With the recent excitement of luxury brand IPOs more experts are predicting luxury stocks to rise. Citigroup has prepared a list of luxury stocks around the world projected to rise even higher. No doubt that the luxury industry is moving in the right direction.

We at MosnarCommunications.com were talking luxury PR when all others jumped ship but nice to have the attention back on the luxury sector and luxury stocks that are expected to do well.

Six luxury stocks Citigroup anticipates will rise:

1. Brown-Forman Corporation (BF-B): Market cap of $10.63B. Brown-Forman Corporation engages in manufacturing, bottling, importing, exporting, and marketing alcoholic beverages. Target price at $85 vs. current price at $74.63. Implies a potential upside of 13.89%. The stock has gained 21.36% over the last year.

2. Apple Inc. (AAPL): Market cap of $369.36B. Designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. Target price at $500 vs. current price at $401.36. Implies a potential upside of 24.58%. Might be undervalued at current levels, with a PEG ratio at 0.77, and P/FCF ratio at 12.28. The stock has gained 27.05% over the last year.

3. Estee Lauder Companies Inc. (EL): Market cap of $19.56B. Engages in the manufacture, marketing, and sale of skin care, makeup, fragrance, and hair care products worldwide. Target price at $112 vs. current price at $119.77. Implies a potential upside of -6.49%. Exhibiting strong upside momentum–currently trading 22.52% above its SMA20, 23.74% above its SMA50, and 23.28% above its SMA200. The stock has had a good month, gaining 15.39%.

4. Starwood Hotels & Resorts Worldwide Inc. (HOT): Market cap of $9.94B. Operates as a hotel and leisure company worldwide. Target price at $60 vs. current price at $51.32. Implies a potential upside of 16.91%. This is a risky stock that is significantly more volatile than the overall market (beta = 2.07). The stock has had a good month, gaining 31.16%.

5. Starbucks Corporation (SBUX): Market cap of $30.72B. Operates approximately 16,858 stores, including 8,833 company-operated stores and 8,025 licensed stores. Target price at $48 vs. current price at $41.29. Implies a potential upside of 16.25%. The stock has had a good month, gaining 10.55%.

6. Saks Incorporated (SKS):Market cap of $1.75B. Operates fashion retail stores in the United States. Target price at $13 vs. current price at $10.69. Implies a potential upside of 21.61%. This is a risky stock that is significantly more volatile than the overall market (beta = 2.5). The stock is a short squeeze candidate, with a short float at 32.21% (equivalent to 9.26 days of average volume). The stock has had a good month, gaining 23.45%.

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Join Pam Danziger, the president of Unity Marketing, on Thursday November 10 at 12 p.m. EST to learn the 10 essential values every luxury brand has to deliver and how to these values work for your brand.  Branding is a long-term proposition.  It is an investment in the future of your business.  To build a luxury brand, it takes time to repeatedly convey a consistent value message that resonates with your target customer.  There is no such thing as a “pop up” luxury brand.

With the national economy still in a precarious position, luxury brands must emphasize the “luxe” to draw the attention of the affluent consumer, the nation’s heavy lifter segment that accounts for 20 percent of households but over 40 percent of spending.  To be successful, you need proven strategies tailored to your marketing needs.

How Do You Position Your Brand to Attract These Affluent Consumers?
Unity Marketing Has the Answers.

In this 60-minute webinar, you will learn:
•How to satisfy the youth passion for luxury indulgence through brand positioning
•How to think beyond features and benefits to “buzz”
•What ten brand attributes that every brand has to have to attain ‘luxury’ status in the consumers’ eye
•The five ‘hot button’ words that translate into quality for luxury goods
•How to think beyond product to deliver branding experiences for your customers

Danziger, the author of ”Putting the Luxe Back in Luxury”, will host this exclusive webinar, which will include actionable strategies drawn from case studies of successful luxury brands, plus plenty of time for Q&A.

