilon analyzed and compared 30,000 luxury shoppers to uncover insights, myths and stereotypes of the luxury shopper, the firm said.

According to the findings, luxury brands mistakenly believe their customers are typically female and on average 45-years old with a net worth over $1 million. However, 57.5% of luxury spenders are in fact male. They are likely to be of Asian and Middle-Eastern descent with a net worth over $500,000. In addition, nearly 13.8% of shoppers with a net worth over $1 million invest mostly in modern, contemporary decor and gifts as opposed to high-ticket apparel items.

“Luxury brands need to truly understand who their customers are and what they are looking for in a luxe shopping experience,” said Jean-Yves Sabot, vice president, retail business development at Epsilon. “This is critical in creating a personalized experience for the customer that drives engagement, retention and satisfaction.”

The report categorizes luxury shoppers into four groups including the so-called “True Luxe” shopper who has the means to purchase luxury items at will without financial concern. But there is also the “Aspirational Shopper,” described as shoppers who “desire to own pieces from a brand, but may not have the means to do so on a regular basis.”

Another group is labeled “Moments of Wealth,” comprised of shoppers that may save for specific piece but do not purchase from the brand frequently. And the “Dressed for the Part” group buys luxury items to give the appearance of someone who lives a luxury lifestyle but often does not have the financial resources to be a true luxury buyer.

The study also found that online shopping accounts for less than a quarter of sales for multichannel luxury retail brands, because these consumers typically want to see and touch the product. While 98% of luxury shoppers use the Internet regularly, more than 50% of the time they are researching products and comparing prices on their mobile devices.

Luxury shoppers “crave the experience of the brand and look for a VIP interaction,”  according to the report.

Recommendations include using insights to tailor marketing communication to the optimal targets for more personalized and relevant communication. Luxury brands also need to do a better job of leveraging external shopper behavior for true one-on-one interaction both in-store and online, the report surmises. They also need to get a complete picture of their consumer target set. Third-party data will help. More on the report can be found here.


The Average Luxury Shopper May Surprise You

The Wall Street Journal
December 24, 2014
By: Nathalie Tadena

The average luxury shopper doesn’t look like a Real Housewife of Beverly Hills.

According to a report from marketing agency Epsilon and boutique research and consulting firm Luxury Institute, a true luxury shopper — one that has the financial means to purchase high-end items frequently throughout the year  – is most likely to be an Asian or Middle Eastern single man between the ages of 25 years and 44 years old,  with no children.

Luxury brands have traditionally pitched their products to women over the age of 45 with a net worth more than $1 million, so many have apparently been failing to engage their best customers. Half of luxury brands lose 50% of their top customers every year, the report said.

The study compared the top 30,000 luxury spenders with a yearly spend over $30,000 in specialty retail and average transactions of over $1,200 to the shopping patterns and profiles of individuals with a net worth of more than $1 million and financial resources over $2 million.

According to the research, there are four types of shoppers who buy luxury goods. The “Aspirational Shopper” desires to own pieces from a luxury brand but doesn’t have the means to do so on a regular basis and might turn to an outlet or discount boutique like Rue La La to buy from a luxury brand. The “Moments of Wealth” shopper saves for a specific luxury piece, but doesn’t buy from that luxury brand frequently. The “Dressed for the Part” shopper purchases high-end items but doesn’t have the financial resources to be a true luxury buyer.  The” True Luxe” shopper — a luxury retailer’s best customer — has the financial means to purchase high-end items and purchases from luxury brands frequently throughout the year.

Nearly 60% of these True Luxe shoppers are male and more than half are single, the report found. The True Luxe shopper also has a net worth of more than $500,000.

Luxury shoppers prefer to shop in stores, where they can get VIP treatment from a salesperson and touch and see products in person, the study said.  Online shopping represents less than a quarter of sales for multi-channel luxury retail brands.

A rude or inattentive salesperson is the biggest reason that a consumer won’t come back to a particular luxury brand, said Luxury Institute Chief Executive Milton Pedraza. Only 10% to 15% of luxury customers said they have a first-name relationship with a sales professional, according to the report.

