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Luxury Trends for 2011: The Latest From The Luxury Institute via [luxist]
by Susan Kime
The Luxury Institute conducts independent research with wealthy consumers about their behaviors and attitudes on customer experience best practices. Their white papers on luxury trends and consumer attitude change emerge consistently throughout the year. The most recent was published on October 10, 2011, on emerging luxury trends for 2011..
The Institute states, ” As the luxury industry enters the last quarter of 2010 and prepares for 2011, executives are grateful for what could have been a worse year considering the state of the world’s economy. The truly global top-tier luxury brands are surging in China, while holding their own in the US, Japan, and Europe. Leading public companies have done much better than privately-owned brands by using their heritage, innovation, and resources to gain market share. Many family-owned European brands, rich with history but lacking innovation, have suffered and are desperately looking for capital. Overall, the industry has seen tepid growth; this trend is likely to continue for the next three years unless some unforeseen, and highly unlikely, positive event occurs and saves the global economy.”According to the Luxury Institute, here are some trends that have emerged in 2010 and should continue in 2011:
1. A Deepening Focus on Brand Values and Service Values
In his recent book on luxury strategy, Jean-Noel Kapferer stated that unlike mass consumer brands, luxury firms don’t need a brand positioning (e.g. Hertz: #1 in Rent-a- Car , Avis: We try Harder), but they do need an identity. The Luxury Institute states, “Brands must create their identities not only by the name, personality and style of the founder, but also through values by which they should be known and publicly judged. They can be one comprehensive set of brand values that establish the company personality while also acting as service values which define the customer experience.” Brands can also choose to develop two distinct but related sets of brand values and service values. In a recent Luxury Institute LCRMA (Luxury CRM Association) survey, 90% of luxury executives agreed that luxury culture and values are directly linked to positive financial results. .
2. Luxury Brands Purge its Out-of-Touch, Arrogant Staffs
“As top-tier luxury CEOs and their Boards discover the importance of a benevolent culture and values,” the Luxury Alliance states, ” they are also beginning to realize that the people who manage and deliver customer experiences must fit the new customer culture In the sales and customer-facing ranks, people will soon be selected on their abilities to be brand and product experts, earn trust and build lasting customer relationships. Lone Ranger, toxic sales professionals who are currently tolerated will soon be out of fashion. Ritz-Carlton, Mandarin Oriental, Four Seasons, Lexus and Nordstrom have been doing this for years, but even they will have to move to a higher level of cultural relevance and practice, as companies like Zappos prove that there is far higher ground to reach in terms of selecting customer-centric people, living the values and transparency.”
3. Websites!
One senior luxury executive recently told the Luxury Institute that “It’s a dark day for luxury when Zappos delivers a far better luxury experience than any luxury brand”. As luxury retailers learn to leverage the Internet for e-commerce, they are also learning that one thing affluent consumers expect from their online experience, if the need arises, is the availability and opportunity for quick, easy and immediate direct communication. In a recent Luxury Institute WealthSurvey, 62% of affluent consumers stated that when shopping online they feel more comfortable if they can call someone directly for assistance, and 60% said they are likely to abandon their online purchase if they cannot find quick answers to their questions on the website. In addition, 45% expect an obvious phone number to speak with a live sales or customer service representative. While luxury struggles with the answer, Zappos has beat them to it and gained the high ground. The secret that Zappos has learned is that only a small percentage of people need this call service very often. Look for most luxury brands to understand the connection between the call center and online channels and create a far better experience for customers in 2011.
4. Clienteling Goes from a Hobby to a Discipline
In a recent Luxury CRM Association Clienteling survey, only 25% of affluent consumers reported that they have a relationship with a sales associate at a luxury brand. That was actually a high water mark, as other surveys that Luxury Institute partners have conducted indicate that only 8-15% of customers report having a relationship with a sales associate at top luxury retailers. Why is this important? Because this small group of luxury consumers give a retailer almost twice as much in wallet share. They also are likely to continue buying more over time if they have a relationship with a dedicated sales professional.
5. Luxury Mobile Applications Come of Age
Top luxury brands now well into a few years of e-commerce, and having finally ventured into social media, are determined not to miss the soon-to-explode mobile device shopping party. Luxury Institute research on the wealthy consumer use of mobile devices shows that 76% compare prices via mobile devices, while a rapidly growing 27% have purchased via a mobile device. In addition, 21% report that they use mobile devices to look up respective product information while shopping in stores. We are near a tipping point where mobile devices will replace the laptop for many activities and transactions and luxury brands are racing to be a step ahead for a change. Tiffany‘s recently-launched mobile application for finding your perfect engagement ring is a good example of a simple and practical innovation that seeks to serve its customers.
6.Luxury Equips Sales Professionals with In-Store Mobile Devices
Luxury is about to begin testing equipping its sales professionals with mobile devices such as iPads and iPhones in its stores. They can also be used to take customers through rich sales presentations that include video and audio enhancers. They can be used to search out-of-stock inventory anywhere in the retail system, conduct an online transaction, and arrange for delivery in real time. As customers opt in to having their own mobile devices announce their arrival at the store, sales professionals can be alerted to greet customers by name with custom offers ready, or at minimum be aware of what offers have already been sent to them. These applications are only the beginning of the use of mobile in stores as a customer experience enhancer for the sales professional as well as the customer. Mobile devices combine personalization efficiency and effectiveness with an unprecedented touch of caring and nurturing that are the Holy Grail of a true luxury experience.
A Recap: 6 Trends That Defined Luxury in 2010
BEVERLY HILLS, Calif. (TheStreet) — Despite being on the tail end of the worst recession in modern history, 2010 proved a winner for a few select hotels, restaurants and nightclubs whose business models and practices allowed them to rise to the occasion.
Microchain boutique hotels
After beginning as a hipster-granola hotel concept in the Pacific Northwest, Ace Hotels has spread across the United States with a celebrity-studded outpost in New York and destination resort in the California desert.
The bathrooms on Emirates’ 15 Airbus A380s go beyond luxurious in first class. The airline has become the first and only to offer in-flight showers.
The realization that artists on a budget need stylish and comfortable rooms too has evolved into bohemian enclaves that in New York include a Michelin one-star eatery by the creators of the Spotted Pig. Their gastropub eatery is just as popular with city folk as it is with hotel visitors.
In Palm Springs, Ace has brought a Dash Snow sensibility to the destination pool party, with celebrity jam sessions and indie DJs recruited from LA to spin lazy Sunday afternoons by a pool stewing with tattooed rock stars and models on winter break from the Milan-Paris-Tokyo-Ibiza circuit.
Membership clubs
They’ve been a staple of London social life since the advent of the Groucho Club and Soho House, the latter migrating through Berlin and New York before sweeping across the United States this year. The membership club concept thrives most notably in Los Angeles, where Nick Jones’ Soho House has essentially a monopoly on celebrity dining and nightlife from its penthouse West Hollywood location along the Sunset Strip.
Potential members scour their circle of friends for sponsors only to line up for a multimonth waiting list from which only a connected few at a time are selected to join.
November saw the opening of Soho Beach House in Miami, which includes a hotel that was the party site du jour at Art Basel 2010. Meanwhile, Miami’s perennial Casa Tua was set to expand to Aspen, where the Caribou Club has long had a stranglehold on the billionaire and ski bunny set.
Are you a friend of Andre Saraiva?
He seems to be everywhere these days. In Paris his Le Baron nightclub is the fashion stalwart of local nightlife, while the Hotel Amour he co-owns has become the most fashionable address for one-name artists and celebrity designers. Ditto for Japan, where Le Baron is the hottest club in Tokyo.
In United States, Saraiva has the Boom Boom Room and Le Bain atop the Standard New York and plans for a nightclub in Chinatown. Pop-up installments of Saraiva’s nightclubs are the “it” events at the Cannes Film Festival and Art Basel, where he was essentially handed the keys to Delano’s famous Florida Room for the past two year.
In St. Tropez he’s transformed the once derelict Hotel Ermitage into a bastion of cool on the scale of LA’s Chateau Marmont, but with a French accent.
Saraiva, only 38 and already the new Ian Schrager, is the man of the moment, the coolest guy in town — any town.
Let’s make a deal
It wasn’t long ago that the name Gilt Groupe was barely pronounceable to the average Internet consumers, let alone recognized as a discount retailer specializing in deals for high-fashion goods for subscribers. This year Gilt launched its JetSetter travel deals, offering cut rates at selected hotels that range from quirky boutiques to the best luxury addresses in Paris.
The formula has brought competition from such players as Tablet Hotels, Design Hotels and Leading Hotels of the World that now allows even the high end of the travel market to scout out a deal without embarrassment. Drawbacks include a not always stellar selection with prenegotiated availability and, often, required prepayments. The endless emails for affiliated and launching products also detract from the experience of a once exclusive membership now open to pretty much anyone.
Shower before landing
The advent of the French Airbus A380 has allowed a creative interpretation of the traditional first class flying experience, and Emirates, with its impressive 15 of the craft, offers the most luxurious and over-the-top configuration: It has become the first and only airline in operation to offer in-flight showers.
Emirates’ Private Suites, touted by Carrie Bradshaw in Sex and the City 2, are equipped with sliding doors and minibars of almost full-size premium goodies. There’s also two shower spas at the front of the first-class area — complete with Bulgari bath products and fluffy Italian linens — offering a burlwood boudoir that’s become the hottest amenity in the aviation industry.
Celebrity chefs
Celebrity chefs, the latest must-have amenity for new hotels, are a sure-fire way to keep guest dollars in house as well as a burgeoning business for hoteliers looking to divest real estate during tough times. This year has seen the debut of Daniel Boloud’s DB Bistro Modern at the new JW Marriott Marquis Miami, J&G Steakhouse by Jean-George Vongerichten at St. Regis Deer Valley, the highly touted WP24 by Wolfgang Puck at the Ritz Carlton at LA Live and Michelle Bernstein at the Omphoy in Palm Beach.
Pierre Gagnaire seems to be in front of the trend, conquering the globe with a new Reflets eatery in Dubai, a two-star Michelin-rated restaurant at Les Airelles in Courchevel and an outpost at the Mandarin Oriental in Las Vegas. With no shortage of celebrity chefs, Vegas is also welcoming Scott Contant’s Scarpetta and Jose Andres’ Jaleo, which just opened at the Cosmopolitan Las Vegas.
Look for even bigger chef names to debut next year. The world’s most heralded chef, Heston Blumenthal of Fat Duck, given three stars by Michelin, will debut a concept eatery at the Mandarin Oriental Hyde Park in London that already has its own Bar Boulud in the basement.
Ready, set … click! Roundup of Cyber Monday deals on Luxury goods! via [usnews and nyt]
| Author: Loren Ridinger | via [MyFashionCents]
Wiped out from shopping yet? I’m not 🙂 Hope you snagged some amazing deals on Black Friday! You also have a chance to do some damage on Cyber Monday – here’s another list of great sales and promo codes for tomorrow:
ARDEN B. 20% off entire site, plus free shipping over $25
ASPINAL OF LONDON 20% off $185 or more with code CYBMN29
BEAUTYTICKET.COM 30% off with code CYBER30
BEBE 20% off, plus free shipping
CHARLOTTE RUSSE 25-50% off everything, plus free shipping and free sparkly compact with orders of $35 or more
EDDIE BAUER 30% off, plus free shipping with code CYBERDAY
FINISH LINE $10 off $60 or more with code RG2010
ICE.COM Up to 80% off jewelry, plus free shipping with code SCM10
KOHL’S Extra 10% off $100 or more with code JINGLE
LANE BRYANT Buy one, get one free
LORD & TAYLOR 25% off site wide with code CYBER
MACY’S Specials, plus free shipping on $75 or more with code CYBER
RICH & SKINNY 30% off full priced items with CYBER2010
SHOES.COM 20% off, plus free shipping with code CYBER
SHOEMALL.COM 25% off $25, plus free shipping with code MONDAY25
SHOPBOP Up to $500 off your order with code BIGEVENT
WET SEAL 20% off entire site
Love,
Loren
Luxe Life
Luxury is no longer the sole province of the elite. Upscale goods and services now target a much broader market. Kimberly Castro, deputy business editor of U.S.News & World Report, takes a look at the luxe life, from fine wines and cars to high-end real estate and wealth management. Though no elitist, Kim does admit a fondness for a bold bottle of Scout’s Honor from Venge Vineyards and satiating her wanderlust in Europe.
