Some Stuff I Read Today

30-day Challenge – Day 28

It’s been a wonderful and exhausting day. Our LuxRe Club did some consulting work for a large VA winery today, and I’ve been busy doing some necessary follow up.

Today I’m posting a link to an article, entitled “Top 8 Luxury Travel & Marketing Trends for 2012”. I recommend it not only because I read it, but because I do not believe I could give you the gist of it without omitting some important information.

If you are thinking of starting a new business catering to affluent consumers, I recommend you take the 10 minutes necessary to increase your knowledge. The article may validate or refute some of your perspective, but I can assure you that it covers a lot of ground.

I also recommend you read “To Market or not to Market? The No-Marketing Approach“. I read the following lines and couldn’t stop because it’s one of the best luxe conceptualizations I have come across:

We can live without luxury, and we are consciously aware that when we buy it we are spending our money on something we don’t need. So why, in an age of financial instability and austerity measures, is luxury spending on the rise? The decision to purchase luxury good is closely tied to the importance of freedom – freedom of choice, or the freedom to spend our money as we wish.

– Dr. Isaac Mostovicz, consulting academic

Yao Ming Launches Wine Brands

30-day Challenge – Day 27

I’m not much of a sports fan, but I couldn’t help but notice recent stories about the former Houston Rockets star, Yao Ming, releasing a line of luxury wines in his native China. Continue reading

Please Define “Rich”

30-day Challenge – Day 26

There are a lot of words and phrases to describe the typical luxury consumer. You could use: wealthy, affluent, moneyed, well off, well-to-do, prosperous, opulent, well-heeled, and a bunch of other colorful words. Though today’s luxe buyers can be segmented into different income and wealth categories, we have usually characterized luxury with the most affluent segments of society.

In my post entitled, The Pulse of Luxury, I discussed the definition of “affluent”: those earning incomes of $100,000 or more. For the longest time (or as long as I’ve been around – not too long), much of the literature has considered $100,000 as the “rich” threshold. Well, if you read that post, you will remember that I raised a question as to whether we need to keep using that description because it does not seem to take inflation into consideration or consumer sentiment. Continue reading

Swatch: Creating a Shakeout in the Swiss Watch Industry

30-day Challenge – Day 24

A watchmaker at Edox, one of the Swiss companies challenging Swatch's decision to stop selling timepiece components.

For a company with revenues in excess of $6.5B, Swatch is considerably the worlds largest watchmaker. The Swiss company recently received approvals from the regulatory agencies to stop supplying competitors with the movements they use to make their timepieces. This is an ironic twist of events, because I am forced to ask myself, “why didn’t Swatch’s competitors invest in producing their own inner workings?”

Continue reading

Morningstar: Luxury Firms are Overvalued

30-day Challenge – Day 23

Luxury brand valuations – from Morningstar  

Aside from writing on this blog, I’ve got some other nice skills, particularly in the areas of financial analysis and valuation. I am also fortunate to be part of a select group of MBA students, who manage approximately $500K for the Mason School of Business. In my duties as an equity analyst for The Batten Fund, I cover the consumer staples & discretionary sectors, and as such all the securities associated with luxury firms fall under my purview.

Yesterday, Francesco Lavecchia, an equity data analyst with Morningstar Italy published an opinion piece on the biggest decision luxury brands are facing in their bids to enter the growing Asian market. There are two choices lux companies have in conquering Asia: Continue reading

Hospitality Jobs Coming in Europe

30-day Challenge – Day 22

As my classmates and I get closer to graduation in May 2012, the anticipation of finding a job only increases. Today’s post will shed some light on where some luxury companies may be hiring – specifically hospitality.

Hilton Worldwide recently made an announcement of its intention to add more than 8500 new jobs in Europe by 2014. Check out the press release here.

The company is opening more than 110 hotels in Europe, via new builds and conversions. Key growth markets for the company include the UK, Russia, Turkey, Germany and Poland.

A range of award-winning training and development initiatives are also available at Hilton Worldwide such as the fast-track graduate programme, Elevator, which identifies and nurtures talented graduates and high potential candidates from within Hilton Worldwide. These rising stars go through a thorough 18 month training programme before assuming their first management position, and then are usually fast tracked to senior leadership positions, with the aim of developing into successful hotel general managers.

Diamonds are Getting Pricey

30-day Challenge – Day 21

If you are an affluent consumer earning more than $100,000 in annual income, then the recent report by Bain & Company on diamond prices should worry you. If you make upwards of $250,000 a year, then you shouldn’t be as perturbed because you will not be greatly affected by the forecasted jump in diamond prices.