Brands that use information about an individual consumer’s buying habits and preferences during in-store visits can create a stronger buying relationship, the researchers said.


December 1, 2014

Marketer of the Year: Stuart Weitzman

By: Irene Park
Women’s Wear Daily
December 1, 2014

Click on the link to read the entire article (subscription required):

October 30, 2014

October 1, 2014

Coldwell Banker Previews International Luxury Market Report Reveals Newcomers On List Of Hottest U.S. Cities For Luxury Home Sales

PR Newswire
October 1, 2014
High Net-Worth Consumer Survey Reveals Dramatic Gender Gaps
MADISON, N.J.Oct. 1, 2014 /PRNewswire/ – Quiet, unassuming areas adjacent to traditional luxury markets have rapidly transformed into hotbeds of luxury real estate in the 12-month period from July 1, 2013 through June 30, 2014.  Leading the way and making its debut in the top 5 U.S. luxury markets for homes valued at $1 million+ is San Jose, where high-end home sales are up a staggering 76% from this time last year, according to the Luxury Market Report prepared by the Coldwell Banker Previews International® marketing program. With Silicon Valley luxury real estate on fire, the affluent enclave of Atherton doubled its sales in the $10 million+ range from 2013. Burlingame, located approximately a mile from Hillsborough in Northern California emerged in the $10 million+ list for sold homes for the first time, most likely as the result of low inventory in the Bay Area’s most sought-after ZIP codes. Adjacency is a powerful trend playing out in high-demand luxury cities well beyond Silicon Valley and the Bay Area, notably in Miami.North Miami Beach made its debut among the top 20 cities for $10 million+ homes sold —signaling that luxury buyers are expanding their horizons beyond the typical hotspots of Miami Beach, South Beach and the private communities of Star and Fisher Islands. Overall, San Francisco led the nation with the highest number of sales in the $1 million+ category—up nearly 57% from this time last year. During the last 12 months through June 2014, the top five U.S. cities with the highest number of luxury home sales valued at $1 million+ are:

Coldwell Banker Previews International Luxury Market Report




Number of Home Sales Valued at $1 million+


San Francisco




Los Angeles




New York




San Jose




















San Diego







The number of sales for four out of five of these top cities is up by at least 36%. Extending the range up to the $10 million+ category, Miami Beach and Aspen have another strong showing against long standing luxury real estate epicenters New York and Beverly Hills.

Coldwell Banker Previews International Luxury Market Report




Number of Home Sales Valued at $10 million+


New York




Beverly Hills




Los Angeles




Miami Beach







6 (tie)




6 (tie)





Santa Barbara








Palm Beach



10 (tie)

Laguna Beach



10 (tie)

Kailua Kona



10 (tie)




10 (tie)

San Francisco



HIGH-NET-WORTH CONSUMER SURVEY The U.S. high-end residential real estate market remains strong, with nearly half (48%) of all wealthy consumers indicating that they plan to purchase a luxury home within the next 12 months, according to the companion survey of wealthy U.S. consumers with a net worth of at least $5 million (penta-millionaires) conducted by the Coldwell Banker Previews International® program and the Luxury Institute.  Younger buyers are by far the most highly motivated to purchase:  An overwhelming 81% of affluent individuals under 35 plan to buy a luxury home in the next year. The survey reveals dramatic generational differences:

  • Penta-millionaires 35 and under reported the highest average purchase price of all age groups - $7.8 million – and have the largest percentage (80%) of all age groups paying all-cash.
  • By stark contrast, wealthy buyers 45-64 paid an average of $2.7 million for their most recent home purchase while buyers 65 and older spent just $1 million.

The report brought to light strong gender gaps:

  • 70% of women reported paying all-cash for their most recent property vs. 57% of men.
  • Women reported buying more expensive homes than men:
    • 22% of women spent $10 million or more for their most recent property vs. 13% of men in the same wealth bracket.
  • 46% of women have plans to buy another home in the coming year, up from 31% in 2013.

Location, location, location may no longer be the golden rule of real estate:

  • With the ability to work remotely now a reality for many, only 25% of the under-35 age group indicate that location dominates their search criteria.
  • Instead, 75% say that lifestyle considerations are the No. 1 factor driving their choice of which home to buy.
  • As evidence of this powerful generational shift, 86% of buyers 65 and older say that location remains their top priority.  

Hottest In-Demand Amenities:

  • Nearly one-third of all wealthy buyers under the age of 45 count a “green” or “LEED certified” home as more important than it was 3 years ago.
  • The trend is also catching on among wealthy buyers of all ages, with 21% saying that they want to buy an eco-friendly home, up from a mere 7% in 2013.
  • As homes become increasingly high-tech, 25% now consider a fully automated home a priority.
  • 37% of respondents under age 35 and 30% of those with a net worth exceeding $10 million will prioritize safe rooms in their next homes.

The full list of the Top 20 Best Performing U.S. Cities in Luxury Real Estate by price points of $1 million+, $5 million+ and $10 million+, and the high-net-worth consumer survey results can be viewed here About Coldwell Banker Previews International® The Coldwell Banker Previews International program has been a world leader in the marketing of luxury homes since 1933. The Previews® program was acquired by Coldwell Banker Real Estate LLC in 1980 and re-launched as Coldwell Banker Previews International, the brand’s luxury homes program.  The exclusive group of certified Previews Property Specialists make up approximately 8.5 percent of the Coldwell Banker sales associates worldwide.  Coldwell Banker Previews International participated in more than 20,000 transaction sides of homes priced at $1 million or more in 2013. On average, Previews handles $102.7 million in luxury homes sales every day. Coldwell Banker, Previews and Coldwell Banker Previews International are registered marks licensed to Coldwell Banker Real Estate LLC. Each office is independently owned and operated. Sales associates affiliated with Coldwell Banker offices are independent contractors. About Coldwell Banker® Since 1906, the Coldwell Banker® organization has been a premier provider of full-service residential and commercial real estate. Coldwell Banker is the oldest national real estate brand in the United States and today has a network of approximately 84,200 independent sales associates affiliated with more than 3,100 offices in 48 countries and territories. The Coldwell Banker brand is known for creating innovative consumer services as recently seen by being the first national real estate brand with an iPad app, the first to augment its website for smart phones, the first to create a iPhone application with international listings and the first to fully harness the power of video in real estate listings, news and information through its Coldwell Banker On LocationSMYouTube channel.  The Coldwell Banker System is a leader in niche markets such as resort, new homes and luxury properties through its Coldwell Banker Previews International® marketing program.  Coldwell Banker Real Estate LLC fully supports the principles of the Fair Housing Act and the Equal Opportunity Act.  Each office is independently owned and operated. Coldwell Banker is a subsidiary of Realogy Holdings Corp. (NYSE: RLGY), a global leader in real estate franchising and provider of real estate brokerage, relocation and settlement services. Methodology Manhattan area active listing data has been gathered from the Real Estate Board of New York (REBNY). Not all Manhattan area real estate brokerage firms make Information about their property listings available to any cooperative resource, including REBNY.  Manhattan area sales data has been gathered from REBNY and from, an online consumer and private industry portal that reports closed real estate transactions from REBNY as well as other reporting brokerage resources. Not all Manhattan area real estate brokerage firms report their closed sales to any cooperative resource, including and / or REBNY. All other data has been gathered from the Multiple Listing Service (MLS) databases known or believed to be the primary real estate broker cooperative resources for each market referenced in the report. All closed sales activity reported is for the annual period July 1, 2013 through June 30, 2014. Closed sales reported to the MLS significantly later than this analysis period will not be included. All active status listing records were downloaded and processed to the same standards, and on various dates, during the months of July and August, 2014. Property specific listing and sales records were standardized to USPS address city and ZIP Code, inaccurate list and sale prices were corrected when necessary, and all duplicate records were manually excluded. As a result, statistics available via the source data providers may not correlate to this analysis. While all results are believed to be highly accurate, MLS systems do not report all real estate activity in their primary marketplace, and there may have been property transfers not included in this analysis. Copyright © 2014, Real Data Strategies, Inc. All rights reserved. Licensed for the exclusive use of Coldwell Banker Real Estate LLC. The Luxury Institute, in partnership with the Coldwell Banker Previews International® program, conducted research on the topic of real estate during Quarter 2, 2014. This in-depth survey includes responses from 506 ultra-wealthy male and female consumers in the United States. Respondents were recruited and screened to only include those age 21 or older with a minimum gross annual household income of $200,000 and a minimum net worth of $5 million.

