September, 2011 – This Luxury Daily article features AARC research on the effectiveness of email sales campaigns with an affluent audience (http://www.luxurydaily.com/gieves-and-hawkes-drives-in-store-ecommerce-sales-for-anniversary-celebration/).

By Rachel Lamb

Savile Row tailor Gieves & Hawkes is celebrating 100 years of its Naval Warrants with an in-store and online sale that it is promoting to its email database.

Running Sept. 17-Oct. 16, the promotion is offering a discount on ready-to-wear and made-to-measure ranges both online and in-store. Gieves & Hawkes sent out email blasts and has a section on its Web site dedicated to the sale.

“If the emails are going to past clients, this can be a very effective promotion,” said Ron Kurtz, principal of American Affluence Research Center, Atlanta.

“Email announcements work with people who are past clients and people who have otherwise opted in,” he said. “[However], if the emails are being used to make initial contact with an affluent audience, the results are apt to be very limited.”

Gieves & Hawkes did not respond by press deadline.

Mr. Kurtz is not affiliated with the brand but agreed to comment as an industry expert.

Gieves & Hawkes is a 240-year-old tailor in London specializing in bespoke and made-to-measure men’s suits and tuxedos.

The company is based at No. 1 Savile Row with two other London stores in Sloane Square and Lime Street as well as boutiques in department stores Harvey Nichols and Selfridges.

There are multiple locations across Britain including Bath, Birmingham, Chester, Liverpool, Winchester and Dublin.

The company is continuing its expansion into China, Hong Kong and Taiwan with 100 stores and concessions.

Private bespoke
Opt-in consumers were alerted via email to the new discounts.

Individuals are discounted $157 off suits and all outwear and $117 off all jackets excluding blazers.

Furthermore, consumers can buy any three shirts for $471.

Gieves & Hawkes is offering made-to-measure suits for $1,178 or $1,250 if two or more suits are bought.

The offer is only available on select fabrics and consumers must go in-store to learn specifics of this offer.

“I believe this promotion will attract consumers to the store,” Mr. Kurtz said. “It gives a special reason for providing extra value, which even the affluent appreciate.

“It is also being conducted at the start of the new Fall season, when men will be thinking about adding to their wardrobe,” he said.

“And, the recipients of the offer are familiar with the quality Gieves & Hawkes offers.”

Tailor-made
Although email is a more modern vehicle to attract an interested consumer group, some experts think that traditional marketing could be a better ploy.

“For a high-end product such as this, a personal letter in the form of an invitation to enjoy this special offer would be the most effective both for sales and luxury branding,” said Karen Weiner Escalera, president of KWE Group, Miami. “The letter would be on a very high-quality stationery and personally signed.

Luxury consumers, especially those who will be spending considerable amounts of money on customized suits and tuxedos, like to feel important to the brands they covet and buy from.

Therefore, it is important for brands to highlight their heritage and the quality of their products, the reasons why luxury products cost so much.

“What needs to be projected most prominently are the qualities that make for luxury that they feature in the section Discover Grieves & Hawkes Tailoring, namely the history, quality and craftsmanship,” she said. “Then, the special offer is perceived as real value.”

Posted in Affluence Research, Apparel, Luxury Market & Goods | No Comments »

September, 2011 – This article from The Centurion (E-Newsletter & Info Hub for Prestuge Jewelers) features AARC research about the differences between the affluent market and the luxury market—and who jewelers actually are serving (http://news.centurionjewelry.com/articles/view/who-are-americas-highest-ticket-jewelry-stores).

By Hedda Schupak

New study finds the average ticket among top 15 most expensive luxury jewelry stores is $5,559. But typical guild jewelers’ average receipt is only $1,100. Why is there such a difference?

New York—What jeweler is writing the highest tickets in America?

