-- 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
commodities.
-- 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
(72%).
-- 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 (www.LuxuryInstitute.com)
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
(www.LuxuryBoard.com), 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: dotty.giordano@evins.com E-mail: enid.lewin@evins.com The Luxury Institute, LLC Martin Swanson Business Development Phone: (914) 909-6350 E-mail: mswanson@luxuryinstitute.com