November, 2011 – This Luxury Daily article discusses the rise in luxury men’s apparel (http://www.luxurydaily.com/why-the-scramble-for-luxury-menswear/).

By Rachel Lamb

At one point taking a backseat to the much-more-hyped women’s apparel, luxury menswear is now the most quickly-rising and lucrative segments of the industry, causing female-centric designers to pay more attention to the other half of the population.

Notable companies and brands such as PPR, Christian Lacroix and Net-A-Porter have been honing in on menswear, bespoke goods and tailors. Why the sudden interest in luxury menswear?

“Men are becoming more fashion-conscious as the media shows how celebrities are exhibiting different fashion styles,” said Ron Kurtz, president of American Affluence Research Center, Atlanta.

“Participation in menswear can add value to a brand by extending its product line and base of customers, both of which can contribute to increased sales,” he said. “Menswear can enhance a brand’s relations with the channels of distribution that feature both women’s and men’s fashions.”

Mad for fashion
The reason why menswear is booming is still out for verdict, but experts have a few hypotheses.

“Brands are getting into luxury menswear because of the perception that it is an under-served area,” said Paula Rosenblum, managing partner at RSR, Miami. “Men are generally not as price-sensitive as women and they just want something that works for them.”

Another possibility is media influence.

Indeed, fashion-savvy men on television, in movies and on the red carpet could get consumers’ creative juices flowing.

For example, retailer Banana Republic based an entire collection off of the popular TV show Mad Men.

Well-tailored suits, ties and an overall “done up” look was brought back when men realized they could look like Don Draper and let go of grunge.

Another fashion guru could likely be Chuck Bass from Gossip Girl who has a penchant for velvet blazers, bowties and pocket squares.

Of course, the ever-growing infatuation with celebrities’ apparel and accessories on the red carpet is broadcast across the Internet and on TV, burning images of well-coifed gentlemen into watchers’ minds.

Further possibilities for the sudden surge in menswear could include the end of casual Friday and the rise of the metrosexual, according to Ms. Rosenblum.

Mr. Tailored
Luxury brands are definitely noticing this trend and are using menswear as leverage to entice affluent consumers.

For example, early last week, luxury conglomerate PPR announced its intent to acquire men’s fashion label and tailor Brioni.

On Wednesday Nov. 9, PPR chairman/CEO François-Henri Pinault said that Brioni’s acquisition makes a lot of sense for the conglomerate, especially since the growth in menswear is significantly stronger than in women’s fashion.

Since PPR has a multitude of either women-focused brands such as Alexander McQueen, Stella McCartney and Boucheron, or men-and-women-split brands such as Gucci and Bottega Veneta, its planned acquisition of Brioni makes it clear that the conglomerate is aiming to get into menswear.

In addition, label Christian Lacroix announced intent create tailored men’s clothing including suits retailing $1,000 and up, according to a report from Women’s Wear Daily.

Other brands that have primarily focused on women’s clothing are also focusing on menswear as of late.

Gilt Groupe ditched flash-sale sites in June to launch its first full-priced mens retailer Park and Bond in a partnership with Conde Nast’s GQ magazine (see story).

Furthermore, online retailer Net-A-Porter launched a men’s ecommerce destination Mr. Porter earlier this year that has seen momentous success (see story).

Even department store Bergdorf Goodman is using social media as a way to connect with males with its “What I’m Wearing” feature on Facebook that chooses one employee to take a picture of and describe each outfit of the work week once a month.

“The luxury shopping is [changing],” Ms. Rosenblum said. “I think dress styles among the population shift over time and luxury is no exception.

“We’ve come out of a 25-year period of ever-more casual dressing back to a point where dressing well is considered appropriate,” she said. “Men are bored with the plain suit and traditional tux.”

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November, 2011 – This Luxury Daily article discusses the growth in the men’s segment of luxury apparel (http://www.luxurydaily.com/ppr-has-the-power-to-bring-brioni-to-a-1b-company-expert/).

By Rachel Lamb

With its planned acquisition of Italian label Brioni, Gucci and Yves Saint Laurent owner PPR has made clear its interest in a market segment where it sees much potential: luxury menswear.

Founed in 1942, Brioni is known for both season collections and bespoke products targeting men looking to addstyle and pizazz to their wardrobe. Financial details of the planned transaction were not disclosed yesterday.

“Brioni’s acquisition makes a lot of sense for PPR,” said François-Henri Pinault, chairman/CEO of PPR. “The brand is complementary and does not compete with the group’s other brands, as much as in regards with its market positioning than on its stylistic content.

“Growth in the men’s segment is significantly stronger than in women’s, and Brioni is the perfect match for this,” he said.

PPR owns Gucci, Bottega Veneta, Yves Saint Laurent, Alexander McQueen, Balenciaga, Boucheron, Girard-Perregaux, JeanRichard, Sergio Rossi and Stella McCartney.

Spoken for
PPR announced the signing of an agreement with Brioni shareholders to acquire all of its capital yesterday morning.

The transaction should be finalized at the beginning of 2012, according to PPR.