The global consulting firm has put out a report estimating that diamond demand will  grow at a 6% CAGR over the next decade. The company believes that as we approach 2020, diamond supply will not be able to keep up with demand due in part to the growing economies of China and India. Those markets alone are estimated to push diamond demand at a CAGR of 6.6% in diamond volume alone. While demand is estimated to grow, diamond supplies are only expected to grow by 3% (CAGR) in volume. Continue reading

The Pulse of Luxury

30-day Challenge – Day 19

As long as time continues, tastes will change, new desires will emerge, and premium goods and services will be valued above their regular substitutes. However, the definition of luxury will be a moving target depending on cyclical economic patterns and societal mores on the exhibition on wealth.

I have been reading a couple of books to help my thought on luxury and they all say the same things differently. Most of those books were published in times when special circumstances were affecting the luxury market (think 2001 dot-com bust or the 2007 housing bubble).The intention of this post is to bring attention to one of those varied views on luxury, but this one is important because, unlike the books I’ve been reading, this perspective has its relevance in the now, and it is supported by empirical data.

Ipsos Mendelsohn is an international market research company ranked high in the global playing field. For the past 35 years, the company has put out its annual Affluent Survey, a study of affluent households (incomes of $100,000 or more) in the US. The survey has been a key reference for many luxury brands because it is considered a reliable measure of the pulse of the US luxury consumer.

As a side note, I will say that the definition of affluent doesn’t seem to have changed in the last 7 years. Most, if not all of the books I have been reading use the same income definition. I wonder if we should think about changing that number especially because of the effect of inflation, or the fact that some luxury items are no longer accesible by just the wealthy – but I digress.

The results of the latest Affluent Survey warrant a view not just from those currently in the industry, but also from people looking to get hired in the space. These results may not tell you what the next best innovation will be, but if you are truly passionate about serving this specific segment of consumers, it might be useful to draw upon these insights in your interviews and casual conversations with luxe professionals.

I wouldn’t recommend anything I haven’t tried, so be rest assured your reading time will be well spent on these publications. You can get the gist of the survey in two different ways:

Let me know if you see something unique or worthy of comment.

Leaders in Luxury: A Series of Insights

30-day Challenge – Day 15

I am devoting today’s post to Leaders in Luxury, a series of insights from esteemed professionals leading global luxury brands. My thanks go out to FT.com for making these available. Enjoy…

Sung-Joo Kim, head of MCM Group, on her career and the business of luxury

Leonard Lauder, Chairman Emeritus of Estee Lauder on the next luxury consumers.

Differentiating Upscale Hospitality Series: Four Seasons Hotels and Resorts

30-day Challenge – Day 14

If you have been in touch with much of the happenings in hospitality, then you would have noticed a huge emphasis on rolling out more value-added services to complement the commoditized room revenue segment.  Over the past year, one of the hotel and travel components being actively pursued by hospitality groups, developers, and licensees alike, has been spa services.

I can’t remember where I heard or read it, but someone once said something very profound about luxury brands:

Luxury brands don’t discount, they add value.

Continue reading

Differentiating Upscale Hospitality Series: Ritz-Carlton

30-day Challenge – Day 13

An image from the Ritz-Carlton "Let Us" video

Today, I am going to highlight an ingenious new brand platform put out by Ritz-Carlton. If you don’t want to read the post and just get to the core of an exciting and counterintuitive differentiation strategy, play the video below.

Continue reading

Differentiating Upscale Hospitality Series: Orient Express

30-day Challenge – Day 12

Today, I am looking at emerging themes in luxury with a focus on the hospitality industry. With rooms becoming commoditized, hotels have but one option to capture the hearts of its customers – differentiate. How do you differentiate one luxury hotel brand from another? Well, for starters we are way past thread counts, serving sumptuous breakfasts, and delivering the morning newspaper. Upscale hotels are having to differente themselves on the experiences they can provide their guests. In the next posts, I’ll talk about how some hotel groups are doing just that. We’ll kick off the series with Orient Express.  Continue reading

Focus, Focus, Focus – A Great Co-branding Strategy

30-day Challenge – Day 10



Yesterday, I wrote an entry about a questionable co-branding effort. Today, I want to write about what I believe is an absolutely ingenious co-branding initiative between Mercedez-Benz (MB) and American Express (AXP). Continue reading

