Luxury Brands Failing to Deliver on Fundamentals of Luxury at Critical Time for the Industry

Consumers Cite Commoditization and Signal a High Level of Dissatisfaction With Customer Service, According to Luxury Institute "State of the Luxury Industry 2009" Survey

NEW YORK, NY--(Marketwire - February 10, 2009) - The independent New York City-based Luxury Institute ( today released its latest WealthSurvey documenting the Current State of the Luxury Industry. Questions for the survey were developed in cooperation with Luxury Brand Forum (

According to a sample of 500+ high net-worth consumers, luxury brands are failing to deliver on the fundamentals of luxury at a critical time for the industry:

--  For wealthy consumers, superior quality (82%), superior craftsmanship
    (78%) and superior customer service (60%) are the top three requirements of
    a luxury brand. Yet, more than one-third of consumers say luxury brands are
    worse today than in the recent past on delivering superior customer service
    and on failing to have salespeople who are experts in their products.
--  Half of consumers earning more than $200k annually and 46% of those
    with a net worth more than $1 million think luxury brands are becoming
--  64% of wealthy consumers believe luxury goods prices are too high
    relative to the value they deliver. One reason may be that while major
    luxury brands are trying to spread themselves into as many categories as
    possible, 68% of the wealthy consumers believe a luxury brand can only be
    an expert in a few truly related product categories.
--  The failures come at a time when 43% of wealthy consumers say they are
    becoming more practical in their luxury purchases, are becoming more budget
    conscious (43%) and are purchasing more of what they need rather than what
    they want (30%).
--  62% of wealthy consumers say that the current state of the economy has
    changed their view of the luxury industry. When asked why in an open-ended
    format, consumers cite the following as key reasons for the change of view:
    becoming more budget-conscious and prudent, the need to re-think and re-
    prioritize, a strong feeling that luxury goods are too "mass" vs. price, a
    sense that flaunting luxury at this time is insensitive and a desire to
    help others rather than spend on themselves.
--  A majority of wealthy consumers state that they like to buy luxury
    items for the quality because they last longer and keep their value (77%)
    and that they buy expensive items for their own pleasure, not to show off
--  Half of luxury consumers cited discounts and sales as a major
    influencing factor in making luxury purchases and more than half of wealthy
    consumers state that they are likely to respond to a special offer or sale
    from a luxury brand over any other factors.

"The state of the luxury industry in February 2009 is quite sobering," says Milton Pedraza, CEO of the Luxury Institute. "We have an industry that, according to wealthy consumers, fails to deliver on the fundamentals, especially service and trained salespeople. Half the customers surveyed believe luxury is becoming a commodity, and prices are too high. At a time when consumers are cutting back for many reasons, the luxury industry's two biggest draws for consumers are discounting and sales. Luxury leaders need to quickly get beyond the price and cost-cutting exercises and start innovating again on quality, craftsmanship and, especially, customer service. In this hyper-Darwinistic environment, many brands that fail to innovate into the true luxury high-ground will go past the point of no return."

A national sample of 500+ wealthy American consumers was surveyed online by the Luxury Institute. The Institute's respondents had an average income of $308,000.00 and an average net-worth of $3.9 million.

About the Luxury Institute (

The Luxury Institute is the uniquely independent and impartial ratings and research institution that is the trusted and respected voice of the high net-worth consumer. The Institute provides a portfolio of proprietary publications and research and consulting services that guides and educates high net-worth individuals and the companies that cater to them on leading edge trends, high net-worth consumer rankings and ratings of luxury brands, and best practices. The Luxury Institute also operates the Luxury Board (, the world's first global, membership-based online community for luxury goods and services executives, professionals and entrepreneurs.

Contact Information: For Further Information, Please Contact: Evins Communications, Ltd. Dotty J. Giordano, Director Enid Lewin, Vice President Phone: (212) 688-8200 E-mail: E-mail: The Luxury Institute, LLC Martin Swanson Business Development Phone: (914) 909-6350 E-mail: