Luxury Institute News

October 2, 2013

By Noon, These Two Will Have Brought In Another Half a Million More Dollars

By Paul Wachter
New York Magazine
October 1, 2013

One Kings Lane
Founded: 2009
Age of co-founders: 38 and 58
Most recent estimated valuation: $440 million
Lesson: Better than a deal on flatware is the perfect set delivered to your in-box.

The name emblazoned on the outer wall of 1355 Market Street, an Art Deco building ­in San Francisco completed in 1937, is a tribute to the past, not the ­present: Western Furniture Exchange and ­Merchandise Mart. As late as 2005, the premises housed 300 furniture wholesalers. By 2008, the number was down to 30, and the developer, brandishing city tax credits, made the sensible decision to re­invent the space for techies. Twitter moved in, followed by Microsoft-owned Yammer. Also came a company that can lay claim to the building’s former identity: One Kings Lane, an online purveyor of furniture and home accessories that is now projecting $300 ­million in annual revenue.

When I met the company’s co-founder, ­Alison Pincus, in One Kings Lane’s offices in late August, this historical symmetry went unmentioned. It wasn’t, I’m certain, because she was unaware, but rather because from the outset, she said, “we thought of One Kings Lane as always trying to be more than furniture.”

Click the link to read the entire article which includes multiple quotes from Milton Pedraza, CEO of Luxury Institute: http://nymag.com/news/business/boom-brands/one-kings-lane-2013-10/?imw=Y&f=most-emailed-24h5

September 30, 2013

Coach and Michael Kors and the Japanese Fashion Market

By Sarah Deschamps and Hiroshi Saito
Modern Tokyo Times
September 29, 2013

Michel Kors ventured into the competitive fashion market of Japan in 2009 and since this period this brand continues to consolidate. The handbag market is just one angle to the products sold by Michael Kors but this area alone is worth a staggering amount each year throughout Japan. Now it is becoming clear that inroads are being made in this area and other important segments of the fashion sector in the land of the rising sun.

Coach may be on the horizons of Michael Kors in Japan because this company is firmly established and highly desired. Indeed, the reputation of Coach is known internationally for being extremely creative and where vibrancy is maintained year after year. Therefore, with Coach being firmly established in Japan and with this nation ranking highly within the profits of this company, the impact of Michael Kors in the handbag market is extremely intriguing.

In the United States it was stated about Coach that their customer service is second to none. This angle is certainly important throughout Japan and noticeably in major cities like Tokyo and Osaka where the fashion market is enormous. According to the data of the Luxury Institute in America 25% of wealthy women had purchased a Coach bag. Equally powerful is that the same statistic was given for buying a new handbag in the next twelve months. No other company came close to Coach in America in other types of surveys.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute:
http://moderntokyotimes.com/2013/09/29/coach-and-michael-kors-and-the-japanese-fashion-market/

September 11, 2013

Will new owners bring Neiman Marcus and Saks into the future of retail?

By Erin Shea
September 10, 2013
Luxury Daily

The Neiman Marcus Group Inc. was purchased for $6 billion by investment firm Ares Management and the Canada Pension Plan Investment Board Sept. 9, which makes this the second United States-based department store after Saks Fifth Avenue that has new Canadian owners.

Neiman Marcus’ new owners now have the opportunity to further expand the brand and revamp it into a retailer that is ready to take on the next generation of consumers. With the recent purchases of both Neiman Marcus and Saks, both retailers are looking to expand their global presence while creating a loyal customer base.

“On behalf of the entire management team, we are delighted to be joining with Ares and CPPIB to continue enhancing our strong brands by offering our customers the best edited merchandise assortments as well as delivering a superlative omnichannel shopping experience,” said Karen Katz, president and CEO of Neiman Marcus Group, Dallas.

Next step
Neiman Marcus’ former owners, Warburg Pincus and TPG Capital, purchased the retailer in 2005 for $5.1 billion.

The companies sold the retailer on Sept. 9 for $6 billion, after ending a long struggle to sell it, according to Reuters.

With its new owners, Neiman Marcus is looking to expand while keeping its consumer’s satisfied with its omnichannel offers, which is similar to what Saks is aiming to do.