Brioni has significant intrinsic growth potential and PPR will enable it to accelerate its expansion and boost its profitability, notably through a wider product range and geographic expansion in strong growth markets, according to the conglomerate.

“PPR is buying one of the most prestigious and exclusive brands in the mens clothing business – Brioni is a gem of a brand,” said Milton Pedraza, CEO of the Luxury Institute, New York. “As PPR has shown with Bottega Veneta and Gucci, it knows how to scale a brand.

“Most of these brands are for men’s and women’s clothing, but Brioni is very distinctive and will give PPR an edge for custom and bespoke men’s clothing,” he said. “They can even expand the brand into accessories because men’s is such a growing business.

“PPR has the power to bring Brioni to a $1 billion company.”

Indeed, many experts believe that Brioni will certainly flourish under the control of PPR.

The addition of Brioni is a quick expansion of PPR’s product line and adds a new customer base for other PPR brands, according to Ron Kurtz, president of the American Affluence Research Center, Atlanta.

Brioni can benefit from having access to the capital resources of PPR and PPR’s relationships with the channels of distribution, he said.

Luxury brands that are part of conglomerates are provided with extra protection, especially in light of economic uncertainty.

PPR has taken brands such as Bottega Veneta and Gucci under its wings, turning them into extremely lucrative and successful labels.

“I think that Bottega Veneta is one of the most successful luxury brands in the last 10 years,” Luxury Institute’s Mr. Pedraza said. “The marketing and the customer experience expertise of PPR will be a tremendous asset to building Brioni.”

Acquiring gems
The luxury industry has witnessed several mergers and acquisitions in the past year.

Some experts believe that the reemergence of M&A is indicative of a recovery economy (see story).

Following the recent acquisition of sportswear manufacturer Volcom, PPR announced in July its 50.1-percent stake majority control of Swiss watchmaker Sowind Group, parent company of Girard-Perregaux and JeanRichard (see story).

This is just the most recent in a whirlwind of mergers and acquisitions in the luxury industry.

For example, footwear manufacturer Jones Group acquired Kurt Geiger in June, which followed the sale of Jimmy Choo to Labelux in May (see story).

Additionally, Richemont, the conglomerate that owns luxury brands such as Jaeger-LeCoultre, Cartier and Montblanc, recently acquired online retailer Net-A-Porter this summer.

Furthermore, the ever-hungry LVMH Moët Hennessy Louis Vuitton set its sights on, and soon acquired, Italian jeweler Bulgari in the first quarter of this year (see story).

This begs the question: Is there any hope for independently-owned luxury brands in the future, or will they all eventually be owned by conglomerates?

“I think that luxury brands can achieve a certain level on their own – look at Coach,” Luxury Institute’s Mr. Pedraza said. “Gaining capital is the easiest thing to do right now, but having great financial management is a skill that these companies [such as PPR] have.

“There is no question that luxury brands can remain independent, but a brand in a conglomerate that has this certain level of expertise will grow tremendously,” he said. “The portfolio management approach works well for both the conglomerates that acquire brands and the brands that are acquired.”

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October, 2011 – This Diamond News Broadcast article features AARC research about the affluents’ view on current business conditions and their plans for holiday gift spending this year (http://www.diamonds.net/news/NewsItem.aspx?ArticleID=37579&ArticleTitle=Diamond+News+Broadcast).

By Rapaport News

Global luxury goods sales have continued 2010’s double-digit growth trajectory and will see an increase of 10 percent, to €191 billion in 2011, according to Bain & Company in the 10th Edition of its industry bellwether “Luxury Goods Worldwide Market Study,” which was unveiled at a conference today hosted by Fondazione Altagamma (the Italian luxury goods industry trade association).

The study points to a consumer whose return to luxury spending is not simply a rebound, but instead a sustained renewal of spending on luxury apparel, accessories, leather goods, shoes, jewelry, watches, perfume and cosmetics. As luxury revenues have surged out of the trough and continued their momentum to record-breaking sales levels, the study shows, luxury distribution has undergone a significant shift, with 14 percent growth for direct-owned stores, more than 50 percent higher than the growth rate of wholesale and department stores. Direct-owned retail now accounts for nearly 30 percent of luxury sales worldwide.

“Top brands are now master retailers as well,” said Claudia D’Arpizio, a Bain partner in Milan and lead author of the study. “Product still matters, but retailing strength has let luxury brands take control of their growth more than ever before.”

The post-crisis world of luxury goods has also proven that luxury’s mature markets are still relevant, both in absolute terms and in impressive growth rates. Bain expects 10 percent growth in Europe and 12 percent growth in the Americas for 2011 at constant exchange rates, although the weakening Euro eats into these growth rates by 3 to 4 percent. Japan yields the biggest surprise in terms of growth. It remains luxury’s second market. Declines, which stabilized to result in a flat 2010, have now reversed to five percent growth at constant exchange rates for 2011. The over 230 brands reporting 2011 revenue for the study report a much lower impact to luxury goods sales from Japan’s March earthquake; the effects on luxury sales lasted only one quarter before this year’s growth cycle restarted. Developing market growth (China, 35 percent; Brazil, 20 percent; Middle East, 12 percent) is still notable and remains a priority for brands. When factoring in spending in Mainland China and spending by Chinese tourists abroad, luxury consumption by Chinese people is now just over 20 percent of the global market.

