Luxury Institute News

December 11, 2014

Where Has All the Luxury Gone?

By: Judith Russell
December 8, 2014
The Robin Report

 

We in the industry have been bandying about the term “luxury” pretty freely of late, but there is growing realization that if a product or brand is easily accessible and relatively inexpensive, it’s not really a “luxury” product. And the minute you add the term “affordable,” it becomes an oxymoron.

As the ever-widening income inequality gap illustrates, the rich are still getting richer. According to Pew Research, the top 1% of households in the US, or those making $400K or more annually, earn 23% of the total income in the country, and control 35% of the net worth. Both figures have been steadily growing for more than a decade.

One ever-present behavior in the spending habits of the superrich of any generation is opting for the special over the mundane. Makers of high-end jewelry and electronics, cars, exotic vacation hotels, and other products and services target this group of discerning consumers for a reason: They value, and are willing to pay a steep premium for, that which is appreciated by and accessible to only an elite few.

Milton Pedraza, CEO of The Luxury Institute, a research firm that tracks and advises the global luxury goods market, says that consumers consistently define luxury as the best of design, quality, craftsmanship, and service. Brands that always deliver against these attributes, including Audemars Piguet, Chanel, and Buccellati, also tend to have a compelling brand heritage story.

Dumbing Down the High End

So where is true luxury retailing today? The high end is on a steady course down market. Nordstrom, Neiman’s and Saks are slowly evolving into off-pricers, expanding their Rack, Last Call and Off Fifth concepts much faster than their full-line businesses. This is eroding their credibility as purveyors to the elite, since one of the strongest pillars of luxury is pricing integrity. But Wall Street can be pretty unforgiving. In order to satisfy investors, these businesses must grow. Opportunity for organic growth is limited, due to intensified competition and more demanding consumers.

Look at the auto market. Mercedes, BMW and Audi are all adding cheaper models to the low ends of their product lines. You can’t turn on the radio without hearing an ad for their affordable lease deals, wooing us to experience a taste of luxury at a discounted price.

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Exacerbating the situation is the fact that many luxury brands, including Louis Vuitton, Prada, Hermès, Burberry and Dolce and Gabbana are now bypassing their retail partners and going direct to consumers, launching their own e-commerce sites and brick-and-mortar stores. The fastest way the Nordstroms and Neiman-Marcuses of the world can grow sales and earnings is to trade down. But they can only do this for so long before becoming known primarily for their discounting, the kiss of death in luxury.

Ubiquity Erodes Exclusivity

Then there are the outlet stores. Many of the veteran brand leaders, such as Coach, Tiffany, Michael Kors, and Ralph Lauren, are finding that they’ve tapped out the full-price specialty market opportunity and are now growing exponentially by expanding their outlet store footprints. Overexpansion breeds ubiquity, ultimately the downfall of premium brands whose hallmark is limited distribution.

Ubiquitous availability in outlet stores also compromises perception of pricing integrity. “Wealthy people are smart,” says The Luxury Institute’s Pedraza. “They’re willing to pay a high price for the best, as long as it’s fair, but they don’t want to get taken advantage of.” Also, many of the leading industry bloggers are of the opinion that much of the merchandise in luxury outlets has never seen a full-price store. It is, they believe, a lower level of design, quality and craftsmanship created specifically for the outlet, and carries faux full-price tags that are then reduced to obfuscate their real value. This breaks another rule of luxury, authenticity.

The New Luxury Customer

In what used to be the high-end luxury sector, a big, gaping void is forming, ripe for the filling by a new breed of luxury brands. Several key factors are contributing to this opportunity.

  • Millennials, who will account for 30% of all retail sales by the year 2020, according to Pew Research, are an increasingly important force in the marketplace. They are already wielding tremendous influence in retail, demanding more elevated, contemporary and technology-driven products and experiences. They are forcing retailers to offer better high-tech, high-touch engagement and greater personalization.
  • Many high-end consumers are beginning to show a distinct preference for experiences over things, having become sated with too much “stuff.” This is driving growth in segments like the ultra-luxury travel industry. These experiential customers are also demanding a meaningful brand connection that elevates the products they buy with an emotional investment. We know that a unique personal experience will make it more likely for that consumer to become a loyal customer.
  • A group of consumers has moved away from playing it safe and shopping with the flock to desiring more individualized offerings. Leading fashion-trend forecaster David Wolfe of Doneger says, “Bye-bye mainstream, hello to thousands of tiny consumer tribes.” And these tribal members are demanding fresh, frequent new products and experiences that can be customized, personalized and unique.

The New Face of Luxury

The next generation of luxury brands, I predict, will focus on meeting the needs of a relatively small, yet potentially profitable group of consumers. The brands will deliver quality of workmanship, authenticity of design and materials, and customized fit and trims. Whether casual or dressy, products will be limited in availability. There will be no sales, no coupons, no department store gatekeepers, and no need to get big fast. These brands will need to reach critical mass of between $500 million and $1 billion to generate sufficient profit and cash flow, while remaining exclusive, premium, and ultra-special. Needless to say, service—or its newest moniker, customer relationship building—will be out of this world.

Does this sound like the couture world of times past? You bet it does. But there will be differences enabled by 21st century technology. Brands will use digital tools, including big data, to develop and maintain an intimate relationship with their consumers and engage them on a personal level.

Curated offerings of products and services will be created especially for customers who opt into the relationship. Brands will use store-scanned measurements of their customers’ bodies to deliver a perfect fit. With geo-fencing and other technological capabilities, companies will know where their customers are and where they’re going—even going so far as to deliver a fresh wardrobe to their client’s hotel while on vacation. Sound futuristic? The technology exists today.