SOURCE Coldwell Banker Real Estate LLC

Media Inquiries:

Athena Snow

Coldwell Banker Real Estate LLC


Holly Taylor

Rogers and Cowan for Coldwell Banker Real Estate LLC


SOURCE Coldwell Banker Real Estate LLC RELATED LINKS

February 27, 2014

Handset Makers Go Big on Smartphones

By Brian X. Chen
New York Times
February 26, 2014

BARCELONA, Spain — Smartphones are going against one of the long-held rules in portable electronics, that smaller is better.

Year by year, computers, storage devices and music players have shed size and weight. And for decades, it has been happening with cellphones, too.

But now cellphones, and smartphones in particular, are going the way of the television: They just keep getting bigger and bigger. And people keep buying them.

The trend became even more apparent this week, as handset makers introduced a number of big-screen smartphones — from five diagonal inches to more than seven inches — at the Mobile World Congress trade show in Barcelona, Spain.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute:

June 7, 2013

Wealthy Will Spend Less on Jewelry for Rest of Year, Survey Finds

Posted in Uncategorized

A new survey predicts that high-end jewelry “may be under some pressure” for the rest of 2013, with 25 percent of affluent consumers saying they plan to spend less on that category.

By Rob Bates
JCK Magazine
June 2013 Issue

The survey by the New York City-based Luxury Institute polled consumers with a net worth of at least $5 million and minimum annual household income of $200,000.

The survey also found that spending on handbags was projected to fall, with ultra-wealthy respondents preferring to spend on travel, dining, and wine.

“They are definitely going to the ‘experential’ categories,” Luxury Institute president Milton Pedraza tells JCK. “Travel is healthy, technology is healthy.”

Pedraza believes the “economy is not as healthy as people think.”

“Even though real estate is robust and the stock market is robust, there is a lot of uncertainty out there,” he says. “There is some pent-up demand, but also a lot of caution.”

May 25, 2013

Neiman, Saks could create international success

By Daniel Abril
Dallas Business Journal
May 24, 2013

A Saks Fifth Avenue, Neiman Marcus merger could create new opportunities for both brands to save money and expand their footprints, a retail expert industry expert said.

News broke this week that private equity firm KKR could be considering purchasing and merging New York-based Saks and Dallas-based Neiman Marcus.

Milton Pedraza, CEO of New York-based Luxury Institute, thinks that the chances the two retailers will merge is 50/50. But if they did, he said, the two would open the doors in the luxury retail world.

“The savings from being together would create more buying power, whether it’s for marketing or products,” he said. “It gives them opportunity to be more profitable and innovative.”

Pedraza said the savings that would come from combined back office operations and online efforts could create more resources to do what both companies need to survive in the current market: Improve customers’ shopping experiences.

“They don’t deliver a compelling person-to-person in-store experience,” he said. “They’re transactional, not focused on relationships.”

He also said a merged company could fill a gap in the international luxury market.

“There is no international brand that has mutibrands under one roof … that really delivers a fantastic experience,” he said. “I think Saks or Neiman could fill that void.”

But if the two were bought and merged, its owners would need to keep the two brand identities intact, Pedraza said. This could manifest itself in the two brands buying different products from the same designer and also offering their own unique selections.

A merge would make the two retailers a unique luxury brand in a market that is thriving, according to Pedraza. But a move like that wouldn’t happen overnight.

“A lot of pieces have to come together to build that puzzle,” he said, adding that management would have to spend time developing a sound business model. “There is a business case to be made … but it might be really unique opportunity.”