The 10th Edition of Bain’s Luxury Goods Worldwide Market Study also finds that the luxury sector’s growth is robust, by looking at organic growth versus new openings. Comparable growth will exceed growth from new stores by 2 percent in 2011, indicating that luxury growth is not exclusively driven by store openings. Eighty percent of brands saw growth in 2011, with 20 percent of brands seeing more than 20 percent growth.

Finally, the study shows growth across all major luxury categories. Apparel will experience eight percent growth in 2011, driven by both menswear (9 percent) and womenswear (7 percent). Perfumes and cosmetics consumption will grow by 3 percent globally, with much of that growth found in emerging markets such as China and Brazil. As with 2010, however, accessories and hard luxury (jewelry and watches) are the strongest growth stories. Accessories (including shoes and leather goods) will grow by 13 percent in 2011, as consumers often rely on these products as an entry to luxury consumption. Hard luxury is delivering the strongest growth for 2011, however, with 18 percent estimated for 2011. Increasingly, consumers are shifting their hard luxury purchasing from unbranded to branded items, and purchasing these branded products in direct-owned stores.

”Despite the headwinds of global events and economic uncertainty, luxury is experiencing a sort of ‘anti-crisis,” concluded D’Arpizio. “We expect to see the sector continue to outperform other categories, if brands stay as nimble as they have been in their approach to recovery.”

The American Affluence Research Center produced the 20th in a continuing series of the original and only twice-yearly tracking studies of the mood and spending plans of the wealthiest 10 percent of U.S. households, which account for almost half of all consumer spending, this survey was designed to provide information critical to understanding today’s affluent and luxury consumers.

1 – Affluent to Spend $23.6 billion, 2.3 percent over 2010, on Christmas gifts, with a greater number of households buying gifts to offset plans to reduce gift expenditures by 3.7 percent per household.

2 – Affluent households to spend over four times the average family on Christmas gifts at an average $2,270 in gift purchases versus $518 for all families in National Retail Federation survey.

3 – Affluent men and women name the top two items on their Christmas gift list as currency and clothing.

4 – Over 40 percent of affluent families plan to reduce or defer expenditures due to economic conditions.

5 – Only 3 percent of affluent are “under water” with their mortgage, compared with 25 percent of all home mortgages; affluent have average equity in home equal to 72 percent of its market value.

6 – Internet is favorite source for Christmas gift purchases.

7 – Affluent turn very negative in their view of current business conditions and 12-month outlook for the U.S. economy, stock market, and personal income.

8 – Spending plans of affluent fall less than expected given their negative outlook.

9 – Pockets of strength exist in spending plans of the affluent.

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

October, 2011 – This Luxury Daily article discusses the importance of product catalogs in the luxury world (http://www.luxurydaily.com/barneys-emphasizes-malleable-new-york-personalities-through-catalog).

By Rachel Lamb

Department store chain Barneys New York is using real New York residents to promote its newest Co-Op inventory through a “New York Stories” catalog.

The two-part catalog uses up-and-coming design students, models, actors and musicians from New York to showcase the line’s urban, edgy spirit. The first part consists of the new crop of New Yorkers modeling collections while the second part is purely products.

“The importance of catalogs in the luxury world varies according to the product,” said Ron Kurtz, president of American Affluence Research Center, Atlanta. “The tactile quality of a catalog, based on page size and paper quality, can contribute to an image of luxury, as does the type font and use of color and photography.

“The color and size of the product image can enhance the perception of luxury,” he said. “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 Barneys, but agreed to comment as an industry expert.

Killer looks
The first part of the Barneys catalog features apparel and footwear for men and women.

Each model has a small blurb under his or her name and age. Some photographs are shot against an urban background such as a wall covered with graffiti or the outside of a building.

Many of the models have artistic backgrounds and are studying art, music or literature in New York educational institutions such as New York University, Hunter College or Parsons School of Design.

Others moved to New York to make a name for themselves as artists, while some were born and raised there.

Under each blurb is the name and price of whatever the model is wearing.

Brands such as Theory, Helmut Lang, Barneys New York, Opening Ceremony and Marc by Marc Jacobs are represented.

In the second half of the catalog, there are accessories and footwear from brands such as Alexander Wang, Iosselliani, Helmut Lang and Isabel Marant.

Barneys includes a Web call-to-action by placing its Web address at http://www.barneys.com on the side of every page.

The retailer also included a list of store locations and their numbers on the back of the catalog.

Mail bondage
In the face of an increasingly digital world, luxury retailers strive to stand out from rivals through traditional media such as catalogs, print and out-of-home ads.

Luxury marketers tend to differentiate their direct mail pieces from competitors, as well.

For instance, the Barneys catalog is made with thicker stock paper and is bound. Its unique fold-out mechanism is also helpful to differentiate the catalog from other retailers.

A thicker paper stock and a clean catalog layout look more elegant, which affluent consumers appreciate.

