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What 2011 earnings say about the 2012 luxury shopper

luxurybiz — Fri, 03 Feb 2012 16:34:40 +0000

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Affluent consumer

Even though the industry as a whole did not report superlative earnings, luxury retailers came out on top at the end of 2011, indicating that the luxury shopper should continue to flourish in 2012.

Luxury conglomerates and department stores have so far reported positive earnings with most seeing double-digit growth year over year. Shifts in strategy from 2011, namely the increase of menswear and the return of conspicuous spending, are expected to continue this year.

“The luxury shopper is not embarrassed anymore – she is happily spending and enjoying herself,” said Paula Rosenblum, managing director at market researcher RSR. “The luxury market is alive and well, and consumers are spending an obscene amount of money.

“I think that the market will remain generally recession-proof, especially with consumers spending from BRIC countries,” she said.

Number the stars
Luxury conglomerate LVMH Moet Hennessy Louis Vuitton – which owns famed labels such as Christian Dior, Louis Vuitton, Bulgari and Marc Jacobs – saw a 16 percent increase reaching $31.1 billion, according to the company.

LVMH, which acquired Bulgari in the first quarter of this year and increased stock in independently-owned Hermes throughout 2011, reported that revenue increased by 20 percent in the four quarter alone.

Bulgari fall/winter 2011

Meanwhile, luxury retailer Saks Fifth Avenue reported a profit of $2.9 billion in sales for the fiscal year, which was a 7.8 year-over-year increase.

The strongest categories in January included women’s contemporary and high-end designer apparel, handbags and men’s apparel and accessories, according to the retailer.

Additionally, department store chain Nordstrom reported a 7.2 percent increase in 2011 with preliminary total retail sales at $10.5 billion.

Profits increased 12.7 percent year over year, with 2010 rounding out at $9.31 billion, according to the retailer.

Macy’s Inc., which owns department stores Macy’s and Bloomingdale’s, saw a total profit of 5.3 percent growth, which its CEO/chairman Terry Lundgren called “weaker than anticipated” in the company’s press release.

Bloomingdales’ 2011 holiday windows

However, this is the 26th consecutive month of growth for the company. Its total sales for 2011 reached $26.4 billion.

Macy’s did not offer separate numbers for Bloomingdale’s.

Conglomerates such as PPR and Richemont and retailers Burberry, Tiffany Co. and Ralph Lauren have not yet reported 2011 sales at press deadline.

Room to bloom
On the other hand, mainstream retailers such as Target, Gap Inc., TJ Maxx, Dillard’s, J.C. Penney and Kohl’s saw small or declining growth in 2011.

Where some retailers are struggling to make ends meet, the luxury market is going strong.

This behavior is likely to be carried on throughout the rest of this year.

The only fly in the ointment could be the ever-impending potential crumble of the Euro, according to Ms. Rosenblum. This could seriously alter the way that the world spends in 2012.

Luxury companies should continue to see strong growth from not just U.S. consumers, but also shoppers from the BRIC countries.

Gucci 2011

This includes male shoppers.

Indeed, the jump in both sales in menswear and attention given to the market was huge in 2011.

This is clear in some examples from mergers and acquisitions in 2011, such as PPR’s acquisition of menswear and made-to-order suits.

“Another thing to note is that ‘she’ is now ‘he,’ too – it’s not just women anymore,” Ms. Rosenblum said. “A big surprise in 2011 was the emergence of men spending more on themselves in the luxury market.

“I think that the luxury shopper is reverting back to form,” she said. “After a couple of years of humility, they are coming back.”

Final Take
Rachel Lamb, associate reporter on Luxury Daily, New York

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Facebook evolution presents new kind of social commerce: WWD speaker

luxurybiz — Thu, 26 Jan 2012 21:14:55 +0000

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Tory Burch Facebook commerce

NEW YORK – The new updates by Facebook this week will require a major shift in strategy for brands advertising on the platform, presenting opportunities more focused on sharing and interaction, according to a speaker at Women’s Wear Daily’s Digital Forum yesterday.

Luxury brands including Oscar de la Renta, Bulgari, Burberry and Tory Burch have begun to use social commerce, but the updates to the Facebook platform, especially of the “timeline” feature, will shake up how brands use the site to share goods and services. In fact, a majority of brand interaction will now be done through sharing between consumers.

“The days of fan pages are dead,” said Wade Gerten, CEO of 8thBridge, Minneapolis, MN. “Over the past few years, we’ve learned a lot about what works with social commerce and what doesn’t.

“Some of the early pioneers in Facebook commerce attempted to just take the entire product catalog and put it on your homepage, especially at discounted prices,” he said. “But for a lot of luxury and fashion brands, it is not brand-consistent.

“You don’t want to continually sell things half-off, especially not to your core customers.”