Saks’s new owner Hudson’s Bay Company will help boost its omnichannel experience as part of its portfolio of retailers.

Saks’ new Look campaign

Hudson’s Bay Co. purchased Saks July 29 for $16 per share in an all-cash transaction that is valued at $2.9 billion, which includes debt. This purchase is likely to help Saks reach its goal of becoming an omnichannel retailer and provide its customers with an enhanced shopping experience.

Both Saks and Neiman Marcus are likely to benefit rom new ownership so that they can focus on building up consumer relations.

“There has been a lot of capital accumulated in Canada in the last couple of years,” said Milton Pedraza, CEO of The Luxury Institute, New York. “I think that when the Canadians look around the world, they see the U.S. as a growth opportunity and they especially see luxury as a growth opportunity.

“The Canadians tend to be brand builders and there is a tremendous opportunity to build up customer culture since Neiman Marucs is lacking in this area,” he said.

“Neiman Marcus needs loyal customers and Saks does too.”

In addition, these new owners could help the brands reach other goals by expanding their presence in Canada.

“Neiman Marcus and Saks are great retailers and great brands that can easily extend to Canada, especially in ecommerce,” said Marie Driscoll, CEO and chief consultant at Driscoll Advisors, New York.

Just a coincidence
However, the purchases of Neiman Marcus and Saks could be looked at as just a coincidence happening around the same time.

Although, both of the sales do seem to indicate that the new owners have faith in the retailers to remain strong in the future.

“Investment companies are global,” said Chris Ramey, president of Affluent Insights, Miami, FL. “It’s serendipity that both Saks and Neiman Marcus will be owned by companies based in Canada.

“Saks and Neiman Marcus are the heart of American luxury,” he said. “The two brands escaped the recession unscathed.

“There is a continuum between when you’re purchased by a private equity group and when you’re sold by a private equity group that commences with optimism and a willingness to invest.”

http://www.luxurydaily.com/will-new-owners-bring-neiman-marcus-and-saks-into-the-future-of-retail/

September 5, 2013

Ferragamo CEO Quells Buyout Talk as Growth Surges in U.S., China

By Andrew Roberts
Bloomberg
September 4, 2013

Salvatore Ferragamo SpA (SFER) Chief Executive Officer Michele Norsa quashed speculation of a buyout, saying the luxury shoemaker has the financial resources to fund expansion as growth accelerates in China and North America.

“I don’t see any reason” for a sale, Norsa said today in an interview on Bloomberg Surveillance with Tom Keene. A 2011 initial public offering gave financial freedom to members of the Ferragamo family, and the Florence, Italy-based company is generating greater-than-expected free cash flow, he said.

“If you become big enough you can survive alone,” Norsa said.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute:
http://www.bloomberg.com/news/print/2013-09-04/ferragamo-ceo-quells-buyout-talk-as-growth-surges-in-u-s-china.html

September 3, 2013

Luxury Institute Survey Reveals Risk of Brand Dilution

By Danielle Max
September 2, 2013
International Diamond Exchange (IDEX)

A recent survey by the Luxury Institute discovered that while many affluent shoppers – those with a household income of $150,000 or more – welcome brand partnerships, half of these affluent consumers believe that partnering with another brand – luxury or mainstream – could damage the brand’s image or reputation.

According to the survey, the industries where partnerships are seen as most fruitful are hotels and resorts, travel, fashion and airlines.

The survey revealed that women are far more likely than men to applaud fashion partnerships, as well as those involving jewelry and beauty.

Perhaps unsurprisingly, men are most enthusiastic about partnerships involving automobile companies while affluent shoppers older than 50 are especially interested in airline and cruise collaborations.

Luxury brand collaborations wealthy shoppers would like to see include Michael Kors and Apple, Chanel and Air France, and Lexus and The Ritz-Carlton.