Who will be included in the next generation of the luxury elite? Brands like Elizabeth and James, Tom Ford, Bottega Veneta come to mind. The extent to which they succeed in creating luxury businesses with staying power depends on how well they can deliver on their product, service, and customer engagement features, and how well they can rise above the relentless discounting fray that is decimating brands today.

The luxury brands of tomorrow will be privately-owned and managed by a team possessing design genius, marketing savvy, financial prowess and technological wizardry. They will view their work as the intersection between art and science. They will control every phase of the value proposition from product conception to delivery, with customer focus front-and-center every step of the way. These innovators will not think of their businesses in terms of the products they sell or distribution channels, but rather in terms of serving their affinity tribe, a community of customers that share similar values and a passion for the brand, bordering on obsession.

So, back to Wall Street, these guys may not pay any attention to these businesses because they will be privately held. But there’s little doubt in my mind that they’ll become personally invested in the luxury brands of the future—by becoming some of their best tribal customers.

Source: http://therobinreport.com/where-has-all-the-luxury-gone/?utm_source=The+Robin+Report&utm_campaign=c3d66eab66-Where_Has_All_the_Luxury_Gone_12_10_2014&utm_medium=email&utm_term=0_e90268c709-c3d66eab66-201755673

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): http://www.wwd.com/footwear-news/markets/marketer-of-the-year-stuart-weitzman-8049600?gnewsid=a161467a3da489b5897b97c969ca7fb8

November 22, 2014

Astronaut Mark Kelly talks watches at South Coast Plaza

By: Lisa Liddane
OC Register
November 23, 2014

The former Space Shuttle and combat pilot lends his credibility to Breitling’s timepieces.

As ambassadors of luxury timepieces go, Mark Kelly is as antithetical to the prevailing celebrity mold as it gets. He travels without an entourage, can walk into South Coast Plaza and blend into the crowd – as he did recently, and does not pose in any advertisements for Breitling.

Perhaps that’s a good thing.

The retired astronaut and decorated Navy pilot brings to the 130-year old Swiss brand two important things that actors Daniel Craig, Hugh Jackman and Leonard DiCaprio, for all their onscreen talent, bankable pulchritude and high-wattage glamour, cannot provide to the watch brands they represent: gravitas, authenticity and credibility.

Kelly’s résumé includes flying 39 combat missions during Operation Desert Storm and traveling more than 22 million miles through space, according to the National Aeronautics and Space Administration.

“Mark Kelly has such a great reputation for integrity – he’s an all-American space hero,” said Milton Pedraza, chief executive officer of the Luxury Institute, a boutique research and consulting company. Breitling, which calls its timepieces “instruments for professionals,” has had a long-standing relationship with the aviation industry, Pedraza said. Kelly is the ideal brand representative who appeals to a specific segment of luxury watch customers who prize accuracy, innovative technical features or aviation-related components.

Kelly visited the South Coast Plaza Tourneau boutique, which has a dedicated Breitling wing, to launch the new Cockpit B50, a chronograph specially developed for pilots. He sat down with the Register to discuss his history with Breitling and how watches are practical instruments of measurement for him. Here are highlights from that conversation:

Orange County Register: I understand you were wearing a different watch brand during your first space flight.

Mark Kelly: I wore a different one, which shall remain nameless, a pretty high-end watch that didn’t work.

OCR: What happened?

MK: It had a little issue. The second hand got stuck on the minute hand (chuckles), which is not a good thing when you need the second hand to time something at an important part of the space flight … that was the only time I wore that watch.

OCR: Did you buy a new one?

MK: I got a Breitling from a friend of mine.

OCR: What did you know about Breitling at the time?

MK: I always wanted one. I knew it was a watch for aviation and was very reliable and probably wasn’t very well known as some of the other brands, but it’s a product that’s really made for pilots.

OCR: The accuracy of the watches seems to be a big selling point, and I would guess that for you, it is.

 

MK: Yeah, it is, especially in my career as an aviator … time was incredibly important. In the airplane that I flew, you needed to be able to constantly do the math in your head, but use the watch, your distance and your airspeed to figure out, are you behind or are you ahead of getting the target on time … you would break it down into six second increments. Why six seconds? Do you know why?

OCR: Why?

MK: Because it’s a tenth of a minute, it’s easier to do the math. The accuracy of the minute hand and the second hand is key to being able to do your route. And it’s sort of like that for space flight, too. You need an accurate watch because you’re doing a lot of critical things on time.

OCR: You’ve worn Breitling since about 2006. As a veteran, pilot and an astronaut, did you ever imagine you would be a face of a luxury watch company?

MK: No (laughs). When I had my first Breitling watch I had no relationship with the company. I just wore them. Before my last flight (into space), the Association of Naval Aviation contacted me to ask me to fly a Breitling watch that was going to be given to President Bush “41″. It was the centennial year of naval aviation, so I took that watch into space, took a bunch of pictures in space.

The plan wasn’t set on who to give it to. There was a thought about giving it to President Obama, the current president. People went, well, President Bush is a naval aviator. At the end of the day, they decided to auction it off and they gave the money to a school in Pensacola that uses Naval aviation to teach kids math and science. It went to a much better cause. The watch went for like, $60,000.

OCR: As for the new Cockpit B50, are there any features in it that you find interesting?

MK: If I was flying in combat again, that’s the watch I would buy. It’s a SuperQuartz movement, thermocompensated … it’s incredibly accurate. If you turn your wrist, the light will come on. So imagine you’re flying an airplane at night, you don’t have to take your hand off the throttle … it has a regular alarm that’s a tone, but also has one that vibrates like your phone so you can feel it. It’s nice to use in space where it’s so loud – all the fans, pumps and everything.