8^thBridge developed Facebook-commerce solutions for brands such as Oscar de la Renta, HauteLook and 7 For All Mankind.

Good timing
The new Facebook will change the way that brands interact with and are shared by consumers.

In the next week, Facebook users will be introduced to the “timeline,” which is essentially an algorithm that tracks the users’ statuses, pictures, likes, friends, music and fashion preferences from as far back in their lives as they choose.

Everything that a consumer does or interacts with on the site will be automatically added to the timeline.

However, this is the first time that brands can take advantage of consumers liking products on sites other than Facebook, per Mr. Gerten.

Through this new platform, brands can create not just a network of pages or people, but anything from a network of handbags, resorts or music that becomes a user’s outward identity on the Web.

Mr. Gerten at WWD

Brands can now take advantage of sharing opportunities by offering levels of interaction. This involves adding options such as “like” “own” or “want.”

Users can check out products as if they are on an ecommerce site. This is useful because consumers want to look products but may not want to leave Facebook, Mr. Gerten said.

Consumers can choose one of these options to share their friends.

For example, if a consumer likes a product from a brand, she can put it on her “want” list on Facebook. This aggregates the brand in with the user’s friend’s content and has a greater ability to be shared.

Bulgari using Facebook commerce

Bridging channels
Brands can adapt to the new Facebook through three steps, per Mr. Gerten.

The first is integrating brands, products and offers into the social network so that advocates can express themselves on their own terms.

Giving consumers the ability to express themselves in this way will likely drive the shopping activity and time spent with the brand on Facebook, Mr. Gerten said.

Mr. Gerten at WWD

The second step is to promote loyalty. This includes extending these offerings into other channels.

For example, if a consumer sees something in a store that has a QR code on it, she can scan the code and add it to her “want” list to share on Facebook.

This incorporates both mobile and in-store, increasing the amount of times and the number of ways that a consumer spends time with the brand.

The third step is to extend a competitive lead in social shopping. Brands should stop making social media about a product, but more about people.

The one thing that Mr. Gerten warns against is allowing consumers to actually transact on Facebook. Approximately 75 percent of consumers are against entering personal information such as a credit card numbers on social media.

Instead, brands should allow consumers to shop and check out products on Facebook and then bring them back to a branded Web site or mobile site to finish the sale.

“Brands can literally be woven into a consumer’s life,” Mr. Gerten said. “Billions of Facebook users use the site for the same reason they buy brands – they want to be loved and they want to belong.”

Final Take
Rachel Lamb, associate reporter on Luxury Daily, New York

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Gilt Groupe’s woes may signify overall slump in flash-sale industry

luxurybiz — Wed, 25 Jan 2012 20:38:02 +0000

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Gilt Groupe original site

Luxury flash-sale site Gilt Groupe’s recent lay-offs and office closings are likely a result of overzealous growth but are also causing some experts to question the longevity of the flash-sale business model.

Gilt Groupe has announced that two major executives will be leaving the company, along with a rumored 80-90 additional employees from the company’s younger businesses, Gilt City and Gilt Taste. The question is, are the troubles at Gilt an indicator of the future of the flash-sales industry?

“I think one of the challenges for all flash Web sites is that they depend on discounting and, by nature, have lower margins than companies who sell full-price products,” said Milton Pedraza, president of the Luxury Institute, New York. “There is always a pressure on profitability.

“And number two is that as the luxury industry has experienced significant growth in the past few years and the luxury industry has tightened its inventory management, there is less supplies for what seeds the Gilt machines such as excess inventory,” he said.

Mr. Pedraza is not affiliated with Gilt Groupe, but agreed to comment as a third-party expert.

Shine’s off
Gilt Groupe made a statement earlier this week that John Auerbach, president of the group’s separate men’s brand Park Bond, and Nate Richardson, head of Gilt City, will soon be leaving their respective positions.

The flash-sales company said that neither man was laid-off but that they both happened to choose this time to leave the company, according to a statement made to New York Magazine’s The Cut.

This announcement came only a day after rumors broke that Gilt Groupe would be laying off more than 100 of its 900 employees.

As of Monday at noon, a Gilt Groupe spokesperson stated to The Cut that the company had let go 80-90 employees, approximately 10 percent of its workforce, across its businesses. However, there were no more layoffs planned, per the company.

Gilt Groupe also closed six of its Gilt City offices including those in Philadelphia, San Diego, Houston, Seattle, Atlanta and Dallas. A central sales force will take over the work that was done in these offices.

“We have not been as successful in smaller markets and the resources they require take away from growing our core business,” the company said in a statement to Women’s Wear Daily.

Gilt City may have expanded too quickly

Gilt said that December 2011 was its most successful month and that the restructuring is aimed at supporting the long-term goal of turning a profit by the end of this year, according to Gilt.