Cyber-Monday: Deals on Luxury Goods
If you’re like me, you avoided the out-of-control mob of feverish shoppers at retailers on Black Friday. You may have decided to wait for discounts today, otherwise known as Cyber-Monday, the unofficial kickoff to the online retail season. You may be shopping from the comfort of your own home or “taking a break” at work; either way, online retailers see today as yet another opportunity to attract consumers with more promotions.
When you think of great deals, retailers like Wal-Mart, Target, and Best Buy may come to mind. But deep discounts abound on luxury goods, and you can save as much as 40 to 70 percent on men’s and women’s designer apparel, shoes, and handbags from the likes of luxury retailers Barneys New York, Neiman Marcus, and Saks Fifth Avenue.
Here are more online sales to satiate your holiday shopping needs:
- The iconic British luxury house Burberry is offering up to 50 percent off on its classic looks, from women’s wool coats and men’s cashmere sweaters to belts and scarves.
- High-end carpet and rug emporium ABC Carpet is featuring up to 75 percent off its exclusive designer collections.
- Bergdorf Goodman, owned by Neiman Marcus, is offering up to 50 percent off on its designer collections, shoes, and handbags. You can also receive free shipping with any purchase.
- Online jeweler Blue Nile has pearl earrings, charms, and sterling silver necklaces for under $100.
- Spend $25 or more at beauty retailer Sephora, and you’ll get free shipping.
- If your calendar is chock-full of holiday events, online retailer Bluefly is offering up to 40 percent off on party dresses, including the Nicole Miller, Vera Wang, and Laundry labels.
- At Barneys, Christian Louboutin’s Sigourney ankle boots, originally priced at $1,030, now go for $615 at the Barneys website.
- Nordstrom delivers cashmere scarves, gloves, sweaters, and hats for under $100.
- Enjoy up to 50 percent off of Fendi, Marc Jacobs, and Jimmy Choo goods at online luxury fashion retailer Net-a-porter.com.
Happy shopping!
RowNine Cyber Monday deals on luxury goods:
- Free invite to RowNine for WalletPop readers
- 80%off all Eyewear
- Discounts Mulholland Leather
- Savings on timepieces and jewelry starting on Tuesday
Secret’s Out: Sample Sales Move Online
By CLAIRE CAIN MILLER and JENNA WORTHAM
via [New York Times]
Daniela Busciglio still winces at the memory of shivering in line for hours to get into New York sample sales, then shoving her way through throngs of other shoppers looking for deals on designer clothes.
Andrea Mohin/The New York Times
Dany Levy, DailyCandy’s founder and editorial director, left, and Eve Epstein choosing items to photograph for a sample sale.
But now the mobs are moving online, to sites like Gilt, Rue La La, One Kings Lane, Ideeli and HauteLook. On the Web, the shopping is just as competitive, but it is no longer a blood sport.
“Who wants to go to sample sales with lines out the door and girls scratching to get in?” said Ms. Busciglio, 27, now a graduate student at the University of Wisconsin-Madison.
Online, she said, “I can take my time and not have to worry about people getting up in my face.”
The private-sale sites — a misnomer because most of these so-called exclusive sites are open to anyone who signs up — have become a thriving corner of online commerce. Sites using the same “while supplies last” approach have sprung up recently to sell home furnishings, beauty products and travel packages.
The business model is simple: the sites buy mostly overstocked clothing and accessories from brand-name designers, then discount them deeply. Adrenaline-pumped shoppers rush to get the deals because the items are often gone in a few hours.
The sites try to recreate the rush of a warehouse sample sale, minus the trampling and shoving, but they borrow as much from the Home Shopping Network as they do from Saks Fifth Avenue. After shoppers add an item to their cart at Gilt, for example, they get a 10-minute countdown before they lose the item.
For Matthew Rodriguez, 29, a Web marketer and Gilt shopper, the sales turn shopping into a game. “Knowing the sales start every day at noon makes me really competitive to get an item before someone else gets it,” he said. He recently bought a pair of Clae white patent leather sneakers for $38 on Gilt. They can sell for as much as $135 in retail stores.