The webinar will inspire you with innovative new ideas and concepts that are grounded in luxury consumer research

This webinar is appropriate for wide range of professionals in the luxury market.  Specifically:

•Brand managers who are responsible for well established heritage brands, as well as marketers interested in learning how to give luxury status to their fledgling brand.
•Advertising professionals will find this webinar useful to help ground their work with new research insights into the mindset of the luxury customers.
•Retailers will appreciate this session both to help them position their store as a destination for luxury consumers, but also to learn to sell their luxury goods and services more effectively.

The webinar will last approximately 60 minutes.  Subcription fee is $249, and covers an unlimited number of attendees at your site.  Subscribers will also receive a copy of the detail slides used in the presentation.  The recorded webinar will also be stored for an additional 30 days if you want to listen again or can’t make the live broadcast.  Finally, your subscription fee can be applied as credit toward the purchase of any Unity Marketing report.

About Pam Danziger and Unity Marketing

Pamela N. Danziger is an internationally recognized expert specializing in consumer insights for marketers targeting the affluent consumer.  She is president of Unity Marketing, a marketing consulting firm she founded in 1992. Pam received the Global Luxury Award for top luxury industry achievers presented at the Global Luxury Forum in 2007 by Harper’s Bazaar.

Pam gives luxury marketers “All Access” to the mind of the luxury consumer. She uses qualitative and quantitative market research to learn about their brand preferences, shopping habits, and attitudes about their luxury lifestyles, then turns these insights into actionable strategies for marketers to use to reach these high spending consumers. Unity Marketing is the voice of the luxury consumer for such clients as PPR, Diageo, Tempur-Pedic, Google, Swarovski, Constellation Wines, Luxottica, Orient-Express Hotels, Italian Trade Commission, Marie Claire magazine, The World Gold Council, and The Conference Board.

Follow Pam on Twitter @ www.twitter.com/PamDanziger

Pam’s latest book is Putting the Luxe Back in Luxury:  How new consumer values are redefining the way we market luxury (Paramount Market Publishing, 2011).  Her other books include Shopping: Why We Love It and How Retailers Can Create the Ultimate Customer Experience, published by Kaplan Publishing in October 2006;  Let Them Eat Cake: Marketing Luxury to the Masses-as well as the Classes, (Dearborn Trade Publishing, $27, hardcover) and Why People Buy Things They Don’t Need: Understanding and Predicting Consumer Behavior (Chicago: Dearborn Trade Publishing, 2004).

This press release was original distributed by Diamonds.Net copyright reserved.

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Macy’s, Inc. today unveiled an unprecedented, multi-year renovation that will reinvent and elevate the shopping experience at Macy’s flagship store at Herald Square in New York City. The project will fortify Macy’s Herald Square as one of the world’s favorite department stores (it’s already the largest) and a New York City icon.

The company is investing approximately $400 million in capital in the project over the next four years. Additional selling space will be added to allow for expanded assortments and upgraded presentations in key merchandise categories including shoes, handbags, cosmetics and fashion brands for millennial-generation customers.

Work will begin in early spring 2012 and continue in phases through the fall of 2015. The majority of every floor, virtually every department and the exterior of the building will be improved over the life of the project. The store will remain open and operating during construction, with the location of some departments shifting temporarily as work progresses.

“The excitement, size and scale of this remodel reinforces our conviction that Macy’s Herald Square is and will remain a retail store in a class by itself. It is our company’s most productive store, and experience shows that improvements in this location consistently result in higher customer traffic and sales volume. Our upcoming top-to-bottom remodel represents an investment in the future growth of our business as New York City continues to evolve as a world capital and shopping destination,” said Terry J. Lundgren, Macy’s, Inc. chairman, president and chief executive officer.

“Herald Square is a national and international symbol of the Macy’s brand. It already is one of the top tourist attractions in New York City and North America. It is the hub of the annual Macy’s Thanksgiving Day Parade. And generations of fashion designers and celebrities have gravitated to Macy’s Herald Square as a place to launch products and showcase their newest ideas,” Lundgren said.