OCR: How many Breitling watches do you have now?

MK: Oh, I don’t know. I have several … most are locked up in a safe.

OCR: Which one is your favorite?

MK: The one I’m wearing – right now. … This is a Navitimer 1461. It’s got dates, days of the week, the month and it’s got the moon phase. It’s really kind of cool. It has to be reset only once every leap year (or every 1,461 days). So you really have to adjust it only every four years.

Source: http://www.ocregister.com/articles/watch-643086-space-breitling.html

 

November 11, 2014

Luxury Institute’s Seven Trends Shaping Luxury in 2015

NEW YORK, NY–(Marketwired – Nov 11, 2014) – The following is a White paper by Milton Pedraza, CEO of Luxury Institute, LLC:

All around the globe, the luxury industry has navigated against strong headwinds in 2014. Growth in China has slowed due to government crackdowns and macroeconomic forces, Russian clients are buying far less for obvious reasons, and key European countries dependent on streams of wealthy tourists and aspirational buyers have also stalled. The situation is comparatively better in the United States and in Japan but both nations are growing far below their long-term economic potential. To these cyclical challenges, add in the secular change of online buying cannibalizing store and it has been a tough year for most luxury goods and services providers.

There are exceptions to the rule of sluggish sales. Despite the challenges, pure-play luxury brands like Saint Laurent, Bottega Veneta, and Hermès continue to innovate and make necessary investments to retain their status as luxury brands. No one is immune to market forces. Luxury will always be cyclical, but the real danger for brands that we see comes from self-inflicted wounds caused by the inability to accept new realities and failure to execute. Doing either of these far too slowly is also dangerous.

Looking ahead, the future has the potential to be very bright for luxury. Providing high-end goods and services to wealthy customers will remain a growth industry in volume, and value, for decades to come. What’s crucial now is rapid adaptation to evolving market realities. Powerful forces are affecting the luxury industry right now and remind us that we have to get comfortable being uncomfortable. The time to implement change is now.

We work with dozens of top-tier global luxury brands each year and live in the headquarters and stores of our clients. Based on recent experiences and dialogues, here are seven trends and issues that enlightened luxury brands need to address in 2015:

1. There Are Too Many Luxury Brands For A Slow-Growth Environment

There are too many luxury and premium brands in the world. Our industry has too many hotel chains, too many handbags and apparel producers, too many automotive providers, too many wealth managers, too many watch and jewelry makers and too many private jet charter companies. Name an industry and you’ll likely find a staggering number of brands purporting to be premium. Many have global ambitions.

There are too many “luxury” brands, but not enough great ones. Most are pure copycats. This does not even take into account all the fearless start-ups trying to disrupt the industry.

In 2015, look for many more large, medium and start-up brands to stall, or fail, at a faster rate than over the last few years. Affluent consumers, chased to exhaustion, are swamped by too many me-too options in every category. It will be time for true luxury brands to stop benchmarking the mundane players, understand their own brand identity, values, and standards, and get back to delivering differentiated, fully-priced value in 2015.

2. Comparable Store And E-commerce Sales Are The Critical Metrics

One recurring theme we hear in luxury boardrooms is that any run-of-the mill luxury brand can open stores, including outlets, globally to increase sales. In the current environment, it takes true leadership competence to drive significant comparable store sales. Foot traffic into stores is down 20% to 30% year-over-year for many luxury brands. E-commerce has scarcely made up the difference.

Look for luxury brands in 2015 to stop opening stores completely, even close some, and focus surgically on pinpointing true opportunities to open profitable new stores. The three mantras of luxury economics in 2015 will be: driving new valuable clients to online and offline channels, dramatic increases in conversion, and profitable retention of all high potential clients, not just the VIPs.

3. Not Only Best Practices, Best Execution

Dr. Atul Gawande, a Harvard surgeon and author who has studied how the highest performers in many fields achieve results, has written that the biggest differentiator in medicine and business today is not learning new best practices but executing on a core set of known best practices. For example, hospital infections proliferate today in most hospitals even though medical personnel are fully aware how they can be prevented. Failure to execute best practices consistently is the single biggest impediment of increasing sales and profits in the luxury industry.

Luxury today is full of highly experienced marketing, sales, e-commerce, operations and human resources executives who know exactly how to execute best practices. Unfortunately, many of these leaders show up at the office daily and fail to inspire, empower, measure and reinforce these best practices. In 2015, look for boards of directors to require measurable results from their teams as the hyper-competitive environment requires going from experienced to expert, from delusion to execution.

4. Transforming Store Managers Into Entrepreneurs

Everyone who understands luxury retail agrees unequivocally that the store manager is the backbone of any operation. Despite this wide recognition, many store managers are disempowered into becoming little more than glorified administrators and bureaucrats. They stay in small offices all day counting inventory and pounding out reports that can be automated in a flash.

There is a crisis of management in luxury, but it is not primarily in the executive suite. It is among the store manager ranks. Luxury brands need to attract, retain, educate and empower store managers to become a new breed of entrepreneur within the luxury brand. In 2015, look for top-tier luxury brands to focus resources to dramatically increase the formal education, empowerment and incentives of store managers to generate business by using public relations, digital assets, events, social media, and other tools to drive traffic and sales to stores daily. These local entrepreneurs will unleash a new era of “freedom with boundaries” in the luxury world.

5. Brands Are Finally Getting Serious About Human Relationships

We believe that the concept of a luxury brand having a relationship with its customers without continuous human to human engagement is highly overrated, if not an outright mirage. Last year we told you the online personal shopper was a critical and urgent evolving concept in the luxury world. One of the few brands that executed this concept was mainstream retailer Zappos. Others like Net-A-Porter reserve this concept for VIP clients.