More mainstream retailers are also adopting the idea. Saks, for example, is holding 24-hour half-price sales on brands like Hervé Léger.
Others are using the idea for holiday promotions. On the Monday after Thanksgiving, a big online shopping day known as Cyber Monday, Ashford, which sells luxury brand watches, discounted a different watch every two hours on its site. Blue Nile, the jewelry site, is offering a different deal every day until Dec. 23.
By discounting one item at a time, the retailers attract bargain-seekers and avoid the deep discounting done storewide last year, thereby protecting their profit margins. By 3:10 p.m. on Cyber Monday, Blue Nile had sold out of a five-carat diamond bracelet, marked down to $3,950 from $5,300.
One of the buyers, Dan Stanley of Falls Church, Va., said that he had not heard of private sales before and that for four days, he had been shopping for a bracelet for his wife. He bought it on the spot. “The ‘one day’ caught my eye, and I wouldn’t have risked it,” Mr. Stanley said.
Private-sale sites are attracting brand-name investors. Kleiner Perkins Caufield & Byers, the venture capital firm that backed Google and Amazon.com, invested on Wednesday in One Kings Lane, which sells home décor. Gilt Groupe raised $55 million from Matrix Partners and General Atlantic, and Rue La La’s parent company was recently acquired by GSI Commerce for $180 million.
The concept seems tailored to recessionary times. Any guilt that consumers feel over spending thousands of dollars on unnecessary items can be replaced by bragging rights for finding a killer bargain, like a $4,500 diamond necklace that was recently on sale for $2,250 at Gilt.
“We started this at the worst possible time and got traction right out of the box,” said Susan Feldman, a founder of One Kings Lane. People still want to shop, but in the privacy of their homes, she said. “They just don’t want to be seen walking down the street carrying a Bloomingdale’s or Barneys or Bergdorf bag.”
It works for the fashion industry, too, because as the economy slumped, stores deeply cut inventory, which left some designers with excess stock, depending on their production calendars. Some high-end brands view the sites as a place to unload inventory without sullying their image by having their merchandise appear on Overstock.com or on the racks at Filene’s Basement. The members-only Web sites also ensure that search engines will not locate and list the discounted products.
Juliska sells its full-price tableware, like a $625 stoneware soup tureen, at luxury department stores like Neiman Marcus. It sells off-season products on One Kings Lane, Gilt and Rue La La.
Selling those items at T. J. Maxx, as some of Juliska’s competitors do, “is suicide for a luxury brand,” said Dave Gooding, the company’s chief executive. “With flash sales, you have the beauty of it being a one-day sale that is done in a very quick, efficient, tastefully done way, as an alternative to your product sitting on a dusty shelf for six months.”
For shoppers, the sites provide a selection of items, akin to a boutique, so they do not have to wade through the thousands of items on bigger e-commerce sites.
Swirl, a private-sale site that went live on Nov. 19, is betting on the allure of a handpicked collection. It was started by DailyCandy, which publishes e-mail newsletters about fashionable activities in various cities.
The company’s reputation for pointing readers to up-and-coming designers will help differentiate its sample sale site, said Dany Levy, DailyCandy’s founder and editorial director. “They trust us, and they know we’ve done our homework,” she said.
But private-sale sites could run into trouble as manufacturers and stores cut back on inventory. “The universe of what’s overstock is not an infinite universe,” said Sucharita Mulpuru, an e-commerce analyst at Forrester.
To maintain their growth, many of the sites have recently expanded beyond high-end, overstocked apparel.
Ideeli sells spa and vacation packages in addition to clothes, and One Kings Lane has avoided clothes altogether. Gilt now sells gadgets, like a Tivoli radio and a Jawbone wireless headset, and offers products for men, children, the home and younger women with smaller budgets. Gilt also started a site called Jetsetter that sells travel deals, like a room at the Hôtel de Crillon in Paris marked down to $500, from $795.
Susan Lyne, Gilt’s chief executive, said that as long as people coveted something, they would be eager for a deal. “Gilt and these other shopping sites allow people to do the thing that gives them pleasure, without all that guilt,” she said.