Gilt Groupe was founded in 2007 as a flash-sales site for luxury designers such as Alexander McQueen and Louis Vuitton.

In the past five years, the company grew rapidly opening similarly-flash focused sales sites Gilt Taste, Gilt Man, Jetsetter and Gilt City.

The company opened its first full-priced retail site, Park Bond, this past June (see story).

“While the company still seems to be keeping both of their new acquisitions [Park Bond and Gilt City] going, I think that in time they may find they aren’t getting much return on their investment and shutter them both completely,” said Pam Danziger, president of Unity Marketing, Stephens, PA.

“This looks like an interim step unless they can figure out how to make these two very different businesses – daily deals and full priced menswear – work in the Internet space,” she said.

License to kill
To outsiders, it seemed as if the success was too good to be true, and apparently it was.

In fact, experts believe that this overly-rapid expansion into various industries could be the cause of some of Gilt’s current problems.

“I think the Gilt changes are a simple matter of a company whose eyes were bigger than its stomach,” Ms. Danziger said.

“They grew too fast [for example] buying the Gilt City daily site and the full-priced men’s site Park Bond and went outside of their core competencies and core markets into uncharted territory,” she said.

Gilt may have over-extended with full-priced men’s site

Another reason behind Gilt’s recent problems could be that it has always focused on discounting and not placed enough energy into creating a consumer experience and forming customer relationships.

Given that the main Web site sells mostly luxury items, Gilt should aim to provide luxury-quality service.

“I think that all of the flash-sale sites, unlike Net-A-Porter which has built itself on full price and service, but luxury flash-sale sites have ignored the service experience and have not created a customer culture,” Luxury Institute’s Mr. Pedraza said.

“They are very transactional but they have not created a long-term relationship based on a service component,” he said. “When you don’t do that and you have challenging times it is hard to reach out to consumers.”

In the future, Gilt should look to increase its customer culture and may want to consider a full-priced business model such as the one it has for Park Bond.

Indeed, flash-sale sites often catch on like rapid-fire but the fierce competition and purely transactional relationship with consumers are the ingredients for a short business lifecycle.

“Discounting business models are a race to the bottom because how do you differentiate yourself?” Mr. Pedraza said. “What happens when you can’t discount as much as the next guy? Consumers will abandon you.

“I think Gilt should try to do a full-priced business model,” he said. “They have the right brand name, but it will take a while for consumers to think of Gilt has a fully-priced provider when they’ve built a business model on discounting.”

Final Take
Kayla Hutzler, editorial assistant on Luxury Daily, New York

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Four Seasons Private Residences restructures pricing options to get out of slump

luxurybiz — Thu, 19 Jan 2012 14:47:00 +0000

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Four Seasons Private Residences Denver

The Four Seasons Private Residences in Denver has restructured its pricing system to help convince affluent consumers that a primary or second-home purchase is a good investment in the current turbulent economy.

In some cases, the Four Seasons Residences prices have been halved, making them one of the best deals that Denver has seen in years, according to the company. Four Seasons will be mainly focusing on current Colorado residents during its new marketing campaign.

“It was really about the ability of the owner to pay for the payout of the project,” said Chris Norton, CEO of Fingerprint Strategies, Denver. “They were [prior to the restructuring] stuck in a cost base that was determined in 2007.

“So, we were able to refinance the deal to help face the realities of 2012,” he said.

Fingerprint Strategies is the firm that manages the sales and marketing of Four Seasons Private Residences Denver.

Room with a few
Four Seasons Private Residences opened in Denver October 2010 with many residents having agreed on the pricing and payment plan in 2007.

However, Four Seasons and Fingerprint found that many of the prospects and potential client relationships they had made in the past few years had stopped pursuing Four Seasons Residences.

The Four Seasons Private Residences at Denver had seen very few sales in the past 15 months, according to Fingerprint Strategies. This came despite the overwhelming success of the Four Seasons Denver Hotel.

Previously-interested consumers had not turned to anyone else – they had just stopped looking to buy a new home in Denver, per Mr. Norton.

The restructuring of the pricing is meant to face the realities of 2012 – that is, some consumers cannot afford new home purchases at the moment and the affluent who are not as affected feel guilty by indulging in a Four Seasons home.

By giving affluent consumers the excuse of “a good deal” and “incredible value,” the consumers may be able to think of the homes as more of an investment than an indulgence, per the company.

“We wanted to give people a compelling reason by make it a safe purchase and giving them a reason to do it now,” Mr. Norton said.

A living room in one of the private homes

Many of the prices have been slashed in half. For example, a Capitol Residence which used to cost up to $8.2 million now tops out around $4.9 million.

Additionally, a Blanca Residence that used to go for about $5.7 million is currently only $3.7 million.