In addition, many luxury marketers tend to add multichannel touch points, similar to Barneys’ Web call-to-action.

For example, department store Bergdorf Goodman coaxed consumers to its blog, mobile site, store and Web site using touch points in its Fall collections catalog (see story).

In addition, Bloomingdale’s and Neiman Marcus are using QR codes in newspaper and magazine ads and mail to engage consumers and drive in-store or mobile traffic (see story).

“Catalogs can be designed to incorporate other media by using QR codes and directing people to video where sound and motion are important to the use or understanding of the product,” Mr. Kurtz said. “They can also be the carrier of a CD that provides additional information.

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

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October, 2011 – This article from The Fiscal Times features data about the growth for the wider luxury industry (http://www.thefiscaltimes.com/Articles/2011/10/07/9-Must-Have-Status-Symbols-that-Say-Im-Rich.aspx#page1).

By Drew Gannon

Take walk down Fifth Avenue, Michigan Avenue or Rodeo Drive, and you might think Louis Vuitton had finally had a sale. Block by block, the signature brown bags fill the streets. Never mind that the bags in the Spring 2011 collection start at $2,930 for a small clutch, and go up to a whopping $35,500.

With sales up 23 percent from last year to $23.4 billion, Louis Vuitton is setting the tone of growth for the wider luxury industry. In 2011, spending on premium items and services is expected to rise 8 percent over last year to $359 billion, according to an annual survey by American Express Publishing and Harrison Group.

But the big players are not just the barons of Wall Street, sports, and entertainment.

“America’s top one percent – a little over one million households with a net worth of six million plus – are spending on luxuries,” says Ron Kurtz, president of the American Affluence Research Center. “But the bigger growth has come from the BRIC markets – Brazil, Russia, India and particularly China.”

China, the deus ex machina of the luxury market, is expected to account for 20 percent (roughly $27 billion) of global luxury sales by 2015, according to research by McKinsey, as the Chinese shift their consumption preferences from generic goods and materials to the status of internationally well-known brands. China’s unprecedented wealth has bolstered consumer confidence throughout the country; the fifth annual China Luxury Summit in December 2010 was aptly titled “China Luxury Market: An Oasis of Hope and Possibility.”

In the U.S., despite the belt-tightening across most of the country, wealthy Americans are starting to enjoy the good life once again, buying high-status items and services they had cut out of their 2009 and 2010 budgets. Indeed, rich Americans’ expenditures on luxury are set to rise $26.6 billion this year.

Whether such optimism will trickle down to the middle class is to be seen. Overall spending is still at a standstill, with consumer confidence declining sharply in August. Online shopping and social media may be the key to bringing up luxury sales in the United States as well as abroad. A recent study by Italian luxury foundation Altagamma found online sales (now only 2.6 percent of the market) growing at a rate of 20 percent a year as luxury brands multiply their friends on Facebook and activity on other social media sites.
Here are nine popular purchases helping wealthy consumers live high. Some people just can’t live without their Louboutins.

1. Swanky Strollers
Think a stroller is just a way to transport your kids? Think again. The mommy wars are being played out on the playground, with parents sizing up each others’ wheels. High-end strollers like those by the Bugaboo brand are flying off the shelves, and run anywhere from $500 to $2,000. One Bugaboo model that converts from a single stroller into a side-by-side double has a $1,659 price tag, and a waiting list to buy one. Another stroller by Kid Kustoms has a vinyl leather seat and optional iPod speakers, for a mere $3,500. Celebrities like Naomi Watts and Gwen Stefani have been spotted pushing around expensive Bugaboo prams, and their popularity has spread to suburban streets across the country.

2.Specialty Bikes
Biking became more popular in the last year, with bike sales rising 15 percent between 2009 and 2010, according to the Bicycle Manufacturing Association. But the bikes that are gaining the most popularity? Pricy, custom-built bikes. Specialty bike retailers command only 14 percent of the market, but 44 percent of the dollars, according to the National Bicycle Dealers Association. For example, custom bicycle company KGS Bikes does an elaborate three-hour fitting session, and has sold bikes for as much as $32,000. “I’ve seen growing demand,” says KGS Bikes’ owner Kevin Saunders. “My customers want a bike that is perfect for them.”

3. Designer Fashion
Last year, Carolina Herrera reported that, to her pleasant surprise, her $7,990 gray sequined ball gowns were “selling like hotcakes.” Other top designers have also reported stellar earnings, including Louis Vuitton (up 23 percent from 2010 to $24.3 billion), Hermes (up 41 percent to $11.9 billion), and Chanel (up 23 percent to $6.8 billion). The king of American style, Ralph Lauren, has seen his $13 billion-valued company’s stock grow 150 percent in the two years since June 2009. Sales for Ralph Lauren’s heritage Rugby brand jumped 34 percent last year after an online-only fashion show where online shoppers could purchase items in real time. High-end department stores and online designer sale sites have snagged some of the profits as well. Saks reported quarterly earnings up 50 percent and sales up nine percent ($726.7 million) in May this year, thanks in part to a boost in full-price sales.

4. Fine Wines
Forget two-buck chuck. Nielson Co. reporting a 4.1 percent rise in total U.S. wine sales to $9.32 billion this year, but wine priced $20 plus saw an even larger increase in sales (11 percent), demonstrating that pricier wines are becoming more popular. In its 22nd Annual Restaurant poll, Wine & Spirits magazine found the average price for the most popular wines in restaurants was $62. One of the magazines’ most popular restaurant brands, Duckhorn Vineyards, boasts an array of reds, including a 2007 estate-grown Rector Creek Vineyard Cabernet Sauvignon, which goes for $95 per bottle.

5. The Fur Effect
Fur is in, according to America’s top fashion magazines. Many September issues– including long-time fashion bible Vogue – featured fur and faux fur as the next big thing for the coming cold. According to them, fur goes with and on anything, from apparel like vests and coats, to accessories like purses and even shoes. Global retail sales for fur were up 5.4 percent to $14 billion in 2010, according to the International Fur Trade Federation. Alexander Wang’s fur sandals sell for $895 a pop. And while just this month West Hollywood becomes the first U.S. city to ban all fur sales, fur’s popularity continues to rise as the temperature falls.

6. …to Furry Friends
American pets are living the good life – sometimes even better than their owners. In 2010, Americans spent a record $55 billion on their pets, according to research firm Packaged Facts, more than the gross domestic product of many countries. Gourmet pet food tasty enough for humans to eat (think duck and quinoa) and premier pet care facilities like the Barkley Hotel and Day Spa, are popping up everywhere. Packaged Facts estimates that pet insurance sales, which rose 27 percent from 2008 to 2009 to $303 million, will reach $881 million by 2014. By the end of 2010, one in five Fortune 500 companies offered pet insurance by Veterinary Pet Insurance (VPI), the industry’s largest provider. Expensive designer dogs, like “teacup” dogs as well as hybrids between two breeds are growing more and more popular, and can cost thousands of dollars. Celebrities buying into the designer dog trend include Mischa Barton with her Shih Pom (cross between a Shih Tzu and Pomeranian) and Jessica Simpson with her Maltipoo (cross between a Maltese and Toy Poodle). But pure breeds have also kept their place on the upper crust. An 11-month old red Tibetan mastiff named Big Splash became the world’s most expensive dog after being sold to a Chinese millionaire for 10 million yuan, or $1.5 million.

7. Fast Cars
Despite the doom and gloom in Detroit, the luxury car sector is revving its engine. In July, Mercedes-Benz reported its highest monthly sales growth (16.7 percent) since 2006, with 21,065 cars sold. Still, BMW outsold its competitor that same month by over 5,000 vehicles, an 11.7 percent increase from sales on year prior. BMW’s SAV, a midsize SUV starting at $37,000, led the pack, with sales up 56 percent in 2011. And the high-end Z4 Roadster was BMW’s third highest selling vehicle, up 92.4 percent in July from the previous month. U.S. News & World report named the Z4 one of the best luxury cars of 2011, describing it as a car suited for drivers more interested in luxury than performance. The Z4 sells for between $47,450 and $62,500.

8. Cruising Through Life
An estimated 73.7 million Americans will travel outside the United States in 2011, estimates Business Monitor International in last month’s United States Tourism report. And while air travel sales remains on a perpetual roller coaster of ebbs and flows, cruises have grown more popular for wealthier Americans this year. Business Monitor International reports that in 2011, 9.6 million will have traveled outside of the United States by cruise. The Cruise Line International Association plans to welcome 22 new ships to its 25 lines, including the 3,690-passenger Carnival Cruise Lines’ Carnival Magic, launched in May 2011. A 12-night stay in the Mediterranean on luxury cruise liner Celebrity Solstice costs $9,299 per person.

9. The Bling
Rolex, recovering from a 14 percent decline in brand value last year, is making a comeback. Sales are up 11 percent to $5.3 billion this year, making it the sixth most powerful luxury brand according to consulting firm Millward Brown. The Rolex Presidential Day-Date watch has long been considered a quintessential luxury item, worn by celebrities and several U.S. Presidents from Roosevelt to Reagan, and costing upwards of $35,000 depending on its materials and dealer. Rolex’s signature men’s watch has now opened its doors to women, with InStyle featuring Jennifer Aniston and Courtney Cox among others wearing the brand. Other jewelers have also seen strides in the last year. Milward Brown ranks French jeweler and watchmaker Cartier fifth on its luxury list, up 34 percent to $5.3 billion net worth. Tiffany & Co.’s American sales rose 22 percent in the first half of 2011.

Posted in Affluence Research, Apparel, Automobiles, Cruises, Entertainment & Recreation, Fine Jewelry & Watches, Luxury Market & Goods, Travel, Vacations | No Comments »

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.”

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This article on Wall Street Journal Digita Network features AARC research about aspirational consumers (http://www.smartmoney.com/spend/deal-of-the-day/how-to-buy-luxury-goods-at-a-discount-1313705085759/?link=SM_hp_middle_optStory).

by Kelli Grant

August 2011

While the market upheaval and economic uncertainty has encouraged many people to tighten their budgets, shoppers lusting after that “it” bag, a first-class airline seat or a pricey car may now find those luxuries are more affordable than before.