Why Are the Top Luxury Websites Incompatible With Apple iPad? via [psfk.com]
Top 10 Luxury Brands’ Sites Fail To Work On iPad
A review by the team at PSFK shows that most luxury brands are
unprepared to leverage the changes in web use that products like
Apple’s iPad and iPhone are driving. Out of the top 10 luxury brands
ranked by Forbes in 2009, none of their websites worked
sufficiently to match their desktop-web-experience. Only Gucci seems to have
created a site that can handle the technology requirements that Apple has placed on its
mobile devices.
The key issue is that all the key luxury brands have designed their
sites to use Adobe’s Flash. Flash offers an animated but
controlled web-design experience but Apple’s Steve jobs has said
that the iPad
and iPhone
will not use Flash software partly because of the drain it puts onto
battery life.
Apple has sold an estimated 1 million iPads in the first month. The
world’s luxury brands seem to be failing to keep up with a gadget
loving shopper who will spend between $500 and $1,000 on what may
consider as a supplemental device for a user. Later this month Apple
will start taking orders for the iPad from key luxury markets like
Japan. Apple has already cornered 46% of the smartphone market in Japan
and the world’s most mobile web savvy audience are bound to lap up
Apple’s new tablet.
When viewed through the iPad, many of the luxury brands’ websites
simply fail to load and instead ask the user to download Flash – a
request which is not an option for the device’s owner. Three brands of
the top 10 offer a store locator but the Chanel’s offering is
so poorly designed (read: not even contemplated) that it looks like it
was created for the worldwide web of 1993.
Brands need to realize that the iPad offers a different experience.
While some have invested in Apps to overcome the iPhone’s limitation –
the fairly light iPad with its 9 inch screen brings some focus back to
the browser driven web. Several commentators have suggested that the
change the way people will consume entertainment in the home but
research that the PSFK
consultancy team has conducted for leading corporations has shown
that the device will fuel online retail too.
Unlike the cumbersome laptop, the iPad is a device that can used
while the user simultaneously enjoys other entertainment options like
watching TV. Brands and retailers need to create tablet friendly
electronic catalogs that allow people to browse as they’re curled up on a
sofa with the TV flickering in the background.
PSFK Review Of Top 10 Luxury Brands On The iPad:
Nothing. Just a Flash logo.
Fails to load. A message requests users to download Flash – an option
that is not available for iPad users.
Fails to load. A message requests users to download Flash – an option
that is not available for iPad users.
Nothing.
Fails to load. A message in various languages requests users to
download Flash – an option that is not available for iPad users.
Fails to load. A message in various languages requests users to
download Flash – an option that is not available for iPad users.
Main page fails to function. The store listings have no design
element.
The store appears to function well and purchases can be made. Videos
are not viewable as they are currently served by Flash.
The brand messaging and store locator sections of the site fail to
load. The ecommerce store operates but images of the products fail to
appear.
A
basic site is offered with warning messages throughout asking the user
to download Flash. The catalog works but there is no purchase option.
Beauty News: Hermès Launches NEW Perfume via [elle]
Hermès Launches New Perfume
The new scent, Voyage d’Hermès, captures the
essence of travel
When in-house Hermès perfumer Jean-Claude Ellena was asked to mix up a
new fragrance for the storied luxury brand that captured the essence
of travel, he avoided thinking in terms of specific global
destinations. “I wanted to convey the emotions surrounding a journey,”
he says. “The anxiety you feel before going away, the thrill of the new
experience, and the comfort of having something familiar to carry with
you along the way.” The resulting juice, Voyage d’Hermès, is a captivatingly woody, musky
scent that can be worn by both men and women wherever they go. “I don’t
believe that notes need to be gender-specific,” Ellena says. “What
smells good simply smells good.” Bottle designer Philippe Mouquet had a
similarly romantic-yet-utilitarian notion in mind when he set to work,
drawing inspiration from a flip-case magnifying glass he found on a
path while walking in the woods. The fact that the finished flacon also
resembles a stirrup—hearkening back to Hermès’ origins in 1837 as a
luxury saddlery—is, he says, just “a lucky coincidence.” When you think
about it, that’s often what the best journeys are all about.
OpuluxeLtd.com Luxury Lifestyle Special Report: Platinum Brands via [Forbes]
Beyond The Balance Sheet: Platinum Brands
Christina Settimi and Kurt Badenhausen
The most valuable luxury brands will shine in a recovery.
