Luxury Institute News

July 7, 2014

The Value of Luxury Poseurs

By: Paul Hiebert
The New Yorker
July 7, 2014

Bellezza mentioned Tiffany & Co. as a good example of a company executing the policy outlined in her and Keinan’s report. Some store locations offer side entrances and private viewing rooms to physically separate the élite shoppers from those looking to purchase a seventy-five-dollar Heart Tag Charm. The core Tiffany users, Bellezza says, are therefore defined by their access to privileged retail space, while the company can still grant a degree of access to the masses without tarnishing the brand. In 2013, the Luxury Institute, a research and consulting firm, conducted a survey that revealed that Tiffany was the jewelry brand most widely purchased by American women with a minimum net worth of five million dollars.

As Amy Merrick noted in April, Burberry recovered from its overexposure problem. Following the arrival of Angela Ahrendts as its C.E.O., in 2006, (who has since left for Apple), Burberry began scaling back its licensing agreements and removing its signature check from about ninety per cent of its items. A sense of sustainability has returned, thanks to a clear balance of insiders enjoying their cachet and outsiders looking in.

Click the link to read the entire article:

January 11, 2014

Tiffany results signal caution among luxury shoppers

By Jonathan Berr
CBS News
January 10, 2014

Shares of Tiffany & Co., whose name has been synonymous with luxury since before the Civil War, fell Friday after the second-largest luxury retailer said its earnings would be less than analysts had expected.

The New York-based company expects to earn $3.65 to $3.75 per share in the fiscal year ended January 31. While that forecast is unchanged from a previous forecast, it was below the $3.79 that analysts surveyed by Bloomberg News had forecast.

This is the latest sign of the uneven performance of many retailers during the holiday season despite the improving performance of the U.S. consumers. Wealthy consumers appear to be less enthused about buying goods and services than many experts predicted.

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

Spread the wealth, share!

September 24, 2013

What are your brands doing to customize communications based on what you know about each customer?

By Ben Popken
NBC News
September 23, 2013

Paper towels embossed to look like cloth. Tampon packages with a glossy metallic sheen. Designer ice cubes for $75 a bag. Marketers are going glam with everyday products, taking them upscale as they give up on selling to the middle class.

Companies have reacted for years to the shrinking middle class by developing both top shelf and bargain versions of their product lines. Toyota has been successful with the Lexus. Frito-Lay has introduced Olive Coast, kettle-cooked chips with a Mediterranean flavor, as well as “Taqueros,” a discount tortilla chip. Apple’s new iPhone comes in both a $199 version and a $99 one with cheaper components.

For the wealthy, a 20 percent markup is a small price to pay for “luxury.” For some in the middle class, it’s a way to feel affluent, at a cost. For the poor? There’s the bargain brands. In an economic recovery that has magnified income inequality, consumers are either spending at the Family Dollar stores of the world, or at the Nordstroms.

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

September 7, 2013

Cascade Platinum: Turning household goods into gold

Posted in Luxury Market,Retail

By Krissy Clark
September 6, 2013

Procter & Gamble is a big company that makes a lot of the little things we use every day: Paper towels, toothpaste, razor blades.

Now P & G is leading the charge in offering upscale versions of some of these everyday products.  From specially-embossed paper towels, to designer tampons or fancy dishwashing detergent.

To understand this trend you need to understand the word bifurcation.

Bifurcation is industry lingo for  “splitting the market.”  That is, when a company targets some products to high-end consumers and others to bargain hunters. And in an era when, by many tallies, the American middle class is shrinking and the extremes are growing, bifurcation is a consumer products survival tool.

The country is “bifurcating into the Dollar Stores and the Saks Fifth Avenues of the world,” according to Milton Pedraza of the Luxury Institute, a research firm that specializes in luxury products.

So what to you do if you are a company like Procter & Gamble, which has traditonally made  middle-tier products like Tide, Ivory Soap and Crest that are targetted at middle-class consumers?

Procter & Gamble’s approach involves offering “book-end” lines.