However, brands need to be careful about the sort of partnerships they create. “Brands should partner with companies with similar values and service standards to avoid potential risks of collaboration,” says Luxury Institute CEO Milton Pedraza. “This maintains credibility and helps to ensure a consistently positive customer experience.”

http://www.idexonline.com/portal_FullNews.asp?id=38556

August 29, 2013

Retail loyalty programs add tiers to reward big spenders

By Kelli Grant
CNBC
August 28, 2013

Taking a page from airline programs, more retailers are adding elite levels with extra perks to their loyalty packages. But shoppers may find membership nearly as pricey as a first-class airline ticket.

In July, Sephora relaunched its Beauty Insider program, adding a reward level with free shipping, early access to new products and sales as well as VIP event invites for shoppers who spend $1,000 or more in a year. Around the same time, flash-sale site Gilt.com introduced its Gilt Insider Program, awarding shoppers five points per dollar spent and weekly bonuses for interacting with the brand. Tiers with extra benefits such as exclusive sales and a VIP customer service line kick in at the 5,000-, 10,000- and 25,000-point thresholds.

“To make it fair we crafted a program that rewarded engagement, i.e. site visitation and social interaction, in addition to purchasing, so that members could advance up tiers as they earned points,” said Elizabeth Francis, Gilt.com’s chief marketing officer.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute:
http://www.cnbc.com/id/100991902

August 23, 2013

Biggest risk of partnerships is brand dilution: Luxury Institute

By Erin Shea
Luxury Daily
August 22, 2013

Collaborations can sometimes be risky for luxury brands, and half of affluent shoppers say that the biggest risk for a luxury partnership is the potential damage to the brand’s image or reputation, according to the latest survey from the Luxury Institute.

Overall the study found that most affluent shoppers enjoy brand partnerships, even with the risk. However, luxury marketers should pair up with brands that have the same goals and mindset when seeking partnerships.

“Nearly half of wealthy consumers think that long-term collaborations are most effective for luxury brands,” said Meera Raja, director at the Luxury Institute, New York.

“Luxury brands should utilize partnerships not just to showcase their strengths, but also to create unique and innovative experience for consumers,” she said.

Luxury Institute surveyed consumers with a household income of at least $150,000 about the appeal and impact of brand partnerships.

Pairing up
The survey found that in addition to partnerships being the biggest risk for a brand, affluent consumers also thought that partnerships could be beneficial if done correctly.

Affluent consumers ranked joint advertising, products, events and sponsorships as the most effective types of brand collaborations.

Aston Martin partnered with Jaeger-LeCoultre to create a watch collection.

Also, consumers reported that partnerships with hotels, travel brands, fashion labels and airlines are the most fruitful.

Women are more likely to be interested in fashion, jewelry and beauty partnerships, while men seem to enjoy automotive partnerships more.

Shoppers who are older than 50 are interested in airline and cruise partnerships.

Affluent shoppers also said that they would like to see luxury collaborations between a number of brands including: Michael Kors and Apple, Chanel and Air France, and Lexus and The Ritz-Carlton.

Furthermore, affluent shoppers are not turned off by luxury brands partnering with mainstream brands. Those surveyed said they would like to see Starwood Hotels and Resorts and Bed Bath & Beyond, Gucci and Coca-Cola, and others.

Many luxury brands have engaged in partnerships with other luxury brands with similar statuses as to not hurt their brands.

For instance, spirits brand Johnnie Walker eyed affluent men through a partnership with Alfred Dunhill to create a limited-edition gift set that likely extended the reach of both brands.

The Johnnie Walker Blue Label limited edition collection by Alfred Dunhill is a collection of British-inspired gifts in addition to a designer bottle. The partnership helped both brands solidify their position in the luxury industry and as well as their reputation as men’s lifestyle brands.

Additionally, high-end smartphone manufacturer Vertu continues its six-year partnership with Italian automaker Ferrari with the release of a limited-edition Android smartphone inspired by the automaker’s design features.

The limited-edition Vertu Ti Ferrari smartphone is the latest in Vertu’s smartphone collaboration with Ferrari. By designing the smartphone to resemble the vehicle, the phone will likely appeal to a wider group of consumers (see story).

Luxury brands can gain additional exposure and attract new customers through partnerships with other luxury marketers.