In Pictures: Platinum Brands
To some, BMW seemed a bit out of touch with hard times when it rolled out an exuberant ad campaign called “Joy” this year. Turns out, the ad campaign is in tune with the opportunities BMW and other luxury brand makers anticipate as the recession fades.
Last year was the worst year ever for global luxury goods, with worldwide sales falling 8%. But in a look at the world’s most valuable luxury brands, Forbes identifies 10 that are poised to thrive in better economic times. These brands, including BMW and Louis Vuitton, share some qualities that help keep them strong even when wealthy consumers are curtailing spending.
The companies behind these brands emphasize their products’ quality, longevity and pleasure-giving features through marketing efforts that make it likely these brands will continue to do well, especially if luxury sales around the world grow by 4% to $210 billion this year, as predicted by Bain & Co., the Boston-based consulting firm.
Feng Li/Getty Images
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No. 10: Porsche
Parent Company: Porsche
Brand Value: $4.8 billion
Brand Sales: $8.7 billion
Statia Photography/Getty Images for Cartier
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No. 9: Cartier
Parent Company: Richemont
Brand Value: $5.4 billion
Brand Sales: $3.3 billion
Currently with 32 boutiques in 18 cities across China, Cartier CEO Bernard Foras has said he aims to make China its No. 1 market in three years with at least 55 boutiques.
FABRICE COFFRINI/AFP/Getty Images
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No. 8: Rolex
Parent Company: Rolex
Brand Value: $5.5 billion
Brand Sales: $3.4 billion
Rolex is the most profitable brand in watches. Sales are expected to be up 15% this year, fueled by sales in emerging markets led by China according to analyst Jon Cox of Kepler Capital Markets.
PHILIPPE LOPEZ/AFP/Getty Images
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No. 7: Chanel
Parent Company: Chanel
Brand Value: $5.6 billion
Brand Sales: $3.3 billion
Coco Chanel’s mantra: “Fashion fades, only style remains the same” is still the guiding force behind her brand. But what is equally important to Chanel’s appeal is its creative director, Karl Lagerfeld, one of the most recognizable men in fashion with his silver ponytail, dark sunglasses and black suit.
LIU JIN/AFP/Getty Images
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No. 6: Hermes
Parent Company: Hermes
Brand Value: $5.7 billion
Brand Sales: $2.5 billion
The infamous waiting list for the Birkin bag, which retails between $6,000 and $100,000, is history for the 173-year old company. The company now aims to grow by expanding its customer base. It opened its first men’s only store in New York in February with a made-to-measure program aimed at providing custom apparel.
AP Photo/Jeff Chiu
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No. 5: Coach
Parent Company: Coach
Brand Value: $7.4 billion
Brand Sales: $3.2 billion
Coach’s strategy to cut prices last year–a move that resulted in it offering more than half of its products for under $300–paid off. Sales volume jumped and profits surged. The company is now focusing on middle-price-range products, and expanding its new pricing strategy in Europe.
CHRISTOPHE SIMON/AFP/Getty Images
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No. 4: Gucci
Parent Company: PPR
Brand Value: $8.2 billion
Brand Sales: $3.0 billion
With a new CEO at the helm last year, Gucci unveiled a brand strategy that included cutting production and multiple variations of the same style. It launched a new ad campaign promoting the brand’s heritage that featured Guccio Gucci describing his dream as an artist in Florence in 1921.
AP Photo/Joerg Sarbach
No. 3: Mercedes-Benz
Parent Company: Daimler AG
Brand Value: $18.8 billion
Brand Sales: $63.2 billion
While many automakers advertise price cuts, Mercedes emphasizes its company’s heritage: Its cars are the result of 100 years of German engineering. It is currently vying with BMW to be the biggest luxury auto brand in China and says it plans on outselling its German nemesis by 2011 with a number of cars designed exclusively for Chinese consumers.
AP Photo/Christophe Ena
No. 2: Louis Vuitton
Parent Company: LVMH
Brand Value: $19.0 billion
Brand Sales: $6.3 billion
In its 156 years, Louis Vuitton has held steadfast to a policy of zero discounting–a practice it says enriches the value of the brand. To remind its customers what they are paying for, the new brand campaign features artisans hand-finishing goods at a workshop table.