“While we will be creating a modern, customer-centric shopping experience for customers at Herald Square, we also will be careful to preserve and restore the historical integrity of this landmark building. Macy’s Herald Square is a treasure that we intend to protect and nurture. Blending Macy’s architectural legacy with advanced technology and contemporary design is what makes this project so special,” he added.

Key elements of the remodel project include:

– A 100,000-square-foot expansion of the store’s selling space to a total of 1.2 million square feet by opening up space currently used for stock and offices and extending the mezzanine level in the Broadway Building.

– A new hall of luxury brands, a dazzling series of two- and three-level shops in the Broadway Building. The current Louis Vuitton shop will be updated and enlarged to multiple floors. Other new shops to be announced will be added to provide a robust shopping experience for luxury goods, including handbags and shoes.

– Creating the world’s largest women’s shoe department — a total of 39,000 square feet of continuous selling space (63,000 square feet including stockrooms) on the second floor. The department will offer an unequalled assortment of fashion and luxury footwear (as many as 300,000 pairs of shoes available on any given day), including access to the second level of luxury brand shops. Part of the footwear space will be an all-new concept for a coffee/wine/chocolate bar.

– Dazzling, updated presentations of new and expanded apparel assortments from top fashion brands for which Macy’s is well-known.

– Restoring the first floor “great hall” with an all-new presentation of cosmetics, fragrances and fine jewelry that will incorporate the most advanced thinking on merchandising of the top brands and products for which Macy’s is well-known. The original great hall’s ceiling height will be restored.

– Creating an entirely new Impulse presentation of contemporary apparel and accessories for the millennial customer.

– Creating an entirely new “mstylelab” presentation of juniors and young men’s in the Lower Level. This will be a technology-infused environment of products and services appealing to the social instincts of younger customers. The hottest apparel brands will be complemented by juniors’ accessories, shoes, cosmetics and services such as a nail bar and salon. Also incorporated into the Lower Level will be a complex of casual dining experiences, including concepts created by Macy’s Culinary Council of celebrity chefs and a brew pub that will remain open beyond normal store hours.

– A significant expansion and enhancement of men’s merchandise, which will grow to cover about 200,000 square feet of selling space over seven floors of the Seventh Avenue Building. This will become one of the premier men’s shopping destinations in the world.

– Infusing technology and new media into the shopping experience throughout the store. This includes interactive store directories, a system to stream live video feeds of Macy’s events nationwide, digital product information, an enhanced shoe locator system, new wayfinding signage and a new mobile app to guide customers as they shop. Detailed design of the latter phases of the renovation project are yet to begin so new technologies and ideas may be incorporated as they emerge.

– A new table-service restaurant on the sixth floor with window access along Broadway that will provide stunning views of the Empire State Building and Midtown Manhattan. This all-new restaurant will be among 22 restaurants and foodservice stations throughout the store that will accommodate seating for about 1,100 customers, an increase of nearly 40 percent.

– An entirely new world of home merchandise on the eighth and ninth floors, including an enhanced demonstration kitchen and relocated De Gustibus Cooking School.

– A restoration of the store’s exterior to re-capture its original grandeur and take full advantage of foot traffic along America’s top retailing block. The ornate “Memorial Entrance” on 34th Street will be restored and reopened. Windows along Broadway, 34th Street and Seventh Avenue, which have been covered up over the years, will be reopened. Windows on the upper floors also will be uncovered to allow more natural light into the building. Sidewalks will be replaced, with Macy’s-branded paved “welcome mats” added at every entrance. Awnings and canopies reminiscent of the original building will be added. New exterior lighting will highlight the building’s elegant architectural details.

– Preservation of 42 of 43 historic wooden escalators in the current store — a unique and distinguishing feature of Macy’s Herald Square. (One current wooden escalator will be removed to supply replacement parts for the others.)

– An enhanced Visitors Center on the newly expanded Mezzanine level with technology in nine languages to serve a growing volume of international visitors.

– Expanding and upgrading amenities. Nearly 300 additional fitting rooms will be added over the next four years. Restroom facilities will be added and improved.