Questionable Co-branding

30-day Challenge – Day 9

One thing that I highly admire about companies in the luxury segment of any product or service category is the uncompromising passion with which they pursue their strategic goals. I have never been a fan of trying to be everything to every consumer because it is not always an efficient way to drive your business. However, I do believe in leveraging your brand in any way possible to reach your current and future customers. That brings us to today’s topic on co-branding. Continue reading

The New Luxury – Custom/Bespoke

30-day Challenge – Day 8

The term “luxury” evokes a multitude of disparate meanings for different people. For some luxury is synonymous with “expensive”. For others it can be associated with “unique”, “exotic”, “rare”, “sophisticated”, or “exclusive”. However, I want to make you aware of two words that I feel are most synonymous with the definition of luxury today – “custom” and “bespoke”. Continue reading

Luxury Hospitality Giant Shows Love

30-day Challenge – Day 7

     

Today, I am both glad and proud to write about a company, with which I have done business: both as a pre-MBA professional and as a consumer. I have to say that I wasn’t surprised when I came across this article announcing Hilton Worldwide’s initiative to give people around the world better access to the hygiene that can help prevent fatal illnesses such as diarrheal diseases and pneumonia.

In partnership with the Global Soap Project, Hilton Worldwide is leading the charge to help develop a cost-free way for hotels around the world to recycle left-over bars of soap, which are provided to guests during their stays. In the first year of this partnership, Hilton Worldwide expects this investment to result in the donation of more than one million new 4-ounce bars of soap to people in need. Learn how it works here. Continue reading

Luxury Out of Africa: Edun

30-day Challenge – Day 6

Today, I found another brand that cares about its social and environmental impacts. It’s also not surprising that this brand is associated with the LVMH family of brands (more than 65). One reason I admire LVMH is that it is a company that is comfortable with being the leader in just about every luxury segment. And now, Bernard Arnault is pushing his massive company past another frontier with Edun. Continue reading

Identifying Luxury Brands That Care

30-Day Challenge – Day 5

Since my last post, I have begun an investigative search to identify brands that actually care about the issue of responsible business. I am not talking about businesses that pay lip service to corporate social responsibility (CSR), but brands that truly try to act responsibly in all ways.  Continue reading

Should Luxury Brands Care?

30-Day Challenge – Day 4

Yesterday, I watched a documentary describing the tumultuous experience of workers in the garment manufacturing industry, as they campaigned for better wages and working conditions. Titled Made in LA, the documentary follows “three Latina immigrants working in Los Angeles garment sweatshops as they embark on a three-year odyssey to win basic labor protections from a trendy clothing retailer” (http://www.madeinla.com). 

While putting aside my political and economic views on the subject of immigration, my mind focused on the theme of responsible business – that is doing business the right way and ensuring that all who partake in commercial activities receive benefits (economic and otherwise) that are in line with their inputs. As this concept continued to stir in my head, I had a moment of pure enlightenment. Rather, it was an unanswered question: do brands (luxury brands in particular) care about the things I care about, specifically responsible business?

As the son of a diplomat, I’ve grown up an advocate of all things fine, unique and exclusive. If you think, I grew up with a silver spoon, then think again. My taste and refinement came as a result of the people and cultures, to which I was exposed. I was raised to understand that anything considered unique, exclusive, rare, and pleasurable had a right to be deemed luxurious. More importantly, I learned about the relativity of luxury – what might be luxury for me may be a staple for you. In third world countries, where ample food and water are especially rare and exclusive to the rich, wouldn’t they be considered luxury items.

So you might ask how does this all relate to a blog about an industry focused on goods that some will say are inaccessible to much of the world’s population? At this point I don’t know, but I intend to find out a little more in the coming posts.

Transforming Social Media to the “Bottom Line”

30-Day Challenge – Day 3

Yesterday, I highlighted one obvious problem brands face when employing social media in their marketing strategies. Today, I’m continuing that post with some focus on possible solutions.

Going Where Your Customers Go

Brands need to understand is that social media can influence the decisions of its consumers, especially in the longer term. Luxury companies should be more interested in it because it allows them to communicate with current and future customers. Rather than developing accounts on all the available platforms, companies can start by figuring out which social media tools are being used by their consumers. This reminds me of Mark Bonchek’s (SVP of Communities & Networks, Sears Holding Company) advice on sociographics.