May 9, 2013

Going public could bring more innovation, long-term growth for Neiman Marcus

By Erin Shea
Luxury Daily
May 8, 2013

If Neiman Marcus Group Inc.’s private-equity owners decide to launch an initial public offering of the company, it could mean more innovation and long-term growth for its department stores.

The Irving, TX-based company’s private-equity owners Texas Pacific Group and Warburg Pincus LLC are rumored to be meeting with banks to discuss a public offering of the group, which owns department store chain Neiman Marcus and New York department store Bergdorf Goodman. Since the brand is healthy and the economy improving with the Dow Jones Industrial Average at an all-time high, now seems like an opportune time for the owners to sell.

“2013 is a good time for Neiman Marcus to have a public offering,” said James Dean, vice president and head of luxury practice at WealthEngine, Bethesda, MD. “Initial public offering activity is gradually escalating and likely to spike upward in the second half of 2013 and into 2014.

“With the stock market rising and demonstrating less volatility, the central bank actions are creating a stronger economic environment and generally brighter prospects for luxury consumers in 2013,” he said. “Now is the right time for companies considering an initial public offering to act.

“With the luxury goods market doing well and outperforming the rest of the retail business sector, I expect TPG and Warburg Pincus to take advantage of conditions and take Neiman Marcus public.”

Mr. Dean is not affiliated with Neiman Marcus, but agreed to comment as an industry expert.

Neiman Marcus declined to comment.

Cashing out
Neiman Marcus was previously a publicly traded company after it spun off from its retail parent Carter Hawley Hale Stores in 1987.

General Cinema – later Harcourt General – retained control of 60 percent of the company until 1999.

In May 2005, Neiman Marcus was part of a leveraged buyout by Texas Pacific Group and Warburg Pincus. The two private equity firms purchased Neiman Marcus for $5.1 billion in cash and debt.

Initially Warburg Pincus and TPG planned to hold the company for approximately five years, but were delayed by the 2008 recession.

Now, it seems that TPG and Warburg Pincus are looking to launch an initial public offering of the company by hiring Credit Suisse Group to aid in the process. The owners are hoping to receive approximately $8 billion for the company, according to Bloomberg.

Since the economy is doing well, this would be an ideal period for Neiman Marcus to debut an IPO.

“The owners want to cash out, the brand is healthy and I think that this is a natural progression of private equity,” said Milton Pedraza, CEO of The Luxury Institute, New York.

“I think this is a good move, since it is a good time to go public,” he said. “I think being a public company is not a short-term focus.

“Being in the public domain with many shareholders is far more open than it used to be.”

Sharing the power
If TPG and Warburg Pincus were to launch the public offering, Neiman Marcus would join other publicly traded luxury companies such as Saks Inc., Nordstrom, Michael Kors, Salvatore Ferragamo and Tiffany & Co.

A number of luxury brands went public in 2011 to increase their reach emerging markets (see story).

In addition, taking the company public could give more opportunities for its department stores.

“With the luxury markets doing well, luxury retailers that are public companies can really take advantage of the conditions by expanding their brand and opportunities,” WealthEngine’s Mr. Dean said.

“Luxury retailers such as Saks, Nordstrom and Michael Kors Holdings benefit as public companies, helping them further the growth of their business, expand their client base and improve their financials,” he said.

“When luxury retailers go public, it allows them to expand their brand, open new stores, advance their product line and create a greater opportunity to improve the customer experience.”

Also, going public would allow the company more room to grow financially on a long-term basis.

“When you’re a private company, the focus is more on short-term profitability,” the Luxury Institute’s Mr. Pedraza said. “Being public would mean the company would have more access to capital markets and more access to investors.

“Shareholders are long-term investors,” he said. “Private-equity owners are not long-term investors.

“Today, if you have a courageous management team, you can compromise a little bit of the short-term investments to build out the long-term investment.”

This decision would also bring more innovation and freedom to Neiman Marcus as a whole, since the company would be controlled and owned by its shareholders.

“This would open the brand up to a lot more innovation by being in the public domain,” Mr. Pedraza said. “This means freedom to innovate, and freedom to empower employees. Of course, it is a choice, not a given.

“The management could have many different shareholders on the board and have different ideas from the shareholders,” he said.

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