On the low end, the consumer products giant is introducing cheaper, stripped-down product lines like Bounty Basic Paper Towels and Tide Simply Clean and Fresh. On the high end, the company is launching new products like Bounty DuraTowel, Cascade Platinum dishwasher soap, and Tampax Radiant Tampons.

“Toyota did it many years ago with Lexus,” says Pedraza, noting this isn’t a new concept. “And they’ve been extremely successful.”

Yet, consumer trends consultant Alex Smith has her doubts about P&G’s strategy.   “The recession made everyone, even higher-income individuals, think more critically about the things they buy, and not just fall in to the indulgence-for-indulgence’s-sake trap.”

Headed in to a supermarket in downtown Los Angeles, Jessica Czar and Matt Chisum could have been the perfect target customers for Procter & Gamble’s new high-end household items.  They are both young professionals, making good money in the financial industry.  So I asked them what they thought.

First, they looked at the Bounty DuraTowels, for sale at the store for more than $0.05 per square foot– almost twice as much as the regular Bounty paper towels.

“It’s not clear to me that this is any more durable than regular Bounty,” says Czar, unmoved by the print motifs and the ’3x Cleaner than a Germy Dishcloth ™’ claim on the packaging. “I wouldn’t spend more money.”

Chisum shook his head at the Cascade Platinum Dishwasher soap, with the words ‘Our Ultimate Clean For Dishes — Even Helps Keep Dishwasher Sparkling’ printed across the top of the silver bag. Inside, the soap pods were priced at $0.47 per pod, compared to regular Cascade pods that sell for under $0.25.

“Just because of the platinum branding, I don’t think it means it’s any better than the regular,” Czar said.

Then Czar squinted at the label for Tampax Radiant Tampons in a metallic pink box — $0.37 per tampon versus $0.25 for the more basic Pearl Tampax brand.

“I don’t know what radiant means, if it’s like metallic and shiney?” she asked.

All in all, Czar and Chisum’s verdicts were not in these products favor.

“You’re going to dispose of this stuff,” says Chisum.

“Right,” nods Czar. “These are just basic staples that are disposable.”

That sentiment doesn’t surprise Burt Flickinger of the consumer-consulting firm Strategic Resource Group. People are willing to spend a little more on fresh food and juices and produce and automobiles, he says, “but they’re not going to spend more to do their dishes or wash their clothes.”

Pedraza, of the Luxury Institute, is more optimistic that people might spend more on detergents and tampons, if they can be convinced that there is substance behind the shiny boxes.

“If you can show superior performance then you’re going to have a high probability of success,” Pedraza adds, “If you’re not, and it’s just packaging and fluff, then you’re going to have a much lower probability.”

August 29, 2013

Retail loyalty programs add tiers to reward big spenders

By Kelli Grant
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 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,’s chief marketing officer.

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

August 14, 2013

Successful Rewards Programs Prove That Even Wealthy Shoppers Like Freebies And Special Gifts

(NEW YORK) 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% 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.

“Loyalty Programs combined seamlessly with one-to-one customer relationship building can be highly effective in driving conversion and retention while making data collection easier,” says Luxury Institute CEO Milton Pedraza.

About Luxury Institute ( 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, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

July 17, 2013

Facial recognition software can create personalized retail experiences

By Jen King
Luxury Daily
July 16, 2013

A new facial recognition software could help give affluent consumers a personalized shopping service while taking the guesswork out of identifying VIP customers for retail employees.

The Facial Recognition software, developed by NEC IT Solutions, will help boutique employees better cater to their customers, even if they do not recognize them at first glance. On the brand side, it will also help ensure that retailers never miss out on a potentially lucrative sale.

“A luxury retailer would include a wall mount display or kiosk that would allow customers to preregister themselves, and opt-in either at time of purchase or online,” said Allan Ganz, account development manager for NEC Corporation of America, Irving, TX.

“The kiosk would have two potential locations,” he said. “The first at the sales counter and second at the service counter for instance at alterations. The key is to allow for an enhanced customer experience.