In the coming year, look for more brands to finally begin building deeper relationships with large percentages of online and multi-channel customers. Although resources are scarce, brands should build intimate relationships with, at a minimum, their top 20% to 40% of clients.

Also, and very importantly, look for luxury brands to empower store sales associates who have multi-channel clients to reach out and build human relationships after the client purchases in any channel. For this to happen, digital assets and insights must empower sales associates in real time, and compensation structures will need to reflect the nature of a multi-channel relationship. In 2015 we are extremely optimistic that the economic conditions will force brands to get moving on building better client relationships rooted in personal interaction rather than impersonal algorithms.

6. CEO Change Will Accelerate Again In The Luxury Industry

During the recessionary years of 2008 and 2009 CEO changes were widespread as desperate times called for desperate measures. This time the change lacks desperation, but it will be just as profound. Demographics will drive change in the executive suite as baby boomer CEOs gracefully step down at a rapid clip. We experienced several CEO changes toward the end of 2014, and we expect to see many more in 2015.

In times of change, luxury brands look for more skilled and effective leaders. Enlightened boards of directors at major conglomerates and private equity firms are looking for a new breed of highly collaborative and effective team builders. Inspiration is needed more than perspiration to lead associates to execute brilliantly across segments and channels. Companies expect measurable execution in 2015, and they will get it, one way or another. Given the demographics of luxury, expect more women and diversity candidate CEOs to thrive in 2015, all to the benefit of our industry.

7. Think Less Facebook, More Pinterest

Let’s face it, in its current format, Facebook is of marginal value for luxury brands. Gathering millions of likes and online fans has not been a formula for rapid sales growth in luxury. Success stories have been few and far between despite the lemming-like response from unenlightened digital executives and their agency partners. True luxury buyers are far more discerning. Engagement in luxury requires a one-to-one conversation, not a megaphone.

Social media can certainly serve a useful purpose. Sites and apps like Pinterest and Instagram that engage visually have a far better chance of success for the eye-candy offerings of many luxury brands. Look for localized and personalized efforts to thrive within these highly engaging media and look for the leading edge brands to empower all front-line associates to post their favorites in a brand-sanctioned way. In this way, a brand can engage clients and prospects in rich, honest dialogue that builds relationships and boosts sales.

The luxury industry is healthy, but those who anticipate change will have a decided advantage. Many luxury goods and services brands enter 2015 with false confidence and may only realize too late that the world has changed. Enlightened brands are jumping off of the cresting wave, and onto an emerging wave to drive sales and profits in 2015.

We welcome your opinions and comments. Please see below for our contact information.

Visit us at www.LuxuryInstitute.com and contact us at luxinfo@luxuryinstitute.com

November 5, 2014

Luxury training becomes fashionable MBA accessory

By: Deirdre Kelly
The Globe and Mail
November 5, 2014

When Christal Agostino was pursuing her MBA a few years ago, she had a deluxe classroom – a Hermès boutique in Paris.

In the rarefied edifice devoted to luxury shopping, the Montreal native had to learn the intricacies of the high-end marketplace. But the focus was not on the legendary brand’s crocodile handbags, some costing as much as a car, nor on its famous silk scarves, produced since 1937 and coveted worldwide.

It was on the sales staff, paragons of discretion, and how they interacted with customers of Hermès’ pricey goods.

“The way they handled the merchandise – the way they wrapped it and presented it to the customer, walking from behind the counter to hand it to them – was incredibly fascinating to me,” Ms. Agostino says. “They were creating a curated experience within the luxury experience. Nothing was done haphazardly.”

Lesson learned.

Ms. Agostino had completed her one-year, full-time MBA at Queen’s School of Business in Kingston and was in France at the time to expand her degree to include a specialization in international luxury brand management at École supérieure des sciences économiques et commerciales, better known as ESSEC.

The French business school, in collaboration with LVMH and L’Oréal Luxe, launched the specialization in 1995 to provide the high-end companies with a talent pool from which they could recruit, particularly in developing markets. Queen’s became an exchange partner with ESSEC in 2006. So far, about 180 students have gone back and forth between the schools.

“The ESSEC MBA in international luxury brand management was the first MBA program of its kind to exist worldwide,” ESSEC spokeswoman Anthea Davis says.

The program is 11 months long and is offered at two campuses in France and one in Singapore.

“It is today the reference worldwide in international luxury brand management education. We now work with all major luxury groups and independent houses worldwide,” Ms. Davis adds.

Milton Pedraza is the chief executive officer of the Luxury Institute, launched 11 years ago in New York, and he says there’s a growing need for specialized training in the luxury sector.

“Luxury is different from mainstream retail – the level of design, the level of quality, the level of relationship-building are all much higher than any other business segments,” Mr. Pedraza says.

“You are dealing with the affluent and the wealthy who have special needs and requirements and who are paying a very high premium for their goods and services. So the level of expertise required to deliver that value proposition must be taught and learned.”

Since ESSEC’s program launched 20 years ago, specialized MBAs in luxury brand management have grown in popularity. They are also now offered at the Bologna Business School, in the Italian city that’s home to brands such as Lamborghini and Maserati; the International University of Monaco; the NYU Stern Business School in New York; and the SDA Bocconi School of Management in Milan, Italy, to name some.

Most concentrate on a single facet of luxury, such as design and marketing. Others boost technological skills. Fashion in the digital age has become instant and a luxury goods education today includes video and social media training.

“Historically, luxury has seemingly been quite old fashioned and formulaic to its approach to business. However, with swift changes in technology, social media, e-commerce and expansion to emerging markets, we are seeing that luxury is now evolving and adapting rapidly,” says Nicole McBride, office manager at Lambert and Associates, a retail network company with offices in Paris, London, New York, Milan and Florence, Italy.