– Operating systems to improve environmental sustainability, including a new state-of-the-art energy management system and expanded use of LED lighting, that is expected to reduce annual energy use by 15 to 20 percent.

“Our design of the new Macy’s Herald Square reflects how a new generation of customers prefers to shop. In many cases, product will be organized by lifestyle to help customers create looks and build wardrobes across categories. On every floor and across departments, our shopping environment will be new, fresh, interesting and entertaining,” Lundgren said.

Macy’s Herald Square anchors two of the top retail corners in America — Broadway/34th Street and Seventh Avenue/34th Street. The first portion of the current Macy’s Herald Square store (the majority of the current Broadway Building) was opened in 1902. The store was expanded in three additional phases to its current form by 1931. The current building includes nearly 2.2 million gross square feet.

Over the course of the remodel project, an estimated 1,600 construction-related positions will be created. The total ongoing workforce in the Macy’s Herald Square store is expected to grow steadily as each phase is completed and the level of business accelerates. By fall 2015, Macy’s plans to add about 800 new positions to the store’s existing year-round workforce of about 4,600 persons.

Macy’s, Inc.’s internal planning, design and construction team is leading the Macy’s Herald Square renovation program, with master planning support from STUDIO V Architecture of New York. Component elements were designed by Highland Associates of New York, Kevin Kennon Architects of New York and Charles Sparks + Company of Westchester, IL.

Macy’s, Inc., with corporate offices in Cincinnati and New York, is one of the nation’s premier retailers, with fiscal 2010 sales of $25 billion. The company operates about 850 department stores in 45 states, the District of Columbia, Guam and Puerto Rico under the names of Macy’s and Bloomingdale’s, as well as the macys.com and bloomingdales.com websites. The company also operates six Bloomingdale’s Outlet stores.

All statements in this press release that are not statements of historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of Macy’s management and are subject to significant risks and uncertainties. Actual results could differ materially from those expressed in or implied by the forward-looking statements contained in this release because of a variety of factors, including conditions to, or changes in the timing of, proposed transactions, prevailing interest rates, changes in expected synergies, cost savings and non-recurring charges, competitive pressures from specialty stores, general merchandise stores, manufacturers’ outlets, off-price and discount stores, new and established forms of home shopping (including the Internet, mail-order catalogs and television) and general consumer spending levels, including the impact of the availability and level of consumer debt, the effect of weather and other factors identified in documents filed by the company with the Securities and Exchange Commission.

(note:Additional information on Macy’s)(note:Inc.)(note:including past news releases)(note:is available at www.macysinc.com/pressroom ).

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Are we to be shocked or even stunned that Kim Kardashian’s marriage to Kris Humphries is ending only after 72 days of marriage. The luxury brands who banked on seeding Kim Kardashian as the luxury wedding brand ambassador are sure to feel the backlash.

It was never a smart move to seed Kim Kardashian to promote luxury wedding goods and services. There are often high risk with seeding celebrities and with the rise of social media as a culture this method may not even be effective anymore. A better approach is to engage consumers and offer exclusive goods and services directly. After all who is really going to say I want this for my wedding because Kim Kardashian did it?

Kardashian, 31, cited “irreconcilable differences” in her Los Angeles Superior Court filing on Monday, saying the couple have a prenuptial agreement and asking the court to deny spousal support to Humphries.

“I hope everyone understands this was not an easy decision,” she says in a statement to E!, which airs her reality shows. “I had hoped this marriage was forever, but sometimes things don’t work out as planned. We remain friends and wish each other the best.”

The major issue for the luxury wedding brand is how to regain trust of the luxury wedding consumer. In the world of luxury credibility is the highest regard.Gifting celebrities for exposure must be calculated and implemented with extreme caution. Next time before seeding any celebrity evaluate how sustainable is the celebrity as a brand.

While Kim Kardashian is a reality star with celebrity status. Her potential to remain sustainable relies on pulling celebrity stunts for attention.