“Face recognition allows for the storage and real-time analysis of this vast amount of data to gauge and modify the effectiveness of brand promotions.”

Face time
NEC IT Solutions has created similar software with security, rather than retail, in mind.

Similar to the software that helps to identify criminals and terrorists, the facial recognition software is checked against an opt-in database of shoppers.

The software will scan customer’ faces as they enter the boutique. If the software recognizes a face in the database, an alert will be sent to the employees via computer, tablet or smartphone.

Once alerted of the shopper, the boutique employees will be able to access the customer’s clothing sizes, favorites and spending history.

NEC IT Solutions has been conducting software trials in designer boutiques and hotels in the United States, England and Asia. The company has not disclosed the retailers and hotels used in the trial.

Although privacy is a big concern of affluent consumers, NEC IT Solutions found that many high-profile customers did not mind sharing their private information if it meant a more personalized and quicker shopping experience as per NEC IT Solutions.

“I can see an issue with privacy being a concern for most shoppers,” said Brittany Mills, vice president of client solutions at B Culture Media, Atlanta.

“Even though NEC IT Solutions addressed the privacy concern, I am not sure that most shoppers would want to be identified before a purchase.

“If a customer is a frequent shopper, the store associates should already have a relationship with the shoppers and can determine the amount of attention to give,” she said.

To track or not to track
Although many affluent shoppers are looking for an easier, more personal shopping experience there is some degree of hesitation in providing their personal information to luxury retailers.

For instance, sixty-three percent of affluent consumers would choose to keep their online history and Internet activities private through an opt-out tracking policy, according to a survey from the Luxury Institute.

Affluent consumers do not want their personal information used for other purposes and many consumers do not trust the safety of their information when giving it to a brand. This means that luxury marketers need to earn the trust of their consumers before asking for their participation in online tracking.

Other mobile tracking technologies have been used to draw consumers into stores.

For instance, luxury retailers can benefit from using geo-targeting mobile technologies to keep affluent consumers coming into their stores and not their competitors’ locations.

Retailers can use geo-targeting in a variety of ways, which include targeting consumers in a store, outside a store or in specific neighborhoods. By using these technologies along with consumer data and research, retailers can access their target consumers and drive them into store locations.

Facial recognition is not the only way to identify affluent consumers.

“A more discrete and practical way of identifying these affluent shoppers is with an NFC signal from a personal device that can transmit their presence as well as personal shopping preferences,” said Dave Rodgerson, senior management consultant of retail strategy and change at IBM Canada, Toronto.

“Companies like iSign Media in Toronto are making great strides in this area,” he said.

July 12, 2013

Nordstrom Captures Luxury Customer

By Sharon Edelson
July 11, 2013

In the last 12 months, Nordstrom captured the largest percentage of luxury shoppers — those with a net worth of more than $5 million — according to a recent Luxury Institute survey.

Click the link to read the entire article which features a quote from Milton Pedraza, CEO of Luxury Institute (subscription required):

July 11, 2013

Nordstrom Tops Digital Department Store Study

By Rachel Strugatz
July 10, 2013

NEW YORK — Nordstrom is leading the way for department stores in the digital space.

The Seattle-based retailer took the top spot in a study by New York University…

Click the link to read the entire article which features a quote from Milton Pedraza, CEO of Luxury Institute (subscription required):

June 29, 2013

Neiman Marcus’ Karen Katz: ‘Willing to push the envelope’

By Danielle Abril
Dallas Business Journal
June 28, 2013

Neiman Marcus Group Inc. is known for its luxury merchandise, exclusive customer loyalty perks, and an online presence that has gone global. But behind the designer, hand-stitched curtains, stands a polished, humble woman armed with the confidence to take a risk.

“She’s been willing to push the envelope,” Steven Dennis, a former senior vice president at Neiman Marcus Group, said of CEO Karen Katz. “She has a strong appreciation for innovation and a stronger understanding of where today’s consumer is going.”

Katz, 56, has been with the Dallas-based luxury retailer since 1985, working her way up from her first job …

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

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