“With change comes a demand for a new talent pool that can provide a fresh approach.”

Canadian fashion entrepreneur Diane Robinson is the co-founder of the Huntress jewellery and luxury handbag, which made its debut recently at the Spring 2015 edition of World MasterCard Fashion Week in Toronto. In advance of launching her own business with partner Ron LeBlanc, she took the year-long luxury brand management MBA at the University of Monaco, graduating in 2011.

“You need both the language of business and luxury to compete in this field,” Ms. Robinson says. “Our aim was to have a fully vertically integrated business and I needed to know every part of the business, from the rough to the runway.”

The ESSEC MBA offers several specializations within its luxury brand program: fashion and accessories; fragrances and cosmetics; watches and technology; hotels and property.

Being broadly focused is what attracted Jessica Wang, another Canadian at ESSEC, currently enrolled.

“I have always had a passion for the luxury industry in general and when I found out about this program … , I was very intrigued,” Ms. Wang writes in an e-mail from Cergy-Pontoise, France, where she has lived since September.

“I did a lot of research on similar programs offered by many other schools and found the one offered by ESSEC to be the most comprehensive. It does not concentrate on just one area of the luxury industry such as fashion and accessories; instead it also explores in detail other areas: wine and spirits, watches and jewellery, and cosmetics,” she says.

Prior to becoming a student again, Ms. Wang worked for L’Oréal Group in Canada. When she graduates from ESSEC in 2015, she hopes to work in the fashion and accessories sector. She has a good chance of meeting her goal.

Since ESSEC’s founding in 1995, its 560 graduates have gone on to work for every major luxury group and independent luxury companies worldwide, including LVMH, Kering, Richemont, Estée Lauder, Tod’s Group, Zegna, Chanel and Hermès.

“We have a 95-per-cent success rate of students finding employment in the luxury goods industry upon graduation,” Ms. Davis at ESSEC says.

Ms. Agostino took courses in all aspects of a luxury brand, including retail design, licensing, wholesaling, and the psychology behind an expensive purchase.

Her teachers included the former managing director of Giorgio Armani France: “He brought a wealth of information, a lot of real-time stories,” says Ms. Agostino.

After she graduated from ESSEC in 2011, Ms. Agostino, 30, returned to Canada and landed a job in Toronto at the global office of Fairmont Hotels and Resorts, where she worked on creating luxury partnerships.

In the spring of this year, she moved to Spafax, an international media and marketing agency that works with major airlines such as Air Canada and British Airways as well as Mercedes-Benz and other luxury brands. She produces their videos and glossy magazines.

“The story-telling behind the brand is what I love,” says Ms. Agostino, crediting her specialized MBA program for giving her a heightened awareness of luxury as a layered category of consumer goods.

“A Hermès purse is very beautiful, a piece of art. But there’s also a story behind it, what it represents as a luxury good, and what it means to the person buying it. It’s a piece of their ego, a part of their personal brand.”

Source: http://www.theglobeandmail.com/report-on-business/careers/business-education/luxury-training-becomes-fashionable-mba-accessory/article21438951/

October 30, 2014

October 21, 2014

Luxury Institute Introduces Luxcelerate, an Empirically Proven Method to Drive High Performance in Building Client Relationships

Marketwired
October 21, 2014 80763_LuxcelerateLogo

NEW YORK, NY–(Marketwired – Oct 21, 2014) – Today, the New York-based Luxury Institute announced the launch of Luxcelerate, an enhanced version of its innovative successful 7-Step Customer Culture process. Luxcelerate is designed to accelerate sales performance via a proprietary methodology that focuses on empowering the customer-facing online and offline associates, helping brands to improve both client relationships and sales exponentially.

Presently, top brands are struggling to both expand and retain their client base. Top brands have a conversion rate of 10-15%, a data collection rate of 30-40% (approximately 25% of this data is unusable) and a first time buyer retention rate of 10%.

Luxcelerate encourages the individual sales associate to learn and execute the best practices in client relationship building. The process is designed to improve sales performance via an exclusive methodology that focuses on relationship building, while improving a brand’s conversion, data collection and retention rates.

Luxcelerate’s proprietary methodology is based on shared relationship values and standards that are designed by a brand’s front-line teams, and is therefore customized to fit the unique DNA and culture of each brand. Custom education programs use empirically proven learning principles to drive retention of critical knowledge. Measurement and reinforcement methodologies are then deployed individually to guarantee consistent daily execution. The outcome is humanistic, effective client relationship building that leads to sharp increases in sales.

Luxury Institute’s CEO Milton Pedraza developed Luxcelerate’s 7-step methodology. Mr. Pedraza established this innovative methodology after being inspired by best practices from education, medicine and aviation. Using this process, a number of top-tier luxury brands have doubled, or tripled, the accurate collection of critical client data, and have significantly increased client conversion and retention rates. Luxury Institute has worked with the top brands of major luxury groups, well-known brands owned by private equity firms, and small boutique brands, to drive sales at rates of 15-30% per annum.

“The Luxury Institute was invaluable in helping Malia Mills define and implement our clienteling process. The first quarter that we implemented our program we increased sales by a significant amount.” — Carol Mills, Co-Founder, Malia Mills

“Since embarking on this project, we have seen double digit increases in data collection, conversion and a significant acceleration in retail momentum.” — Claudia Poccia, President and CEO of Gurwitch, Owner of the Laura Mercier brand

References are available upon request. For more information please email luxinfo@luxuryinstitute.com or fill out a contact form at www.luxuryinstitute.com

Source: http://www.marketwired.com/press-release/luxury-institute-introduces-luxcelerate-empirically-proven-method-drive-high-performance-1959706.htm

October 4, 2014

Williams-Sonoma returns home to celebrate heritage

SFGate
Janet Fletcher
October 4, 2014

The store that introduced America to food processors and copper fish pans has returned to its Wine Country roots.