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All eyes are on China for luxury brands and targeting the Chinese luxury market is the object of every major luxury brand. So the desire to capture market share in China as a luxury brand leader is the future for luxury brands wanting to sustain. China is leading the market for consumers purchasing ultra luxury goods and products.

The open letter addressed to the top management of Gucci China from its former employees, who resigned en masse last month, ripped the veil off the luxury brand and its working practices. The public suddenly realized that people who work for luxurious brands are not leading a lifestyle that matches their employer’s image.

Gucci is not the only prestigious brand that sets up production factories in China. The likes of Prada and Zegna have them too.

Thirty-nine-year-old billionaire Philippe Gaydoul tells swissinfo.ch why he wants to expand by trying to sell his Navyboot, Fogal and other brands in China. The group currently comprises four brands: Navyboot (shoes and accessories), Fogal (legwear and knitwear), Jet Set (sports fashion) and Hanhart (watches). Navyboot is the first to dip its pedicured toe into Chinese waters.

Some of the best customers of luxury brands in China—gift-giving entrepreneurs and corrupt officials—might also turn out to be their worst enemies. Corruption is a fact of life on the mainland. China comes in 78th in Transparency International’s corruption index, ranking equally with Colombia. With expensive gifts a routine channel for corruption, the luxury sector owes a part of its explosive growth to the dark side of China’s rise.

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To capture attention of luxury car consumers BMW AG’s is sending a strong luxury PR message.  Announcing plans to enter the South American market next year for the ultra-luxury Rolls-Royce brand.

Timing could not be better with the increasing demand in the luxury sector for ultra luxury products and goods.

“Brazil and Chile have seen impressive economic growth, with an increasing demand from discerning customers for pinnacle luxury products,” Rolls-Royce brand chief Torsten Müller-Ötvös said in a statement.

“Rolls-Royce is growing very successfully in a number of fast-growing emerging markets and it is therefore appropriate that we have a strong presence in Brazil and Chile,” he said.

MAIN FACTS:

- The Via Italia Group is Rolls-Royce Motor Cars’ appointed future dealer in Brazil.

- Williamson Balfour Motors, a member of the Inchcape Group, is Rolls-Royce Motor Cars’ future dealer in Chile.

- Both are working towards full dealership openings in March 2012.

-Frankfurt Bureau, Dow Jones Newswires; 49-69-29725-500

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Watching Bravo’s The Real Housewives Of Atlanta provides an idea of what ultra luxury lifestyles among wealthy African Americans look like. Certainly those ladies love luxury items, products, and services. However, soon after only season one financial problems touched most of them.

A recent study might provide insight into why black spending may also be a cry for help. According to Money Coach Lynnette Khalfani-Cox the median net worth of Black households in 2009, was $2,200 compared with a median net worth of $97,900 for White households. Of the 36 million African Americans, less than .01 percent or 112,000 of Black households in the U.S. have a net worth of $1 million or more. Even at $500,000 in net worth only 333,000 Black household fall into this range.

According to a report published by Target Market News of the total earning power of $836 Billion that Blacks earn. In 2009, Black households spent an estimated $507 billion in 27 product and service categories. That is an increase of 16.6% over the $435 billion spent in 2008. Most of what African Americans are spending their money on has no appreciable value.

Could black buying power be a bubble for the luxury industry? Black households were evaluated among the patterns of spending on none appreciable value items.

Consider Michael, 44, he drives a brand new Range Rover, has a 5 bedroom house in the suburbs, and wears Hugo Boss suits to his job as a Purchasing Manager. Although he earns $87,000, Michael is just getting by. After he pays his $1,400 car payment, $1,700 mortgage and other expenses, Michael has no money left for savings or investments. From the outside looking in, Michael looks wealthy.  The reality is that Michael has less than $2,000 in savings and a negative net worth that includes over $50,000 he had to borrow to earn his graduate degree. Not to mention the decrease in value of the home he purchased right before the real estate downturn.