However, the new prices will only apply to the next 30 sales, according to Fingerprint Strategies.

Live-in luxury
The Four Seasons Residences at Denver are situated within the Four Seasons Hotel Denver location.

Residences vary in size from one to three bedrooms and can be up to 5,193 square feet.

The goal is to provide people with a private home in which they can receive Four Seasons service.

Therefore, residents can take advantage of Four Seasons’ services and amenities such as room service, the hotel’s spa and restaurants and housekeeping.

A dining room table in a Four Seasons residents in Denver

Residents even have access to the hotel’s concierge service for things such as dog walking or party planning.

Fingerprint will be marketing the new prices to its email database of interested consumers as well as through direct mail and Internet advertising.

The Four Seasons Residences Denver will have digital ads on The New York Times and The Wall Street Journal Web sites that are geo-tagged to only appear for readers in the Colorado area.

The marketer will also be running a large radio campaign in the area to help spread awareness of the new prices.

“We really regard our target consumers as people who are still optimistic about the future,” Mr. Norton said. “People buy real estate that they believe will go up and not down [in value].

“So, we are looking to re-price these in a way where people can look at it and say this is an amazing deal and this will be worth much more in the next few years,” he said.

Final Take
Kayla Hutzler, editorial assistant on Luxury Daily, New York

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Nordstrom redesigns rewards program for stronger customer ties

luxurybiz — Thu, 12 Jan 2012 09:21:02 +0000

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Nordstrom rewards

Department store chain Nordstrom is looking to strengthen its customer relationships with a newly-redesigned fashion rewards program that puts more control in the hands of the shopper.

The new program will give all Nordstrom cardholders access to tailoring services and the ability to accumulate reward points more quickly. Additionally, the amount of points needed to be promoted to a higher status level has been decreased.

“Fashion rewards is one of the most important tools that we have to serve our customers and we wanted to make these changes to improve the service experience we offer them throughout the program,” said Colin Johnson, a Nordstrom spokesperson, Seattle.

“A big focus was giving customers more control over how and when they can earn rewards and we hope to extend these benefits to more customers,” he said.

In the cards
With the new fashion rewards program, Nordstrom cardholders will be given a pre-selected amount of credit towards Nordstrom’s tailoring services.

Now, tailor-service credits start at $100 for level-one cardholders and go up to an unlimited amount of free tailoring for top-level cardholders.

Cardholders are also able to choose days on which they would like to earn triple reward points.

Based on their level, a fashion rewards program member will be given one to four “personal days” on which they will earn three times the bonus points.

These will come in addition to the previously-offered days selected by Nordstrom each year.

Shoppers will also be able to earn bonus reward points when they shop at Nordstrom Rack. The outlet line was previously not included.

Nordstrom has also decreased the amount of dollars a customer needs to spend to reach top-level status.

According to the new policies, when shoppers spend $5,000, they will be promoted to level three. Afer $10,000, they will be promoted to level four.

The level entries were previously $10,000 and $20,000, respectively.

“With this relaunch of their program, they have been able to combine the best elements of a reward and recognition program — by offering added value experiences and rewards based on tier levels and ultimate customer spend,” said David Langton, global marketing manager at ICLP Loyalty, London.

“It’s good to see a retailer being more creative and taking this approach and utilizing their wider brand assets from the department store to give relevant value rewards back to customers, rather than solely offering points,” he said.

Nordstrom’s credit and debit cards

Take note
Nordstrom has also kept many of its mainstay offerings despite the redesign.

Level three and four cardholders will still have access to the Nordstrom Concierge which can aid customers in planning parties, obtaining tickets to shows, making dinner reservations, securing spa appointments and planning customized vacation packages.

Additionally, Nordstrom will still be inviting cardholders to experience pre-access to exclusive sales and in-store events.

Top-level cardholders are also given the opportunity to choose one of six complementary private shopping party experiences for the cardholder and friends.

Experiences include a limo-and-lunch package, a couple’s personal styling session, a spa escape package and a teen fashion party that includes a live DJ and personal styling.

Every fashion rewards program member over level two also receives free standard shipping throughout the year.

Additionally, every cardholder will continue to receive a $20 Nordstrom Note for every $2,000 spent at the department store.

The reward program redesign is likely to prove beneficial for Nordstrom.

“There are constant challenges of competitor activity,” Mr. Langton said. “However, historically it has been proven that a brand that has a reward program in place will retain more customers and increase transactional value.

“Reward programs are enticing if designed correctly from the outset and if it is in keeping with the core brand promise and it offers relevance and value to customers,” he said.

Nordstrom is marketing the new program through social media and posting a link to the program outline on its Facebook page.

This is likely a good idea since fans of the brand on Facebook probably will be more interested in the reward program for loyal shoppers.