For many decades, Williams-Sonoma thrived by being one step ahead of its customers, selling them housewares they didn’t yet know they needed. But with this weekend’s opening of its newest venue, in Sonoma, the trendsetting company is looking back to celebrate its 99-year-old founder and recall its humble debut.

The project also reflects the Boomer-fueled brand’s efforts to woo a younger generation — Millennials, who aren’t exactly rushing to buy homes and stock kitchens.

This retro Williams-Sonoma, at the site of the original store, re-creates the look of the shop that Chuck Williams opened in 1956, down to the black-and-white checkerboard floor. “It’s going to be a total doppelganger,” said Wade Bentson, one of Williams’ first employees, who helped with its design.

With a 12-seat cooking school showcasing local talent, an edible garden, vintage merchandise and museum-style kitchenware exhibit, the store is opening in a town famously hostile to chains. But the billion-dollar retailer, for the most part, is being welcomed like a hometown hero.

“I’m totally excited about it,” said Sheana Davis, a community activist and proprietor of Epicurean Connection, a nearby cafe and cheese shop. “If you’re looking for opposition, I’m not it.”

Williams, who celebrated his 99th birthday this week, operated his store near the historic plaza for only two years before decamping to San Francisco. But his later success made Sonoma itself an international brand.

Visitors still inquire about the chain’s birthplace. “I’ve been introduced as his son several times,” said Steven Havlek, who owns Sign of the Bear, an independent kitchenware store on the plaza.

Re-creating the original

When the site at 605 Broadway became available in 2012, the retailer swooped in. The property included both Williams’ original 570-square-foot shop and an attached home and garden that he had shared with his mother.

“We found enough pictures and enough from (Williams) to rebuild the store exactly as it was,” said Janet Hayes, president of the Williams-Sonoma brand. The restoration includes original signage and the clean-lined open white shelving that became the stores’ trademark.

The new Sonoma store includes an exhibit of ingredients and tools that Williams popularized, such as Fini balsamic vinegar, Maldon sea salt, Le Creuset cookware and French mandolines. Williams’ restored home, attached to the store, has been repurposed as a design studio and showcase for Williams-Sonoma Home furnishings. The store is not all retro; the made-over garden boasts an outdoor kitchen with pizza oven and lots of merchandise from the company’s new Agrarian line, launched in 2012 in keeping with a younger generation’s fascination with urban farming.

The DIY cheese-making kits and high-end chicken coops that Williams-Sonoma is betting on today were definitely not in the mix when Williams began his retailing career. The society matrons who patronized Williams-Sonoma in the late 1950s were lured by the gleaming copper saucepans, Pillivuyt porcelain and fluted tart tins that Williams discovered in France. Jackie Kennedy and Julia Child were about to make French cuisine the epitome of chic, and Williams was poised to profit.

Cooking to entertaining

Urged by his affluent customers to move the shop to San Francisco, Williams listened when one of them suggested a spot near Elizabeth Arden, the high-end salon on Sutter Street. “In those days, women had beehive hair that required a lot of attention,” recalled Bentson, who began working for the store in 1961. “It wasn’t unusual for them to go to Arden’s two or three times a week, and they went right by our store.”

Women from Hillsborough, Piedmont and Marin would have their ball gowns shipped to Williams-Sonoma, drop their dogs off at the store, and then go and have their hair done, recalled Mary Risley, who founded Tante Marie’s Cooking School in San Francisco and is a longtime friend of Williams’. They bought Christmas presents and wedding gifts at Williams-Sonoma, especially after the merchant — again nudged by a customer — created a bridal registry to compete withGumps and Tiffany.

Child’s popular television show, which debuted in 1963, also fueled Williams-Sonoma’s sales. If Julia used it, “people beat the way to our store to get it,” Bentson said. San Francisco cooking teachers like Risley andJoyce Goldstein sent their students to the store for quiche pans, flan rings and souffle dishes — equipment that department stores of the day did not stock.

“Everybody was either taking cooking lessons or giving cooking lessons,” recalledJacqueline Mallorca, an early customer and ad agency employee who persuaded Williams that the store needed a mail-order catalog. Begun in 1972 and, for years, written by Mallorca, the innovative full-color mailer put Williams’ finds and favorite recipes within reach of all Americans.

Today, the recipes have migrated to the company’s website, and the catalog copy is far more clipped and concise. The September issue still includes Le Creuset and All-Cladcookware but also features packaged mixes for Bundt cakes, quick breads, waffles and breakfast bars — a shift noted unhappily by the culinary doyennes of San Francisco.

“There’s an awful lot of tableware,” sniffed Mallorca, an Englishwoman whose polished manners don’t conceal her dismay. “People today are not so interested in cooking as much as entertaining.”

Positioning for future

Goldstein, who later collaborated with Williams on several cookbooks, concurred. “At some point, Williams-Sonoma made the shift from being an educating store to being a lifestyle store, with tablecloths, napkins and pottery,” she said.

The publicly traded company’s other concepts — among them, Pottery Barn, Pottery Barn Kids and West Elm — are thriving, but the net revenue of the Williams-Sonoma brand has been stagnant in recent years and the store count is down. Branding experts and trend forecasters see both opportunities and challenges for the chain as it positions itself for the future.

Many affluent young consumers aren’t hurrying to buy homes, they say, and are more inclined to spend on experiences than on stuff.