Meet The Joneses

John and Valerie Hall have been trying to keep up with “the Joneses” since they got married in 2008. With a combined income of $165,000 annually, they appear to be living the “good life”: they live in a prestigious golf and country club community in Atlanta; he drives a 2010 Porsche Cayenne, and; she drives a 2010 Lexus I250c. From all external indications the Halls are living well, but the truth is that over eighty percent of their take home pay is spent on mortgage, car payments, credit cards, etc. They don’t have an emergency fund and are starting to feel the strain of their lavish spending.

Will this prompt a warning label for luxury brands? In the future we could see warning labels to buy luxury goods, products, and services responsibly. This is a necessary move to continue the sustainability of the luxury industry.

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In Beijing, BMW dealerships are giving markdowns of as much as 19 percent on a 3-series car, while some Mercedes dealers are selling the C-Class Elegance model at 20 percent less than the suggested retail price, according to cheshi.com, a pricing guide tracking more than 3,000 dealers in the country.

BMW, Daimler and Audi, the three largest luxury carmakers, face slowing sales growth and falling prices in China, the world’s largest automobile market, as some cities impose driving curbs and the central bank tightens lending. The growth in demand for high-end vehicles cooled to 29 percent the first eight months of this year from 48 percent in 2010, according to researcher J.D. Power & Associates.

“We’re in a cycle of dropping prices,” said Scott Laprise, a Beijing-based analyst at CLSA Asia Pacific Markets. “Dealers are worried about sales slowing and are cutting selectively in the luxury segment. They see where the overall market is going. They want to be preventive and keep their sales going.”

‘Aspirational Buyers’

A tightening Chinese economy may cause “aspirational” buyers, such as those in mid- to upper-level management jobs, to rethink or delay luxury purchases, Laprise said.

China’s central bank raised interest rates five times in the past year to curb inflation, and the city of Beijing started restricting the number of license plates available beginning in January to fight pollution and congestion. The measures are contributing to slowing car demand, according to analysts at CLSA, J.D. Power and Booz & Co.

BMW, Daimler and Audi are targeting record sales in 2011 on growing wealth in China, which overtook Germany to become Audi’s largest market this year. Rising affluence has helped luxury brands outperform growth in the overall auto market, which the China Association of Automobile Manufacturers forecasts will slow to 5 percent this year from 32 percent in 2010.

Source/ Read More

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According to an AdAge article, during the past decade, the Hispanic $110,000-plus households grew 221% compared to 87% for total U.S. $100,000-plus households. This has increased the penetration of Hispanic households among the total $100,000-plus households in the U.S. from 3.7% to 6.5% during that time.

So, believe they are out there, but it is your job to go out and find them.
Here are some of the key tips shared during the council meeting:

1. Do it IN CULTURE: Understand the key affluent target. While Hispanic marketing tends to focus on the Mexican population which makes over 60% of the total U.S. Hispanics, when it comes to the affluent, a great percentage of them are concentrated in Miami and New York who are typically of South American and Caribbean decent. According to the Census Bureau, over 50 percent of Hispanic affluent are foreign born. 45 percent of affluent Hispanics live in five major metropolitan areas: Los Angeles, New York, Miami, Houston and Chicago. The economic and political issues in countries like Venezuela and Colombia have brought many immigrants to South Florida, and also in recent months Texas has seen an unprecedented influx of wealthy Mexicans settling in cities like Houston and San Antonio. Also keep in mind common truths about Latinos around cultural pride, the importance of family and a spirit of tenacidad are important emotional queues.

2. Do it IN CONTEXT: Speak with Relevancy. Relevancy refers to a company’s ability to properly contextualize its messaging and approach to successfully reach a target. Relevancy is key to identify the right partnerships, events and a primary audience. This is why a deeper understanding of the four key Latino Affluent sub-segments is critical to succeed. These can be summarized as: unacculturated immigrant small-business owners who earn over $750,000 a year in sales, bicultural immigrant entrepreneurs earning more than $150,000 a year, young educated immigrant professionals averaging over $175,000 a year, and older U.S.-born Hispanic businessmen averaging over $250,000 or more.