“It starts with Nordstrom notes but it’s about much more than just points,” Nordstrom’s Mr. Johnson said.

“We hope this [redesign] will help improve the way we can serve our customers,” he said. “We want to build relationships with our customers over the long run.”

Final Take
Kayla Hutzler, editorial assisant on Luxury Daily, New York

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Tiffany holiday sales results not indicative of its marketing

luxurybiz — Wed, 11 Jan 2012 21:01:22 +0000

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Tiffany’s holiday 2011 campaign

Although jeweler Tiffany Co. did not do as well this holiday season as forecast in November, it could be that the results are generally indicative of the economy and consumers’ moods, not necessarily of the brand’s marketing.

The brand did not do as well as it hoped, but it was still up 7 percent from last year. Carrying the sales were Asia-Pacific and Japan, both regions seeing double-digit growth.

“I think that this report illustrates the bigger pressing issue of all global luxury brands – there is growth in Asia but it is limited in the United States,” said Chris Ramey, president of Affluent Insights, Miami. “Affluent consumers in the U.S. remain in a funk because the sales are down.

“However, no one is doing better marketing than Tiffany,” he said. “The funk is more of a result of economic condition and mood of the affluent than it is of the excellence and leadership that Tiffany continues to show.”

Mr. Ramey is not affiliated with Tiffany, but agreed to comment as a luxury marketing expert.

Tiffany did not respond before press deadline.

Carats and stick
Tiffany’s worldwide net sales rose 7 percent to $952 million. Its overall comparable sales increased 4 percent.

In the Americas, Tiffany sales rose 4 percent to $503 million. Comparable branch locations – there are 102 – rose 3 percent while the New York flagship on Fifth Avenue declined 1 percent, according to Tiffany.

In addition, combined Internet and catalog sales saw a 4 percent drop in this region.

Tiffany holiday collection

In Asia-Pacific, Tiffany saw a 19 percent increase to $165 million. On a constant-exchange-rate basis, comparable store sales grew 12 percent due to growth in most countries. Asia-Pacific has 57 Tiffany branches.

Sales in Japan increased 13 percent to $160 million. Total sales rose 5 percent and comparable stores sales from the region’s 55 branches increased 6 percent, according to the brand.

European sales increased 1 percent to $117 million. Comparable store sales from the region’s 32 Tiffany locations declined 4 percent.

Other sales including sales to independent distributors within emerging markets and wholesale sales of rough diamonds increased 8 percent, according to Tiffany.

Stepping it up
Although Tiffany’s holiday season was underwhelming, the jeweler saw phenomenal growth in the first three quarters of the year.

Tiffany saw a 20 percent year-over-year increase in quarter one, 30 percent rise in quarter two and 21 percent growth in quarter three, according to the jeweler.

These results prompted the brand to increase its full-year economic outlook.

Nonetheless, Mr. Ramey believes that Tiffany’s marketing had nothing to do with the less-than-expected finish to the year.

Tiffany’s holiday campaign, “Some Holidays are Unforgettable,” was pushed through mobile, social media, video, in-store and Web site advertising.

Tiffany holiday 2011 campaign

The Some Holidays are Unforgettable effort even made Luxury Daily’s top 5 luxury jewelry holiday campaigns (see story).

In addition, Tiffany decked out its flagship windows in New York with a carousel theme inspired by the digital storybook “The Winter Carousel” (see story).

Tiffany’s holiday windows

“Tiffany approaches the market on a 360-degree perspective,” Mr. Ramey said. “They do traditional marketing and social media as well as anyone – they are the leader regardless of the category.

“One of the exciting things they do is that they sell on an emotive basis – they sell love before they sell their jewelry and the results will be positive for them,” he said. “The economic conditions in the U.S. don’t reflect the rest of the world and the opportunity to further advance the cause isn’t always immediately rewarded.

“In my opinion, their sales are an anomaly. I wouldn’t read too much into it.”

Final Take
Rachel Lamb, associate reporter on Luxury Daily, New York

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Rolls-Royce beats 107-year sales record

luxurybiz — Tue, 10 Jan 2012 20:26:42 +0000

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Rolls-Royce models

Rolls-Royce Motor Cars claimed a 31 percent increase in sales from 2011, attributing its heritage and branding in addition to a resurgence of luxury goods spending as the reasons for the best annual sales record in its 107-year history.

The 3,347 cars sold last year is the highest annual sales in the BMW-owned brand’s history. The uptick included both Ghost and Phantom models with its bespoke content at extremely high levels.

“I think that there were a number of elements – first is that we are a very strong brand,” said Andrew Ball, corporate communications manager for Rolls-Royce, Goodwood, England. “The strength of our brand has definitely helped in our sales and the brand is renowned worldwide for quality and excellence and, as a consequence, attracts certain customers.