Companies that make or sell high-end goods are increasingly aiming for what they call aspiration buyers — middle-class shoppers who can afford to occasionally splurge. The tactics are vast, including pitching less-expensive product lines, selling overstock online and allowing consumers to buy luxury perks in lieu of earning them. Audi, for example, is rewarding brand loyalty by offering $1,000 to $3,000 cash-back to households that already own an Audi and want another one. In September, eBay (EBAY: 30.49, 1.03, 3.50%) will team up with Nieman Marcus and other luxury e-tailers to sell goods at discounts of up to 65%. And new credit cards from American Airlines (AMR: 3.54, 0.28, 8.59%) and United (UAL: 18.59, 0.67, 3.74%) offer a cheaper buy-in for perks previously available only to elite road warriors and big spenders. “Luxury has become more democratized these days, and everyone wants access,” says Milton Pedraza, the president of Luxury Institute LLC, a marketing firm.

The luxury-for-everyone pitch may seem at odds with brands that owe some of their success to their elite images. But going down-market has become a survival tactic during tough economic times. Luxury goods sales fell 5% during 2008 and 2009, the biggest drop since 1995, according to Bain & Co., and experts say most of those lost sales were from these so-called aspiration buyers. (Shoppers with a net worth of $800,000 or more scaled back somewhat during the recession, but have largely kept spending, according to the American Affluence Research Center.) Recent market volatility could make middle-class shoppers even more important. Less than the very wealthy, aspiration buyers tend to have less of their net worth tied up in the stock market, and so the occasional downdraft may not stop them from spending, says AARC president Ron Kurtz.

The best deals on luxury goods may not come via coupon — or Groupon. Instead, luxury brands often use subtler tactics, like private sale events and invitation-only deals, Pedraza says: “You don’t want to scream ‘discount’ when you’re a luxury brand.” Getting in on these offers isn’t so hard, though. Consumers can give their contact information to the high-end stores and brands they like, says Fred Thompson, a partner at LoyaltyOne Consulting. Invited guests often gossip on sites like SheFinds.com or Mizhattan.com, where, in June, notices about Chanel’s two-day private sale with deals of 40% off made the rounds a week beforehand. Auto pricing site Edmunds.com tracks unadvertised auto incentives, including loyalty rebates.

Shoppers on the hunt for luxury goods are also finding success with so-called flash-sale sites such as Gilt Groupe, which offer discounts of 50% or better for a short time on clothing, home goods and other products. eBay launched its version, Fashion Vault, last fall and Amazon (AMZN: 206.53, 7.26, 3.64%) debuted MyHabit in May. But shoppers may find the same problem that outlet-mall shoppers often do: Some items on sale aren’t a part of the brands’ usual collections, they’ve been produced specifically for the sites. Which ones? The sites don’t usually say. Amazon and Gilt spokeswomen said there’s no need, because the items are legitimately from that brand or designer and have quality consistent with their price. “We make sure not to give the [buyer] lesser quality,” says a spokeswoman for Gilt.

Even non-luxury brands — think American Airlines, for example — are offering new opportunities to pay for a higher-end experience, says Thomas Jacobson, a senior executive in consulting firm Accenture’s pricing division. For example, airline credit cards have grown in popularity over the past year with the introduction of bigger benefits and waived fees for the first year, while the airlines have also started offering more a la carte purchase options to cut the line for boarding or pick a cushier seat. Cable companies, amusement parks and other companies are also offering pay-in options for a shorter wait. Here, consumers need to evaluate what they’re getting for the extra cash, Jacobson says. Your luxury experience might be little more than a convenience fee.

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This article posted on Daily Finance features quotes from Ron Kurtz about affluent spending in the luxury market (http://www.dailyfinance.com/2011/08/25/why-oscar-de-la-renta-is-americas-most-expensive-store/).

by Alice Hines

Date: August 25, 2011

Of the 25 stores that made consumer finance website Bundle’s “most expensive stores” list, Oscar de la Renta was the only one to break the $3,000 mark: That’s $3,217 on average that customers spend at his Madison Avenue location in New York City.

The top 25 list reads like the credits of a Vogue editorial: big names, big numbers, big cities. Bundle, a data-analysis startup, took price data from millions of credit card transactions provided by Citibank over the course of one year to generate average receipt numbers for each store.

While Oscar De La Renta is not out of place on the list, it does seem a little strange that the brand would trump the likes of Chanel, Chloe, Lanvin and Prada. Giorgio Armani, down the street, comes in second at $2,821.

One reason for its list-topping status does stand out: De la Renta sells dresses. While many of the brand’s original competitors such as Gucci or Louis Vuitton have been absorbed into luxury conglomerates, and now focus more on the high-margin sales of shoes and bags, Oscar de la Renta has stayed private and family-run, and held true to its pricey roots. (CEO Alex Bolen is de la Renta’s son-in-law). Today, Oscar de la Renta is known for the same sort of timeless, womanly gowns that it made for the socialites of the 1960s.