3. Do it in LANGUAGE: Beyond Soccer, Telenovelas and Spanish only. As mentioned above, the key sub-target calls for a different approach to messaging and media mix. While language tends to get minimized into a translation of an English tagline, this audience requires a level of sophistication in line with their level of education, aspirations and key drivers. For example, this past June Telemundo partnered with Giorgia Armani Beauty for an elegant event at the W in South Beach with celebrities and Armani’s makeup artist Tom Quinn, The event brought a glamorous sense of relevancy to their Club de Noveleras with top starts and the iconic participation of Armani as a partner. This was certainly an upscale take at bringing beauty, luxury and the passion for Telenovelas together with relevancy. From premium events like the Kentucky Derby to luxury publications like Ocean Drive en Español, brands must take into consideration how the message is constructed and most important, where it gets shared.

Will you boost your luxury business with Latinos? For the category and in times of economic trouble, this may be the only source of new business and incremental growth.

Source

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The luxury industry enters the last quarter of 2011 with some degree of uncertainty as it prepares for 2012. Many senior luxury executives, coming off a year of banner sales and profits, for some even above 2007, are asking the same question: Will it last? The fundamentals for rapid growth both locally and globally, including in China, are waning a bit and brands now must find a way to gain market share.

Customer Relationship Management (CRM) initiatives have begun to measurably pay off for luxury brands. Data collection efforts have improved but after-sales service and the critical relationship-building function of clienteling continue to be a major challenge. Most luxury brands lose eighty to ninety percent of customers in any given year, and are deficient in retaining even half of their top customers. Contrast those metrics to Zappos’ customer retention rate of 75 percent and you begin see the massive opportunity that luxury brands have in creating customer-centric cultures. The good news is that many companies do have the CRM tools to measure the bleeding so now it is time to mobilize and humanize the entire industry for true relationship-building. Here are seven trends that all luxury brands should follow in 2012:

1. The Annual Luxury Brand Check-Up Emerges

Just like they have thorough yearly medical check-ups to maintain their personal health and prevent major issues from becoming catastrophic, luxury executives are embracing the annual brand health assessment as a critical tool in their arsenal. Despite running quantitative surveys and receiving endless streaming social media feedback, there is nothing comparable to gathering target consumers of appropriate gender and age groups for candid and sometimes heart-wrenching dialogue. Brands are recruiting current customers, lapsed customers and aware non-buyers in all major geographies to scrutinize every dimension of their business. The rich dialogue yields vital learning from consumers as to how they are really making luxury decisions and how they compare brands vs. key competitor brands. This blunt and powerful reality check on every critical component of a brand’s luxury value proposition delivers invaluable insights and prevents luxury executives from being blindsided by major evolving issues or from investing precious resources in useless gimmicks. Expect many more luxury brands to implement this type of exercise in 2012 as they realize an ounce of prevention is really worth a pound of cure when it comes to customer experience.

2. Luxury Brand Strategy Becomes Institutionalized

Many luxury brands, especially family owned companies, have grown up organically with little in the way of brand strategy. As they grow larger, they begin to realize the need for a solid brand platform in order to guide growth activities in all channels and geographies. Sophisticated luxury brands will begin to codify their brand heritage and history, along with their mission and values, in order to establish a credible, compelling, actionable and measurable brand positioning. While some argue that luxury brands do not need a positioning strategy, many luxury CEOs and Boards realize that depending solely on an arbitrary communications plan misses the holistic nature of a luxury brand and creates inconsistency in today’s increasingly competitive luxury world. The lack of coherence between critical brand elements across many constituencies has made brand strategy and platform an essential tool for growth. Look for several luxury brands to develop solid brand platforms and figure out who they truly are, and who they are not, in 2012.