“There are still many benefits of partnerships, but luxury brands must really focus on relevant opportunities with companies that share the same values,” Ms. Raja said.

http://www.luxurydaily.com/biggest-risk-of-partnerships-is-brand-dilution-luxury-institute/

August 20, 2013

Wealthy Shoppers Enjoy Brand Partnerships, But Brand Dilution Is A Risk

(NEW YORK) August 20, 2013 – The Luxury Institute surveyed consumers with a household income of $150,000 or more about the appeal and impact of brand partnerships. These wealthy consumers also shared brands that they would be excited to see partner in the future.

Half of all affluent shoppers surveyed agree that the biggest risk for a luxury firm partnering with another brand—luxury or mainstream—is damage to the brand’s image or reputation. Joint advertising, products, events and sponsorships are the most effective types of collaboration.

Among the industries where partnerships are seen as most fruitful are hotels and resorts, travel, fashion and airlines.  Women are far more likely than men to applaud fashion partnerships, as well as those involving jewelry and beauty.  Men, on the other hand, are most enthusiastic about partnerships involving automobile companies.  Affluent shoppers older than 50 are exceptionally interested in airline and cruise collaborations.

Luxury brand collaborations wealthy shoppers would like to see include Michael Kors and Apple, Chanel and Air France, and Lexus and The Ritz-Carlton.  Missoni offering its fashions at Target and Vera Wang selling at Kohl’s are two high-profile examples of luxury brands partnering with a non-luxury outfit.  Affluent shoppers would like to see additional partnerships of this ilk, including Starwood Hotels and Resorts and Bed Bath & Beyond, Gucci and Coca Cola, among others.

“Brands should partner with companies with similar values and service standards to avoid potential risks of collaboration,” says Luxury Institute CEO Milton Pedraza. “This maintains credibility and helps to ensure a consistently positive customer experience.”

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.

August 15, 2013

Report: Even the wealthy love loyalty programs

Editorial
RetailCustomerExperience.com
August 14, 2013
In a new survey of affluent consumers by the Luxury Institute, wealthy shoppers earning at least $150,000 a year share detailed observations and evaluations of various loyalty and rewards programs, and offer suggestions for improvements to existing frequent shopper initiatives.Overall, 72 percent of wealthy consumers participate in some kind of loyalty program, with the most popular ones connected to credit cards, airlines, hotels and grocery stores. Men are significantly more likely to be members of airline and hotel rewards programs, while women are disproportionately represented in programs sponsored by grocery stores, drugstores and department stores. Previous Luxury Institute research has shown that Sephora, American Express and Amazon are the top three favorite rewards programs among affluent consumers.Very few respondents say that they belong to a luxury brand rewards program. The main perceived benefits of luxury brands’ loyalty programs are special offers and rewards, earning and redeeming points, and free goods and services. Free gifts carry more importance among women, shoppers under 50, and those with net worth less than $1 million.Satisfaction with existing loyalty programs is high and most high-income shoppers say that they have had positive experiences with their memberships. The vast majority of shoppers report that loyalty programs exert a strong influence over purchasing decisions.

http://www.retailcustomerexperience.com/article/217915/Report-Even-the-wealthy-love-loyalty-programs

Bespoke Jewelry, Made With You in Mind

By Shivani Vora,
The New York Times
August 14, 2013

Temple St. Clair, a NoHo jewelry designer, has built her reputation on ready-made yellow gold amulets, which usually cost from $2,000 to $10,000 at places like Saks and Bloomingdale’s.

But when she acquired a 10-carat Burmese sapphire earlier this year on a buying trip to Asia, she knew just the client who would want to commission her to transform the rare stone into something unique. It was a woman in her 40s living in TriBeCa who already owned many of Ms. St. Clair’s signature pendants, and had a generous husband who wanted to buy her a gift to mark their 20th wedding anniversary.

After several weeks of discussion with the couple, which involved sending multiple sketches and three-dimensional molds, Ms. St. Clair created a ring for a fee, she said, of approximately $350,000. “I have always been focused on finished pieces, but personalization is a natural evolution of my brand,” she said.

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

http://www.nytimes.com/2013/08/15/fashion/bespoke-jewelry-made-with-you-in-mind.html?_r=0&pagewanted=print

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