“I’ve been invited to buy wedding gifts at experiential websites,” said Kara Nielsen, culinary director for Sterling-Rice Group, an advertising and branding agency in Boulder, Colo. Nielsen and others also point to a minimalist trend, a preference for smaller, less cluttered homes and simpler lives.

“A lot of Millennials believe in access but not ownership,” Nielsen said, pointing to the success of businesses that enable consumers to share cars or rent special-occasion clothes.

Building in diversity

Like other retailers, Williams-Sonoma needs to respond to changing demographics, marketing experts say. “Diversity has to be built into their product range and into their staff,” said Milton Pedraza, CEO of the Luxury Institute, a consultant to high-end brands. Pedraza points to his own multicultural family, which includes Colombians, a Jewish lawyer from Long Island and a Hindu doctor.

“We make samosas for Thanksgiving with turducken and Spanish rice,” he said. “And we’re not atypical.”

Marc Halperin, a food and beverage consultant with San Francisco’s Center for Culinary Development, believes the chain is still a tastemaker and sharp observer of trends. The Agrarian line dovetails neatly with the urban homesteading wave, Halperin said. And the shift toward offering tableware, juicers and other appliances that have little to do with cooking may also be wise.

“There’s clearly a huge understanding of the consumer,” Halperin said. “The number and variety of espresso machines they’re selling is mind-boggling.”

Janet Fletcher is a food writer and cookbook author in Napa. E-mail:home@sfchronicle.com

Company milestones

1956: First Williams-Sonoma store opens on Broadway in Sonoma.

1958: Chuck Williams moves his thriving cookware store to Sutter Street in San Francisco.

1972: Williams-Sonoma mails its first cookware catalog, with a print run of 10,000.

1973: Williams-Sonoma opens its second store, in Beverly Hills. Chuck Williams introduces the Cuisinart food processor, a revolutionary French appliance.

1978: Chuck Williams encounters balsamic vinegar in Italy and begins to import it.

1983: With its initial public offering, Williams-Sonoma becomes a publicly traded company to raise money for expansion.

1986: Williams-Sonoma releases its first cookbook, starting a hugely successful publishing program.

1999: Williams-Sonoma starts its e-commerce site.

2006: Debut of Williams-Sonoma Home, a furniture and home decor collection

2012: Williams-Sonoma starts Agrarian, a line of products designed for urban homesteaders.

2014: Williams-Sonoma opens its240th store in Sonoma, at the site of the original store.

Source: http://www.sfgate.com/homeandgarden/article/Williams-Sonoma-returns-home-to-celebrate-heritage-5800000.php

October 1, 2014

Statement Sweats Have Proved Their Staying Power

October 1, 2014
By Ruth La Ferla

Rita Ora was traveling quasi-incognito when she was snapped this year at Los Angeles International Airport wearing outsize shades, a blush-tone carryall, Air Jordans and a cushy sweatshirt, its hood pulled seductively over her brow.

Olivia Wilde recently strode the same passageways, the picture of ease in a biker coat … and sweatshirt, as did Rosie Huntington-Whiteley, who sallied toward the airport lounge wearing a dark fedora and … hey now, you know the refrain.

At the airport, a hub for the paparazzi, who tend to treat its fluid corridors as a makeshift red carpet, off-duty models and Hollywood A-listers have been flaunting their sweatshirts with careless élan, wearing versions embellished with eye-catching slogans, cartoons and jewels and pretty florettes or, alternately, opting for standard issue, raglan-sleeve varieties meant to signal, one suspects, that the wearer is just like you and me.

Clearly civilians relate, which may be why this cozy insignia of slacker chic, once reserved for furtive cigarette jaunts to the 7-Eleven or late nights on the sofa, binge-watching “Revenge,” has become the would-be style-setter’s trophy of choice, an item for all seasons — and occasions.

Its transition from nondescript wardrobe standby, the fashion equivalent of mac and cheese, to luxurious fashion mainstay now seems to have been all but inevitable. “The world of luxury has gone somewhat casual,” said Milton Pedraza, chief executive of the Luxury Institute, a consulting firm. “A lot of people don’t see sweatshirts as basic items anymore.”

Conversely, Mr. Pedraza noted, “a lot of basic items have gone premium.” He may have had in mind the sumptuous interpretations of this humble item that appeared on fall runways and are sold at Neiman Marcus, Nordstrom and Barneys New York and on upscale websites. Prices veer from $30 for an orchid-printed top by Altuzarra for Target to more than $4,400 for a Fendi version ornamented with fake fur, felt, swaths of mesh and crystal, but then, who’s counting?

Such gussied-up sweats can still play down one’s wealth while conferring enough raffishness to suggest that the wearer is too young, too prodigiously gifted or simply too chic to go in for a conventional 9-to-5 uniform. Indeed, these days the only thing inelegant about this once unexceptional garment is its name. And even that has had an upgrade.

Statement sweats, as they’re known in fashion-speak, emerged on the runways over two years ago, making their debut on the runway at Givenchy in the form of a photo-collage sweatshirt, followed last fall with a Bambi-print variation that became an instant fashion hit. The look gained traction in the spring with the parade of high-end sweatshirts at Theory, Kenzo and Alexander Wang, whose white shirt, cheekily inscribed with a “Parental Advisory” legend, was a fashion editor’s favorite.

Photo

Rita Ora moved through Los Angeles International Airport in fashionable sweats and accessories.