And as Oscar de la Renta fans like Oprah and Sarah Jessica Parker know too well, looking timeless is a pricey habit. As Ron Kurtz, president of the American Affluence Research Center put it, “Unlike even Armani, [Oscar de la Renta] doesn’t carry a diverse range of merchandise to serve different segments of the market. Everything starts at a very high price point.”

Madison Avenue — home to three of the top four locations on the list — is also an international tourist destination, where people come to buy brands that may not be available in their home countries. “Some of these stores have a very limited distribution and become more appealing,” Kurtz says.

Kurtz also notes that Bundle’s study takes into account only part of the luxury market, since until recently, Citibank dealt only with Mastercard and Visa — not American Express cards or private store accounts. So while the numbers give an idea of how people are spending, they aren’t representative of the entire market.

The only top-four boutique not on Madison Avenue is Boston’s Loro Piana, a family-owned Italian brand known for its fine cashmere that came in at No. 3 at $2.818. It would seem that top spenders are also willing to pay for established glamor and exceptionally well-made products, even when they aren’t flashy or avant-garde.

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This article posted on the Luxury Daily website discusses whether or not the luxury market is on a rebound, and it includes AARC research on the topic (http://www.luxurydaily.com/25886/).

by Rachel Lamb

Date:  August 5, 2011

Is luxury back?

Mixed reports on consumer satisfaction and the economy are confusing experts as to whether or not luxury marketers should expect a rebound — and how they should prepare for the future.

Recent reports have been indicating that luxury sales are on the rise and that consumers are spending close to pre-recession levels, but whether or not the industry is rebounding is still up in the air. Experts are still trying to decide whether or not this is a lucky streak or if the economy is still in danger of double-dipping.

“I think luxury retailers appear to be back only in comparison to the rest of the retail sector,” said Pam Danziger, president of Unity Marketing, Stephens, PA.

“Yes, there are people who can and will pay $1,500 for a pair of shoes, but their numbers are small relative to the population as a whole,” she said.

Confidence confusion

Indeed, analyses and articles have been reporting confusing statistics about whether or not the affluent are truly back to spending.

This uncertainty is making experts uneasy about which way to sway.

For instance, the New York Times released an article reporting that the affluent are back to spending again.

The article mentions that luxury department stores such as Neiman Marcus and Saks Fifth Avenue have been running out of luxury goods because of high demand and luxury car companies have been reporting their best months in years.

While this is true, there has been much tension in the past few weeks as Washington officials have been butting heads in the debt-ceiling debate.

Luxury brands have had an impressive second quarter, but the dip in consumer confidence is putting a damper on spending.

“Most of the aspirational or mass affluent in the U.S. are still out of the market,” said Ron Kurtz, president of American Affluence Research Center, Atlanta.

“The true luxury consumers are still holding back because they lack confidence in the strength of the economy and the outlook for the stock market, which is an important determinant of their mood,” he said.

Indeed, a report from Women’s Wear Daily claimed that the S&P Retail Index fell 3.8 percent Aug. 2 as the Dow Jones Industrial Average lost 2.2 percent.

Additionally, gold prices shot up to a new high of $1,664.20 an ounce.

Luxury retailers such as Nordstrom and Tiffany & Co. were also down that day, according to WWD.

Looking ahead

These mixed reports pose a problem for some luxury brands that may not know how to prepare for the future.

A recent study by Epsilon claimed that luxury marketers looking to make the most of their holiday campaigns are advised to start early and keep pushing post-holiday season.

However, this could waste a lot of energy and money if consumers are not spending as early and as quickly as in previous years.

“Ninety-eight percent of the households in the country are on hold, sitting tight and watching all their spending,” Unity’s Ms. Danziger said.

Other occasions on the horizon, such as summer spending and back-to-school campaigns, have already begun.

“It is very challenging as environmental factors, such as economic conditions and job compensation and factors affecting wealth — such as the stock market and home values — have the most influence on luxury consumption,” American Affluence’s Mr. Kurtz said.

“The best any luxury marketer can do is to keep offering new products at an attractive value and with excellent service and communicate this effectively to the target market,” he said.

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This is an article from JustLuxe Affluent Lifestyle Guide by Susan Kime (http://www.justluxe.com/luxe-insider/trends/feature-1583284.php). The article references our Spring 2011 survey.

May 16, 2011
By Susan Kime

Last year I wrote two articles about the Fall 2010 Survey research results and interpretation provided by the American Affluence Research Center, Ron Kurtz, President. The results of the Fall 2010 survey seemed to indicate some hope for the economic future, and for future affluent spending patterns.

Now, the results of the Spring 2011 American Affluence Research Center Survey appear even more hopeful. This report is based on the responses from 405 men and women who promptly responded and met the minimum net worth requirement of $800,000. Their households have an average annual income of $333,000, an average net worth of $3.1 million, average investable assets of $1.8 million, and an average primary residence value of $1.1 million.