AP Photo/Grace Kassab
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No. 1: BMW
Parent Company: BMW
Brand Value: $19.9 billion
Brand Sales: $56.6 billion
BMW is gaining market share in China, the largest auto market in the world, by designing custom cars to meet the demands of Chinese consumers and tailoring its advertising to align with Chinese culture.
Few brands can sell luxury as a necessity and get away with it like Porsche. A recent ad for the new Porsche 911 reads: “…You strain to think of something else that has stayed this true to its ideals for 46 years. You come to the realization that, in the age of the superfluous and superficial, the unrooted and the unserious, the 911 is necessary. Very necessary. The Porsche 911. There is no substitute.”
Forbes’ Beyond the Balance Sheet department looks at the numbers behind the numbers–or ways of analyzing companies that are different from the usual metrics, such as book value and earnings. To identify the Platinum Brands among luxury goods, we looked at more than 30 leading brands in autos, retail, fashion and accessories to determine the world’s most valuable. We leaned on Jeffrey Parkhurst, managing director of business strategy at WPP ( WPPGY – news – people )-owned media agency Mindshare, to help value these brands.
The first step was to determine earnings before interest and taxes for each brand. Forbes averaged those earnings over the past three years and subtracted from earnings a charge of 8% of the brand’s capital employed, figuring a generic brand should be able to earn at least 8% on the capital employed.
Forbes applied the maximum corporate tax rate to that net earnings figure. Next, it allocated a percentage of those earnings to the brand based on the role that brands play in that industry. Brands are crucial when it comes to apparel and perfumes, but not so much, say, with airlines. Pricing and location are more important for them. To this net brand earning number, we applied the average price-to-earnings multiple over the past three years to arrive at the final brand value. For privately held outfits we applied an earnings multiple for a comparable company.
The companies that came out on top on our list of most valuable luxury brands fared reasonably well last year, one that was disastrous for many companies. Sales of Louis Vuitton, the marquee label of parent company LVMH, rose more than 10% in 2009 to $6.3 billion, despite the recession. Brand sales, which represent 75% of the fashion and leather goods segment of the company, had double-digit growth in the first quarter as well.
What helps set some of these brands apart? The makers of the world’s top luxury brands don’t apologize for the sky-high price tags attached to their products. LVMH’s Louis Vuitton, for one, has never discounted a single item, citing customer loyalty and product value as its reasons. That makes sense: Why would a customer pay full price for an item if they knew that in three months it might be had for 25% less?
Even when the top luxury companies introduce less expensive offerings, they often don’t advertise the price. When Mercedes-Benz introduced its C-Class, its most affordable sedan, it emphasized that it is a product of 100 years of German engineering, a key brand message. And most of the most valuable brands kept advertising during the recession: Louis Vuitton, for one, rolled out a celebrity-flecked campaign. In one print ad, dancer Mikhail Baryshnikov stands on a platform barefoot while photographer Annie Leibovitz watches him from the floor.
The makers of the world’s most valuable luxury brands know that a good portion of their future sales will come from emerging markets, especially China, where sales in the luxury goods market expected to increase 15% there this year, says Bain.
“With Asia being the growth market for luxury players, brands will tailor their product offerings to meet the needs of more diverse customer segments,” says Claudia D’Arpizio, Milan-based partner at Bain.
Research by Ritika Sinha
Hennessy Ellipse Cognac via [ExoticExcess]
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Hennessy Ellipse Cognac
When it comes to cognac, Hennessy has long been a leading name. Hennessy produces more than 40 percent of the world’s Cognac and is the No. 1 selling brand in the United States. Hennessy’s legacy began seven generations ago with Irishman Richard Hennessy, who started the company as a trading post for his productions of eau de vie. Since then, the company has grown to a huge brand, now owned by luxury goods conglomerate LVMH (Moët Hennessy Louis Vuitton).
In keeping with its legacy of excellence, Hennessy’s Ellipse Cognac now comes in an elliptical Baccarat crystal decanter that was specially designed by Thomas Bastide for Hennessy. It is priced at $6,500 and sells at Harrods.