The fact that social media exposes your brand to an exponential amount of customers (for whom you may not be able to count on for a future purchase) forces luxury brands to see it as a threat. Conventional perspective in the luxe space portends that social media could cheapen brands by exposing them to customers that don’t fit their target psychographics. However, if it is done right, social media can give your brand a connection to the next generation of consumers. It would help to mention Coca Cola and Pepsi at this point because both are such iconic consumer brands. These companies have done well in mining their own business intelligence to determine one of the critical times when beverage consumers are most likely to develop their taste preferences – in their college days. As such, Coke and Pepsi spend a lot of money, competing for the exclusive rights to sell their products on college campuses across the US (and obviously the globe).

In the same vane, social media has an influencing capability where users-turned-brand-advocates (evangelists), can help create brand desire within their networks. There is great opportunity for brands who start to view social media more as a long-term brand builder rather than a click-thru conversion enabler. In his article, Rony Zeidan (of RO New York Inc) says:

Advertising has been traditionally about making products desirable, about infiltrating the minds of people to create needs and fuel desire from one particular source. It communicates with consumers, promotes products, creates brand identity, and generates brand awareness.

Social media is the new tool of advertising, and it could be a better marketing tool than the interruptive conventions advertisers have used. I used the term interruptive because traditional advertisements (TV, billboards, and print) have formats that require your focused attention (away from the show or article you really wanted to watch or read) on what the brand is trying to tell you. Today, social media has the power of creating conversations that are user generated, allowing brands to be part of a more intimate and voluntary relationship with consumers. They may not have control over what people are saying, but brands surely have a more proactive capability to know and affect what the market really thinks about their products.

Social media has the potential to introduce brands – whether they are considered household names or deemed obscure –  to markets that were never accessible. It takes word-of-mouth marketing (the best ever for luxury products) a step further by amplifying the brand message. The only thing that that firms have to actively ensure, is that they are using the right social media tools to reach their target markets. To do that they need to go where the customers go.

I enjoy writing about these topics. Blogging is both cathartic and enlightening at the same time. Let me know if you’ve gained something from my perspective.

Connecting the Dots – Social Media and Luxury Brands

30-Day Challenge – Day 2

On my way to school this morning, I had a conversation with one of my classmates about the thin line bloggers and social media publishers straddle between overuse and underutilization of the social media apparatus. Since starting this blog, my objective has developed from just gaining exposure to the luxury goods and services segments, to making connections with people that have similar interests. I’m not worried about how many followers I have (make no mistake I am thankful for my handful); how many facebook “likes” I get; or how many people choose to comment on my posts. I am more interested in the discovery of other publishers, consumers, and readers who have an iota of perspective on the topics I discuss. Continue reading

Digital Marketing: “Apping It Up”

30-Day Challenge #1

I said I would have my first post in 24 hours, but I couldn’t hold the excitement of my first entry in the 30-day challenge.

While rummaging through my ever-thinking cerebrum for something to write, I found it difficult to focus on just one particular topic. I am interested in a lot of things, so why should I have to limit my posts to just one story or event in the world of high-end goods and services.

I decided to write on themes that are taking place in the luxury and retail space. Today’s theme is a pretty nebulous one: social media and digital marketing in the luxre (a pun resembling the offspring of luxury and retail; and also the name of my club at W&M ) space. Continue reading

Luxury in Asia

Prior to my articles on Patagonia and Saks Inc., I promised to deliver some interesting reads on luxury goods in Asia. I am now delivering on that promise with enough reading to keep you as busy as a W&M MBA student. Below are some some of my favorite reports/article on the Asian market for luxury from well the respected consulting firm, Mckinsey & Company. Some worthy reads over the weekend, with a pot of coffee (or tea) waiting in the wings. Enjoy…

Image

No seismic shift for luxury in post-quake Japan – May/June 2011
Although they were rocked by the Tohoku earthquake, Japan’s luxury consumers are back shopping—but with caution.

luxury goods in South KoreaKorea’s luxury market: Demanding consumers, but room to grow – September 2011
This year’s Luxury Consumer Survey addresses three key questions: Can South Korea keep it up? What’s changing? And what do these trends mean for the players in the luxury industry?

ImageFive questions for … Christophe Lorvo – May 2011
Christophe Lorvo, general manager of the Grand Hyatt Tokyo, answers questions about the global hotel business—and how to keep going after an earthquake.

ImageUnderstanding China’s growing love for luxury – March 2011
McKinsey’s in-depth annual report on the Chinese luxury market reveals two major trends: There are more luxury consumers, and they are more sophisticated.

A Chat with Steve Sadove, CEO of Saks, Inc.