“If you look at a number of automotive and other luxury companies, you’ll have seen that there’s been a lot of success around the world and it’s not that the luxury economy is unaffected by the economic issues and constraints, but it does tend to sit slightly outside them,” he said.

“Our customers in real terms were not hugely affected, but it may well have been a visibility thing for them and they didn’t want to be seen purchasing a new Rolls-Royce at that time.”

On a roll
Rolls-Royce’s heritage for fine craftsmanship and values is the main component that the brand attributes to its success last year.

The market with the most growth was Asia-Pacific at 47 percent growth, followed by North America with 17 percent growth and the Middle East with 23 percent growth.

Additionally, Germany and Russia saw double-digit growth and Britain saw a 30 percent increase last year.

Rolls-Royce’s products – the Phantom, Phantom Extended Wheelbase, Phantom Drophead Coupé, Phantom Coupé, Ghost and Ghost Extended Wheelbase – all saw dramatic growth.

Rolls-Royce Web site

The breadth of the portfolio definitely attracted new customers to the brand.

The Ghost model launched two years ago and approximately 80 percent of buyers for that vehicle are new to Rolls-Royce, according to Mr. Ball.

Rolls-Royce’s personalization and bespoke services also played a huge role in 2011 sales.

Many customers, particularly those who own Ghosts, run the bespoke gamut from embroidery to anything else they can imagine, per Mr. Ball.

Finally, the fact is that customers were ready to spend again.

“What we’re seeing from our customer base is that a large percentage is from an entrepreneurial background,” Mr. Ball said. “These men and women have made their own cash and are buying as a reward to themselves.

“They are wealth generators and creating money for the economy, and they have every right to celebrate their success and buy the very best they can,” he said.

Under the hood
As a rule, Rolls-Royce does not advertise as a company. Rather, the brand focuses on building close and personal relationships with existing customers.

For example, the automaker has held events where consumers can test its new experimental electric car (see story) and are alerted when there are new product launches and dealerships.

“These are generally very discrete and very targeted,” Mr. Ball said. “Overall, we have a relatively small customer base.”

In addition, Rolls-Royce released two applications for the iPad this past year, one for the Ghost models and one for the Phantom models (see story).

Customization feature in the Rolls-Royce Phantom app

These apps allow consumers to see a shop window on their mobile device and works as a builder for brand awareness.

This way, the brand can be shared in a modern way, per Mr. Ball. Consumers can build a picture of Rolls-Royce as a modern, contemporary, leading-edge company.

The automaker also flaunted its heritage by celebrating the centenary of two important Rolls-Royce events.

Rolls-Royce celebrated the 100th anniversary of its iconic hood mascot with a grand procession of branded vehicles in London Feb. 6 (see story) and with inspired portraits that were hung in dealerships and meant to bring in foot traffic (see story).

Additionally, the automaker celebrated the centennial of the brand’s first 100-mile journey with experimental speed car 1701 through a procession of 17 historic branded vehicles headed by the 20-Ghost Club in September (see story).

Another surprise marketing tactic came in April in London when Katherine Middleton stepped out of a Rolls-Royce Phantom on her way into Westminster Abbey to marry Britain’s Prince William.

Given the momentous appeal and reach of the wedding, Rolls-Royce likely gained awareness as the Alexander McQueen-clad bride stepped out of the car on her way into the chapel.

“Let’s be honest – it didn’t hurt us,” Mr. Ball said. “The royal wedding was a fabulous occasion, bearing in mind that they weren’t using a current [Rolls-Royce] product.

“It was a huge reminder that we have a huge heritage and our products have great longevity and are built to last,” he said.

Final Take
Rachel Lamb, associate reporter on Luxury Daily, New York

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BRIC countries not yet the key market for luxury lifestyle brands: Luxury Briefing Wealth Summit

luxurybiz — Wed, 04 Jan 2012 03:49:03 +0000

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BRIC not saving the yachting industry

LONDON – Brazil, Russia, India and China are not yet having a noticeable impact on the wine, yacht or real estate industries, according to a panel discussion at the Luxury Briefing Wealth Summit 2011.

Despite the huffing and puffing about the emerging markets in the fashion and accessories world, the increase of wealth in these countries does not seem to be having a huge effect on the lifestyle industries. Experts in the wine, property and yachting industries were cautious about the emerging markets, none of which have seem much of an impact.

“I think we’ve got to be careful when it comes to real estate to get too excited about the emerging markets, and part of it is that the Chinese cannot get large sums of capital out of China,” said Yolande Barnes, director of residential research at Savills, London.

“We think that the strength of the Russian market when it comes to property is over-exaggerated, and in the prime central market, London, it is the Western Europeans that are more important in terms of property bought,” she said. “The Chinese are not buying across the board yet.”