Not surprisingly, it’s Harry Winston (left). According to a report released Tuesday by bundle.com, the tony jeweler averages $8,388 per ticket sale. Trabert & Hoeffer in Chicago is second, with an average sale of $6,627. By contrast, the typical guild jewelry store’s average ticket is around $1,100, says industry analyst Ken Gassman. (This figure is adjusted and does not include watch batteries, repairs, or bead sales, he told The Centurion.)

Bundle.com’s report is based on data provided by Citi for average receipt amounts based on millions of transactions in jewelry stores across the United States from July 2010 to June 2011. The study includes only Mastercard and Visa transactions; it does not include cash transactions or those made with American Express, Diners Club, Discover, or private store accounts, says Mike Dang, the article’s author.

“We were surprised at how many stores that made the list were names that most consumers [outside the retailer’s trading area] probably never heard of,” Dang told The Centurion. “We also were surprised to see that three stores on our list are in Dallas. It’s the first time that Texas made it on a list,” he said, referring to a number of lists the site tracks. William Noble Rare Jewelry with an average ticket of $5,839 took the number-four spot, Sue Gragg Precious Jewels came in fifth with an average receipt of $5,605, and Eiseman Jewels is in 11th place with an average of $5,028.

The three Dallas stores and Trabert & Hoeffer were among nine independent stores on the list of 15 jewelers. The others were Betteridge’s Vail, CO store (average ticket, $5,391, number nine on the list), Fourtane in Carmel, CA ($5,937, number three), Hyde Park Jewelers, Las Vegas, NV ($5,423, number seven), Belluso, a watch store also in Las Vegas, ($4,753, number 13), and Westime, a watch store in Los Angeles, CA ($4,591, number 15).

Also on the list were De Beers, New York City ($4,625, number 14), the Rolex boutique in South Coast Plaza, Costa Mesa, CA ($4,861, number 12), Chopard, New York City ($5,305, number 10), Wynn & Co. Jewelry, Las Vegas ($5,412, number eight), and Van Cleef & Arpels’ store at South Coast Plaza ($5,599, number six.)

Read bundle.com’s entire jewelry article here.

The consumer finance website also recently released its list of the top 25 most expensive apparel stores. According to its research from Citi, the top store is Oscar De La Renta. The designer’s eponymous dress shop on Madison Avenue in New York City had an average sale of $3,217. The lowest of the bundle.com apparel list is Prada, with an average ticket of $1,429—still higher than the $1,100 average guild-level fine jewelry store ticket.

The average ticket for chain jewelers is, not surprisingly, even lower than for guild stores. It’s about $400 at Zale, $350 at Kay, and $800 at Sterling’s higher-end Jared division, according to Gassman’s research. Tiffany, incidentally, did not make Bundle.com’s list of priciest jewelers either, presumably because its wide selection of affordable sterling silver jewelry brings down the calculation of the average ticket.

“I bought a sterling silver necklace for my girlfriend, so I’m probably one of those people who brings their average down,” laughed Bundle.com’s Mike Dang.

But why is the sales figure for a typical guild store tracking below even the apparel leaders?

Part of the reason could be that the jewelry industry is highly fragmented, with few brands big enough to spend with the kind of dollar clout that global luxury brands have, says Huw Daniel, president of Platinum Guild International. Now that De Beers has shifted marketing to its own Forevermark brand and away from generic diamond advertising, there’s no entity pushing jewelry into consumers’ lives with the same impact as luxury brands.

“The global luxury brands have made themselves relevant for today’s woman’s lifestyle, and their objects—bags, shoes—are a highly telegraphic marker of one’s status and personal style,” says Daniel. “That being said, however, adornment will always be a human need, so jewelry has a big role to play and the brands that can seize this can make a very nice profit.”

“Jewelers spend 4-6% of sales on advertising, while true luxury retailers or brands spend up to 20% or more of sales on advertising,” says Gassman. Plus, he says, don’t discount the fact that Mother’s Day and Valentine’s Day—even at guild stores—tend to be fairly low ticket sales, which brings the overall average down.

But that doesn’t explain why some jewelers are hitting the mid $4,000’s and $5,000’s for an average ticket.

What might, however, is identifying the differences between the affluent market and the luxury market—and who those jewelers actually are serving.

According to the American Affluence Research Center, those differences are both distinct and important. The AARC defines the affluent market as the wealthiest 10% of U.S. households as determined by the Federal Reserve Board, based on net worth. But only 10% of the affluent market—or 1% of U.S. consumers, approximately 1.1 million—have the means to acquire and are familiar with the brands and price points of products or services generally considered to be true luxury, says Ron Kurtz, AARC president.

AARC identifies true luxury consumers, who are the most likely to be viewed as conspicuous consumers, with the following profile:

• Average annual income of $982,000
• Minimum net worth of $6 million; average net worth is $15.3 million, or 33% of total net worth of all U.S. households.
• They earn about 14% of the total income earned by all American households.

The affluent market, by contrast, has this profile:

• Average annual income of $256,000
• Average net worth of $3.1 million; and comprise 70% of the total net worth of all U.S. households.
• They earn 36% of the total income earned by all American households and account for almost half of all consumer spending. This represents about a third of total GDP (gross domestic product).
• Additionally, these 11.4 million households hold 89% of the value of all publicly traded stock and stock mutual funds in the United States.
• Only a small segment of this demographic are conspicuous consumers; most are careful spenders and aggressive savers.

According to Forbes.com, the most affluent towns in the United States are Westlake, TX—a suburb of Dallas—and the Village of Kenilworth, IL, a suburb of Chicago. No surprise, then, that four of the 15 stores on the Bundle.com list are nearby. Several more of Forbes’ most affluent towns are New York City suburbs, while Orange County, CA, where South Coast Plaza is located (Rolex and Van Cleef & Arpels’ boutiques from the list) also has a number of very tony zip codes. Cities like Vail and Las Vegas, meanwhile, may not make the list for permanent residents, but they’re favorite affluent vacation spots.

The definition of “luxury” is ambiguous, not quantifiable, says the AARC. In fall of 2008, the organization polled well-heeled consumers asking, “what’s the most you could imagine spending” for 37 different categories of products and brands.

“The numbers were much lower than we expected,” Kurtz told The Centurion. Consumers offered up a very wide spread of price points they considered luxury—but the medians (the point at which half of the responses were above and half below) were surprisingly low.

Kurtz shared the jewelry and watch results—three of the 37 categories—with The Centurion. When asked “what’s the most you could imagine spending for a watch for a dressy occasion,” the median value among respondents was $1,000. 36% of men and 26% of women responding indicated they would spend $2,000 or more. Among the top 1% of respondents—those with net worth over $6 million—the median figure rose to $3,000, and the top value cited was $30,000. Not surprisingly, the most popular brand named was Rolex.

For an everyday watch, the median was a shockingly low $130. 29% of men and 27% of women said they’d spend $500 or more on an everyday watch, and the top value cited for this category was over $20,000. Only about half of the respondents naming a maximum price for this question named a brand; however, among those, the brand most often cited (22%) was Timex.

For diamond stud earrings, only women were polled. The median response was $1,000, with a point spread ranging from less than $100 to more than $10,000. 20% of women said they could imagine spending $2,000 or more for a pair of diamond studs. Only about 15% of women naming a maximum price also named a brand, says Kurtz, and the brand cited most often was Tiffany.

In recent years, says AARC, much of the growth of the luxury market has come from people who have the income ($100,000 to $250,000) to purchase some luxurious products, but not the wealth (or credit) to sustain such purchases, especially if portfolio values dip or the breadwinner loses a bonus or job.

That said, however, AARC’s conclusion from its research is that in the long run, marketers of luxury goods and services will find it far more productive, accurate, and practical to focus on the larger affluent market than the very ambiguous and often elusive luxury market.