Edmund Amoye with Steve Sadove (right) at HBS - 04/2011

Since assuming the leadership role at the Luxury and Retail Club at the Mason School of Business, I have had the opportunity to network with executives from different segments of the luxury and retail industry. My most meaningful encounter occurred in April, 2011 when I met Steve Sadove, CEO at Saks, Inc. at the annual Retail and Luxury Conference at Harvard Business School. I kept in touch with him over the summer, and last month (Oct. 2011), Mr. Sadove (SS) spoke to me (EA) in his New York office about leadership, his company and industry, customer trends, career opportunities, and the job of CEO at a company with a market capitalization of about $1.7B (11/7/11). Below are excerpts from our conversation. Continue reading

BMW’s Car of The Future: Glued, Screwed & Rented – Forbes

BMW’s Car of The Future: Glued, Screwed & Rented – Forbes.

Take a look at the article above highlighting BMW’s attempt to answer consumer demands of the future. Would you like to drive these cars?

BMW i8

BMW i8

BMW i3

BMW i3

Fine Wines and Luxurious Accommodations in Virginia

Luxury and Retail Club members with Kristen Duffeler (5th from left)

Pictures

Last Friday (10/28/11) the Luxury and Retail Club (at The Mason School of Business) went on a company visit to The Williamsburg Winery and Wedmore Place located at 5800 Wessex Hundred, Williamsburg, VA. As a club, we thoroughly enjoyed the opportunity to sample wines from the largest winery in the state of Virginia; and see the luxurious accommodations at a European style hotel. We also found out more about the hospitality, and the wine & spirits business segments. Our itinerary for the day included: a tour of Wedmore Place with Kristen Duffeler (GM of Wedmore Place and In-house Counsel for The Williamsburg Winery); a tour of The Williamsburg Winery with Courtney Darden (Assistant VP of Marketing, The Williamsburg Winery); and a Q&A session with the Patrick Duffeler I (family patriarch and founder of The Williamsburg Winery and Wedmore Place) and Patrick Duffeler II (current President & COO of The Williamsburg Winery).

Continue reading

“Patagonia @ W&M” was a Huge Success

You should have been there to hear Tetsuya O’ Hara speak about what Patagonia is doing to develop a sustainable competitive advantage. We will have pictures and videos out soon to show you all the exciting things that were discussed.

If you attended the event, please let us know what you thought in the comments section below.

Focus On Asia

For this week’s posts, I am going to focus on issues surrounding luxury goods in Asia. In some short paragraphs, I’ll introduce news topics surrounding the Asian market, where brands are pushing hard to establish a presence.

Gucci, Tiffany target Chinese banks in piracy law suits 

You have probably heard the phrase “imitation is the best form of flattery”. While that is true for many things, piracy in China bears huge costs for US firms – between $2.5 billion and $3.8 billion per year. In this article from Reuters, Emily Flitter discusses new developments in attempts by luxury brands to eliminate piracy.

Piracy and counterfeiting are huge “value leakers” for high-end brands, but in a strange twist of irony they can also serve to proliferate a brand (only at lower product prices and brand value).

The Rising Cost of Luxury In Asia

In the MBA program we are exposed to the macroeconomic dynamics of purchasing power parity (PPP). PPP is a figure that tell us if a big mac is more expensive in Brazil, than in China. Well, luxury goods have their own metrics, tracking the price of a basket of luxury goods across world markets. While Forbes Magazine uses the Cost of Living Extremely Well Index, Julius Baer’s August 2011 Wealth Report: Asia brings a new indicator to the party of economic indices. According to the Swiss private banking firm, the the price of luxury goods is up 11.7% in dollar terms in the four big markets of Hong Kong, Singapore, Shanghai and Mumbai. What is even more important is that prices have risen far faster than generic inflation in these cities. Want to know where to get the best price on a Chanel bag? Click here.

Rising Commodity Prices: A Lesson in Managerial Economics

I just read an article in BusinessWeek that is very applicable to what I am learning at the Mason School of Business. In the wake of the recent financial woes, luxury goods manufacturers are facing a problem of rising commodity prices. Though luxury consumers have resumed their spending habits, there is a demand side component that is still causing the price of inputs like leather to go up. A worthy read for those interested in managerial economics.

Conde Nast – 2010 Business Traveller Awards

The business segment constitutes a vital profit segment of the travel and hospitality industry. As you try to zoom in on a couple of companies to apply for internships and full time jobs, take a look at the 2010 Business Traveller Awards by Conde Nast. These are the top-rated hotels catering to business travelers. Click the picture for the full results.