Setting sale
The property industry, particularly in Europe, is still seeing most of its clients coming from Western Europe.

While there are small percentages of Russian and Chinese customers buying property in Britain, they tend to be doing so solely in London.

Many of these sales are actually being referred to as “education properties,” meaning that affluent parents are buying apartments for their children to live in while attending Western schools.

Indeed, China has not proven a saving grace for the yachting industry either, according to Jamie Edmiston, founder of Edmiston Yachts, London.

“China is not big yet in the yacht market,” Mr. Edmiston said. “Russia was very important from 2005 to 2008, but then the yacht business slowed dramatically and will take a long time to get back.

“If you are selling a yacht, now is not a good time,” he said. ”But if you are buying a yacht, it is a great time to do so.”

Even in Brazil, yachts are not doing well since it is hard to gain personal access to the ports in the country.

However, Mr. Edmiston is hoping that this will change and that Brazil and China will start to become more interested in buying vessels.

“I think we expect some interest, and we anticipate that to increase,” Mr. Edmiston said. “We are seeing changes and praying and hoping that the Chinese get involved in the yacht business because it would help us.

“We subscribe to the fact that if you’ve got a lot of money, you don’t stop spending when times are rough,” he said.

The panel at the Luxury Briefing Wealth Summit

High spirits
The wine industry has recently seen some sparks of interest from wealthy Chinese consumers, according to Neils Sherry, the London-based marketing director of Sarment Wines.

In fact, a large amount of wine is actually being produced in China and more Champagne brands are beginning to buy land in the country.

“The Chinese have a real desire to be educated and to learn about things,” Sarment’s Mr. Sherry said.

This could prove extremely helpful to the wine industry because, to be a wine enthusiast, consumers have to learn a lot about the various types of wine.

However, in all three industries, experts agreed that the need to show off was fueling most of the interest from emerging markets.

Indeed, in the yachting industry, Mr. Edmiston pointed to the fact that yachts became generally larger in size due to the buyer’s need to one-up his friends.

Additionally, owning a yacht is generally the last thing an affluent consumer will buy once they have gone through the gamut of buying homes, cars and jets, Mr. Sherry said.

As for property, the idea of the “bling factor” can also be taken into account.

“I think there is a huge mixture in the property market and, in some cases, it is more like a work of art,” Savill’s Ms. Yolandes said. ”Part of a collection that [wealthy individuals] need to have.”

Final Take
Flora Wilke, head of public relations at Mergermarket, London

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Mercedes, Audi October sales provide ray of hope for luxury industry

luxurybiz — Tue, 03 Jan 2012 15:32:32 +0000

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Mercedes C-Class helped drive sales

With Audi and Mercedes-Benz both boasting their highest October sales in history, luxury marketers from all industries could stand to learn a thing or two from the rivals.

Both Mercedes and Audi posted sales increases of more than 25 percent year over year last month. The high sales in the luxury auto world may be a good sign for the luxury industry as whole.

“On the Mercedes-Benz passenger cars and trucks side, it was the best month ever since the recession,” said Mike Slagter, vice president of sales at Mercedes-Benz, Montvale, N.J. “We typically always have a very strong fourth quarter at Mercedes and new products and better availability were a big help to us.

“[Additionally], the marketing efforts have never been stronger, between focusing on what makes the Mercedes brand, such as safety and engineering, and the events that we are a primary sponsor of such as the U.S. Open and Fashion Week,” he said. “So we are on a pretty good roll right now.”

Speeding up
Mercedes sold 24,449 vehicles last month, marking last month the highest sales October in the company’s history.

The highest performers during October were the C-Class, E-Class and M-Class model lines, according to the automaker.

C-Class sales were up 87.9 percent year-over-year, due largely in part to the new 2012 model.

The E-Class and M-Class models were responsible for 4,516 sales and 4,091 sales, respectively.

The Mercedes E-Class

Additionally, the 2012 CLS-Class posted a 192.3 percent increase for the month.

“All in all, the market is getting a little better and things seem to be improving, although not as quickly as we would like to see,” Mr. Slagter said. “[But] we are competing really, really well.”

Indeed, luxury automaker competitor Audi also had a very successful sales month.

Audi saw an increase of 25.8 percent in October sales year over year, and sold 10,225 vehicles.

Similar to Mercedes, Audi stated that the release of new models 2012 A6 and A7 contributed to last month’s growth.

For example, A6 sales rose 43.9 percent.

Additionally, Audi TT October sales increased 133.7 percent year-over-year.

“With the brand’s entries in the top premium vehicle segments – the Audi A6, A7, A8 and Q7 – making up more than a quarter of overall sales in October, it’s clear that Audi is on a roll in the U.S.,” said Andrew Lipman, communications manager of Audi of America, Herndon, VA.