Posted in Affluence Research, Fine Jewelry & Watches, Luxury Defined, Luxury Market & Goods | No Comments »

September, 2011 – This Luxury Daily article features AARC research on how the tactile quality of a catalogue can contribute to an image of luxury (http://www.luxurydaily.com/bergdorf-encourages-multichannel-interaction-with-catalog-touchpoints/).

By Rachel Lamb

Department store Bergdorf Goodman is coaxing consumers to its blog, mobile site, store and Web site using touchpoints in its Fall collections catalog.

The retailer is implementing calls-to-action to its blog, 5th/58th, via bar codes while also drawing consumers in-store to check out the season’s newest looks. The catalog is double-sided and includes editorial, interviews and analyses on Fall fashion.

“The importance of catalogues varies according to the product,” said Ron Kurtz, president of American Affluence Research Center, Atlanta.

“The tactile quality of a catalogue, based on page size and paper quality, can contribute to an image of luxury,” he said. “The color and size of the product image can enhance the perception of luxury.

“Some products may require extended text, best provided in hard copy, to explain or describe important features of the product.”

Mr. Kurtz is not affiliated with Bergdorf, but offered to comment as an industry expert.

Bergdorf was not able to provide comment by press deadline.

Direct male
The Fall 2011 Bergdorf catalog is double-sided, with one section dedicated to editorial, advertisements and looks for women, while the flip-side is for men.

The men’s side boasts ads from Ralph Lauren Black Label, Hermes and Paul Smith.

Bergdorf editors analyze their favorite looks from the runways. This season, it is twists on classic tailoring, rugged looks and urban outfits that can be worn anywhere from the office to the stadium.

Looks from luxury brands are expanded in four sections throughout the men’s side of the catalog.

The catalog also details seasonal surprises and new additions to the store, such as Jimmy Choo shoes for men, hipster hybrids and British biker looks.

The women’s side of the Bergdorf catalog is a little longer and incorporates more multichannel touchpoints.

Ads for this section include Lauren by Ralph Lauren, Hermes, Tom Ford and La Mer.

Where the men’s side is straight-forward and matter-of-fact, the women’s editorial and analyses are slightly more conversational and in-depth.

Bergdorf creative director Linda Fargo gives insight into the hottest trends for women this season, including coats, fur and ultra-glamour.

The catalog has editorial such as an interview with designer Tom Ford who discusses his new lines, surprises from Fall’s collections and beauty trends.

Bergdorf Buzz also takes up a considerable section, where consumers can scan QR codes that take them to sections on the retailer’s blog, 5th/58th.

The buzz touches on social media campaigns such as Faces of 5F (see story), Bergdorf’s shoe-centric mobile application and beauty news. These sections are all linked to mobile or online counterparts.

What’s in-store
With the overwhelming amount of digital media, some younger consumers are ignoring traditional advertising such as catalogs, print ads and mail.

However, social media and online images cannot hold a candle to the textures, detail and overall luxury that is displayed through printed pages.

“Each [print and digital] could be designed to lead the prospect to the other for information best provided through that medium,” Mr. Kurtz said.

“For example, if the product lends itself to display with sound and motion, the prospect might be directed to a video available through a digital medium,” he said.

For instance, other retailers such as Barneys New York, Bloomingdale’s and Neiman Marcus are using QR codes in newspaper ads, magazine ads and mail to engage consumers and drive in-store or mobile traffic (see story).

Retailers must find a way to combine traditional and modern marketing techniques to freshen up old-world marketing without leaving them behind.

“Catalogues can help the consumer to have a better understanding of colors, textures and scale than what is normally achieved in digital advertising, especially if being viewed on a small screen or mobile device,” Mr. Kurtz said.

“The same is true where extended text is helpful,” he said.

Posted in Affluence Research, Luxury Market & Goods | No Comments »