The survey respondents represented 28 states and the District of Columbia. Eighty-eight percent are married. The average age is 57. Fifty-six percent are males and forty-four percent are females. This research survey is the 19th in a continuing series of twice-yearly surveys that focus on the 11.4 million households that represent the wealthiest 10 percent of all U.S. households, as determined by The Federal Reserve Board, based on net worth.

These households account for about half of all consumer spending and a third of gross domestic product.
These surveys measure and track how luxury and affluent consumers assess current business conditions and their 12-month outlook for the economy, the stock market and their personal household earnings. The surveys also monitor the anticipated changes in spending for a variety of different products and services, changes in expected rates of saving, and primary investment objectives. In addition, each survey contains special questions exploring new topics.

The survey results are based on self-administered questionnaires mailed to 4,500 households that, based on their income and ownership of certain assets, were expected to meet the minimum net worth requirement of $800,000. The maximum margin of error of this survey, at 95 percent confidence, is five percentage points. Index values shown in the report can range from 0 (negative) to 200 (positive), with an index of 100 being a neutral point and where little or no change is expected.

Here are the major findings:
In contrast to Fall 2010, the affluent, who account for about half of all consumer spending, report a better outlook for the economy and their personal spending plans. Spending plans for all 17 products and services tracked by these surveys are much stronger than in the Fall 2010 survey. There is also improvement in the plans to make major expenditures such as for a new auto, a cruise and a vacation home.

Discounts by prestigious brands during the past two or three years of a weak economy have apparently been accepted by affluent and luxury consumers without diluting the stature of the brands. About 60 percent of the affluent in the Spring 2011 survey say the discounts did not affect their opinion of the brands, while a quarter said the discounts motivated them to make purchases they may not have otherwise made. Only 5 percent said the discounts lowered the image/prestige of the brand.

This data suggests that the affluent recognize there are certain situations where discounting by luxury brands is reasonable and understandable, if not part of an ongoing practice. Less than 20 percent said the discounts raised potentially negative questions about whether quality had been lowered to offset the discounts and whether prior prices and profit margins were fair.

Similar responses were elicited when asked about their opinion of discounts that prestigious brands communicate via the Internet or mobile devices only to past customers or to “members” of special “flash sale” sites. While 65 percent of the affluent own a smart phone or a tablet (or both), the remainder have regular access to a computer. Half of the affluent say they do not participate in any type of social media.

Among those that do participate in social media, only a quarter say they use it to receive regular communication about product and related information from a manufacturer or retailer. In other words, only 12.5 percent of the affluent say they are using social media to receive regular product information from a manufacturer or retailer.

This relatively low number (12.5 percent of the affluent) may be surprising given all the amazing statistics being circulated by various research and traffic tracking companies about the volume and growth of e-commerce, the ubiquitous mobile devices, and the urgent emphasis to invest time and money into various forms of mobile apps and promotional activities online through proprietary sites and social media.

It is important to understand who will actually be reached through mobile devices and social media (and whether the ROI is reasonable), what technology is needed to be compatible with the various different mobile and other receiving devices, and who might be missed if communications are limited exclusively to these channels.

Based on a different business model and with 12 years in business, Zappos has established a much stronger position among affluent and luxury consumers than any of the 11 “flash sale” sites listed in the survey. Among the flash sale sites, Gilt and RueLaLa have established leading positions.

Over half of affluent and luxury consumers are aware of Zappos while none of the 11 listed “flash sale” sites have more than 10 percent awareness. A third of the affluent have visited Zappos in the past 90 days while 5 percent or less have visited any of the “flash sale” sites during that time. A third of the affluent and luxury consumers have ever made a purchase at Zappos while less than 4 percent have ever made a purchase at any of the individual flash sale sites.

These results are not totally surprising as the affluent are typically careful spenders whose favorite stores include Target, Costco and Home Depot. Also not surprising, the results vary substantially within age, gender and wealth categories. What may be surprising is the fact that over 40 percent of affluent and luxury consumers are not aware of Zappos or any of the flash sale sites.

About 10 percent of the affluent say they will seriously consider acquiring access to a vacation home during the next 12 months. Plans to make an acquisition increase as age declines, income increases, and net worth increases. About 2.9 percent are considering two types of vacation home acquisition. Wholly-owned homes are the most favored type of vacation home access. Wholly-owned homes used primarily on a seasonal basis are more popular than those used frequently throughout the year.

In a recent interview with Ron Kurtz, President of the American Affluence Research Group, he said, “The affluent market, as defined by the top 10 percent of U.S. households, still spend carefully. Their favorite stores are still CostCo, Target and Home Depot. They are not conspicuous or ostentatious spenders. The recession may not have fiscally affected them, but in some deeper sense, they have been affected. But, there is reason to be hopeful.”

Mr. Kurtz recently presented his findings at the GNEX Shared Ownership Conference on May 11, where he was a keynote speaker. “The spending attitudes of the affluent seem to be improving,” he said.

“What we see is a continued conservatism, but tinged with optimism now. Unlike in other years, and taken as a whole, our research shows the affluent majority are not taking action to reduce or defer major expenditures now. They are interested in purchasing vacation homes and are again interested in travel. Things are looking better.”

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