“Consumers are not only ready to get back into luxury cars, but are opening their eyes and their wallets to Audi,” he said.

Driving sales
Both automakers pointed to their recent marketing campaigns as fueling the increase in sales.

Audi’s Mr. Lipman pointed to its multichannel A6 campaign that coined the phrase, “making the road a more intelligent place.” The campaign was implemented on television, print and online channels (see story).

The Audi A6 campaign

Indeed, Mercedes also pointed to its TV commercials, bringing to light the M-Class and C-Class 30-second commercial video spots.

Given the success that automakers have seen with location-based and nationwide television advertising, other luxury marketers may want to consider stepping up their TV marketing.

Additionally, there are a few other marketing and public relations strategies that luxury marketers may want to borrow from automakers, according to Ron Kurtz, president of the American Affluence Research Center, Atlanta.

For example, automakers excel in emphasizing the importance of product value and enhancements.

Additionally, after-the-sale service often helps luxury automakers increase customer loyalty and allows automakers to continue pushing branded content, per Mr. Kurtz.

The increase in luxury auto sales may hold a ray of hope for all luxury industries.

“Strong sales of luxury cars are good indicators of potential strength in the sales of other luxury products,” Mr. Kurtz said. “The consumers are similar.

“[It shows] the affluent consumer is feeling more confident about their financial situation and is more willing to spend,” he said.

Final Take
Kayla Hutzler, editorial assistant at Luxury Daily, New York

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Are affluent consumers numb to stock market turbulence?

luxurybiz — Tue, 03 Jan 2012 15:32:15 +0000

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Dolce Gabbana Autumn/Winter 2011

Turbulence in the stock market is only growing due to debt crises in Greece and Italy, causing investors to pull back in fear of an economic downturn. Whether or not this is a permanent setback is uncertain, especially since consumer confidence itself is up and down.

Parallel to the stock markets, consumer confidence has been rocky during the last year and, therefore, willingness to spend changes with news. Most affluent consumers are tapped into news and even invest in the stock market, meaning that as the economy changes, so might spending habits.

“I think the issue is actually more on the buy side than on the sell side,” said Paula Rosenblum, managing partner at RSR, Miami.

“Philosophical questions about what currency to pay suppliers in and how to hedge bets on the value of the Euro versus other currencies probably trump ‘How do I keep selling?’ questions,” she said. “Beyond some portfolio issues, which people seem to be growing numb to because it’s so up and down, I think the U.S. luxury shopper will play on.”

Peaks and valleys
Meanwhile, Italian investors pushed a 7 percent yield on the country’s bonds. This high interest rate makes it difficult for Italy to borrow money to pay for its debts.

Although yields over 7 percent led bailouts for Greece, Ireland and Portugal, Italy’s economy may be too big for the European Union to rescue, according to a report from Women’s Wear Daily.

This past week, stocks – even luxury ones – plummeted.

Most Italian companies were hit the hardest – Salvatore Ferragamo dropped 5.6 percent on Wednesday, Nov. 9, for example.

On Wednesday, Nov. 9, the SP Retail Index in the United States dropped 2.9 percent and the Dow Jones Industrial Average fell 3.2 percent.

In addition, stocks from Ralph Lauren, LVMH Moet Hennessy Louis Vuitton, PPR, L’Oreal, Burberry, Nordstrom, Tiffany Co., Saks, Richemont and Macy’s fell significantly.

“This is the ultimate price of globalization: our economy is tied to the economies across the world,” said Pam Danziger, president of Unity Marketing, Stephens, PA.

“The luxury consumers, in particular, are more globally-sensitive since these are people at the highest levels of business, with management and budgetary responsibilities in their companies and who are reading The Wall Street Journal, The New York Times, watching CNBC and tapped into Bloomberg,” she said.

“They know what is going on in the world and will make personal spending decisions with an eye toward that.”

Holiday cheers
Even though the stock markets are shaky, there still may be hope for luxury brands especially since a dip in the bourses is not incredibly shocking to consumers anymore.

“To be honest, I don’t think consumers are so concerned,” RSR’s Ms. Rosenblum said.

“The global stock markets are clearly freaked about it, but apart from portfolio issues, I think the problem is a bit over the head of most people,” she said.

This will probably remain true in the fourth quarter since end-of-year holidays will always be a time for splurging.

Nonetheless, marketers cannot assume that consumers will spend if the stock market is uncertain.

Emphasizing quality and value of products and services will likely help to coerce consumers to buy, especially since shoppers may be more likely to buy one thing that will last a long time than a few cheap things.

“My advice to luxury companies is to keep your expectations low and maybe you’ll get a happy surprise at the end of the quarter,” Unity’s Ms. Danziger said.

Final Take
Rachel Lamb, associate reporter on Luxury Daily, New York

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