Sweats were reprised for fall at Rag & Bone, where a satin shirt was paired with paint-splatter jeans; at 3.1 Phillip Lim, with burnt-orange leather hoodies; and at Isabel Marant, where a lustrous camouflage shirt was shown with baggy fatigues. Surviving yet another season, they emerged for spring 2015 in a boxy version with cutoff sleeves at Jil Sander, covered in multihued sequins at Dsquared2, in a sunburst design at Fausto Puglisi, in silver at Norma Kamali and as a sleeveless top with an extravagant bow and as an evening dress at Bottega Veneta.

Like biker jackets, sneakers and skinny jeans before them, statement sweats have proved their staying power.

“Today it would be a misnomer to use the word ‘trend’ in reference to the sweatshirt,” said Tomoko Ogura, the senior fashion director at Barneys. Ever-evolving, it is now cut in sophisticated fabrics, including but by no means confined to cashmere, chiffon, organza, leather and lace, and offered in varying textures and shapes. So lavishly garnished are some that they are hard to place as sweatshirts at all. Yet consumers are responding, Ms. Ogura said, “because, while the designer’s hand is apparent, their utility is not compromised.”

Their utilitarian provenance is a talking point, indeed a boasting point, among luxury consumers who like to wear their shirts subversively with tuxedo pants or furs or, conversely, to throw on a sequin-encrusted versions to lend dazzle to their leggings or jeans. It’s like wearing a Casio watch with your Brunello Cucinelli cashmere pullover, suggesting a kind of inverse snobbery. “Like you’re playing the game without quite really playing the game,” Mr. Pedraza said.

In some quarters, sweatshirts, like sneakers, remain the great fashion leveler. Paraded this summer in men’s shows as diverse as Bottega Veneta, Neil Barrett and Lacoste, they seemed intended to mask distinctions of class and income or to render them obsolete. “Turns out,” as Guy Trebay noted in a New York Times fashion review, “Mark Zuckerberg didn’t need to outgrow his hoodie and shower shoes.” (Which is not to neglect those 99-percenters repurposing their gym togs as everyday wear in apparent deference to Gap’s recent injunction, in a series of fashion ads, to “dress normal.”)

“Sweatshirts flourish because they work for every demographic and every retail category — men’s, kids, junior contemporary and designer,” said Sheila Aimette, a vice president at the trend forecasting company WGSN. “They are cross-generational and cross-gender.”

Madeline Alford, a digital editorial assistant at Luckymag.com, has incorporated sweats into her workday regalia. Taking her style cues from the Lucky fashion staff, she may, on any given day, combine her black tubular jeans or leather midi-skirt with an oversize sweatshirt. “Instead of a chunky sweater, you could definitely wear a fleece,” she said, “something still warm and efficient.”

Function trumps showiness among Ms. Alford’s priorities. Fashion, she noted, has been gradually turning its back on the flamboyant extremes of street style in favor of a more accessible look. “Much as we love all that crazy, out-there style, it’s not for everybody,” she said.

Sweatshirts, on the other hand, merit her unstinting approval. “They’re what real women wear all the time,” she said.

Source: http://www.nytimes.com/2014/10/02/fashion/statement-sweats-have-proved-their-staying-power.html?_r=0 

September 23, 2014

Luxury Institute Survey Of High-Income Travelers from Europe, China and Japan Reveals Brand Status Ranking Of World’s Top Luxury Hotels

NEW YORK) September 23, 2014 – The New York-based Luxury Institute has released findings of its 2014 Luxury Hotels Brand Status Index (LBSI) survey of affluent overseas travelers who shared detailed impressions and evaluations of 37 global luxury hotel brands.

LBSI scores (1-10) are based on each brand’s perceived quality, exclusivity, social status and overall guest experience. In addition, affluent consumers weigh in on whether a hotel deserves premium pricing, if they would recommend it to people close to them and how likely they are to stay at a brand’s property on their next trip.

Here are the top five brands as rated by wealthy consumers from each region, with Europe including the U.K., Germany, France and Italy.

Europe:Small Luxury Hotels of the World (7.96), The Ritz-Carlton (7.95),Armani Hotels (7.88), Mandarin Oriental (7.86), Leading Hotels of the World (7.77)

China: Leading Hotels of the World (8.62), Oberoi (8.57), The Luxury Collection (8.54), Firmdale Hotels (8.53), Raffles Hotels and Resorts (8.50)

Japan:Aman Resorts (8.19), Oberoi (7.83), Waldorf Astoria Hotels and Resorts (7.80), The Ritz-Carlton (7.73), Orient-Express Hotels (7.68)

“The luxury hotel industry is growing in potential, but also in the dramatic number of brands that have top tier offerings,” says Luxury Institute CEO Milton Pedraza. “The winners are those who can consistently provide remarkable guest experiences, as rated by the clients.”

Respondents reviewed the following hotel brands: Aman Resorts, Armani Hotels, Banyan Tree, Club Med, Como Hotels and Resorts, Conrad Hotels and Resorts, Fairmont Hotels and Resorts, Firmdale Hotels, Four Seasons, Grand Hyatt, InterContinental, Jumeirah, JW Marriott, Kempinski Hotels, Le Meridien, Langham, Leading Hotels of the World, Loews Hotels, The Luxury Collection, Mandarin Oriental, Oberoi, Orient-Express Hotels, Pan Pacific, Park Hyatt, The Peninsula Hotels, Raffles Hotels and Resorts, Regent, The Ritz-Carlton, The Rocco Forte Collection, Rosewood, Shangri-La Hotels & Resorts, Small Luxury Hotels of the World, Sofitel, St. Regis, Taj Hotels Resorts and Palaces, W Hotels and Resorts, and Waldorf Astoria Hotels and Resorts.

Contact the Luxury Institute for more details and complete rankings.

Visit us at www.LuxuryInstitute.com and contact us with any questions or for more information.

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