3. Less is More Again

Before 2007, many luxury brands diversified into numerous product categories and sub-brands, thus expanding their target consumer base. As top-tier luxury brands have emerged from the recession stronger than ever, many luxury executives realize that part of their survival and recovery success was in paring back product lines and eliminating mass products that eroded brand equity and alienated their best customers. Pruning the vines is now a necessary annual exercise. Luxury retailers have ruthlessly cut inventories, eliminated low-end mass-market products, shut down unprofitable stores, and discontinued relationships with non-performing distribution partners. Hermes’ huge and highly profitable success continues to prove that “less is more” matters tremendously in luxury. As growth begins to slow down in 2012, look for luxury retailers to pare back even more intelligently, thus positioning their brands for perhaps somewhat slower, but more sustainable and far more profitable, future growth.

4. Renewed Emphasis on the Store as the Key to Relationship Building

While online sales are critical for multi-channel luxury retail brands, they are likely to account for only 20% of sales, at most, over time. In previous years, many luxury retailers became enamored with the online channel and diverted investments online to the detriment of optimizing the experience for customers across all channels, particularly in stores and call centers. In recent Luxury Institute surveys, only 10-15 percent of a luxury brand’s customers state that they have a relationship with a sales professional and can name that person. Meanwhile, customer attrition rates in the luxury industry are at an astronomical 80-90 percent. CRM systems and metrics have highlighted that customers who have a true human relationship with a brand ambassador typically buy double from that brand and stay loyal for a longer period of time. Luxury executives now fully recognize the obvious: the true humanization and relationship-building aspects of brand-building depend on the individuals who interact physically with their customers. Look for a massive emphasis on relationship-building in 2012 as luxury brand executives shift investment back into people.

5. The End of Fascination with Social Media

Yes, luxury consumers are online and are members of Facebook. And, yes, many luxury brands have millions of fans who like them on Facebook. And yes, Facebook tries to come up with a new way to influence purchases online every six weeks. However, there is no evidence that having all those millions of fans, most of whom are purely aspirational, has helped luxury brands in acquiring new customers, creating better relationships and increasing sales and profits significantly. In focus groups and quantitative surveys that the Luxury Institute has conducted, significant percentages of younger and older luxury consumers alike do not place much importance on the social media presence of a luxury brand, with some even reacting negatively to a brand’s association with these mass market channels. Many see Facebook, Twitter, and other platforms as strictly social and they resent the commercialization of social media. Look for luxury brands to demand that their agencies and social media partners prove empirically that they can deliver sales and profits in 2012, without damaging brand equity.

6. Luxury Mobile Applications Become Relevant, but Commoditized

Mobile applications are still in the early days and top luxury brands have yet to use mobile apps to generate any significant revenue thus far. The market is inundated with amateurish apps that are irrelevant and that give luxury consumers little incentive to download or use them routinely. As Operational CRM systems gear up to provide customized, one-to-one intelligence to apps builders and users, luxury brand apps will begin to proliferate. The difficulty is that the technology-driven apps will become utilities, with very few providing true, long-term sustainable competitive advantage. The ones that are truly useful will be immediately and effortlessly copied by competitors and will become another seamless channel to connect with customers. In 2012, look for luxury brands to focus on what mobile applications do to build a customer relationship because most really great apps will quickly become commodities.

7. The End of Soulless Algorithms from Luxury Flash Sites

Luxury online-only retailers that deliver discounted products and hold flash sales have had great sales growth up to now. Profitability is elusive for most companies as there are too many similar players in an industry where differentiation is critical. During the recession, these retailers were able to gather luxury brand inventory and sell it to discount-hungry consumers. But discounting as a business model is tough on margins. You need to be a category killer for that and, as we have seen, even category killers are casualties of innovation. Several of these sites boast that their algorithms can serve up customized offers to their eager buyers. That will only take these companies so far and in 2012, the truly smart players will realize that they need to establish human relationships. They will begin to evolve to be more like Net-A-Porter and Zappos than like each other. Look for most of these brands to try to establish personalized, customer-centric cultures in 2012.

About the Luxury Institute The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

Visit Luxury Institute at www.LuxuryInstitute.com

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        Luxury Institute
        luxinfo@luxuryinstitute.com

SOURCE: Luxury Institute, LLC

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