RAPAPORT… Bain Predicts Surge in Luxury Sales
Luxury goods sales totaled a record $256 billion (EUR 172 billion) in 2010 and are projected to grow 8 percent in 2011 to approximately $275 billion (EUR 185 billion), according to a new report by Bain & Company. The upward trend is expected to continue; luxury sales are forecasted to reach $318 billion or more by 2014.
In its “Spring 2011 Update: Luxury Goods Worldwide Market Study,” the global consulting firm cited strong first-quarter momentum for luxury goods sales across the U.S. and Europe and continuing growth in China, as well as demand for goods in fast-growing markets such as Russia, Brazil and the Middle East.
Retailers interviewed expressed a “high level of confidence that consumers will keep coming into stores and continue making purchases with the same vigor that preceded the global financial crisis,” according to the report. Claudia D’Arpizio, a Bain & Company partner in Milan and lead author of the study, stated, “Luxury has made a brilliant return to the retail stage, but the script has been rewritten. More demanding customers, generational shifts, new loyalty rules, an increasingly integrated offline and digital customer experience and the continued growth of China and other fast-growing markets are transforming the luxury industry.”
By region, Bain forecasts that luxury retail sales in the Americas will increase 8 percent year on year in 2011 to $77 billion (EUR 52 billion), while China will experience a 25 percent increase and growth across Europe will reach 7 percent. The study also predicted that growth from emerging markets would remain the focus of luxury manufacturers for the next two to three years.
Looking ahead to 2014 and beyond, Bain & Company predicted that sales in the luxury goods retail market would approach $318 billion to $328 billion. According to Bain, retailers seeking to “own the luxury goods future” should concentrate their efforts on penetrating emerging markets with tailored value propositions, adapting to the generational changes in shopping patterns and integrating online and offline shopping experiences with “unrelenting service.”
“Emerging markets are doing more than generating revenues,” said D’Arpizio. “New consumers are also forcing luxury brands to become much more nimble in the merchandise selection and customer experience they offer to increasingly diverse consumers.”
Origin Of Luxury Goods Matter
Moving business operations to lower-cost labor centers may damage a brand’s reputation and drive affluent customers away, according to a new study published by Unity Marketing titled “What Luxury Executives Need to Know About Where Their Products Are Manufactured.” The study found that nearly 70 percent of the luxury consumers surveyed, or those with an average income of $287, 200, said they consider where a product is manufactured when weighing a new purchase.
“Luxury customers show a definite preference for luxury goods manufactured in certain countries,” said Pam Danziger, president of Unity Marketing. “Overwhelmingly, they associate countries like the U.S.A., Italy, France and Germany with better-quality luxury goods. On the other hand, nearly two-thirds, or 63 percent, of those surveyed said that manufacturing luxury goods in less costly places, like China, is bad for luxury consumers.”
The new report compares these results with a similar survey conducted in January 2007 in order to provide perspective on how luxury consumers’ attitudes have evolved. “Clearly, luxury consumers are flipping over products and looking for that country of manufacture stamp and if it doesn’t say what they expect, they may well put it down and move on to an item manufactured in a country they associate with higher quality,” Danziger explained.
“The findings from this research can impact the decisions companies make in manufacturing and sourcing in specific countries. It suggests opportunities for brands to create awareness in the minds of luxury consumers about the place of manufacture and how to position ‘place’ to influence the consumer toward purchase. After all, it is their search for superior quality that most powerfully motivates consumers to purchase luxury goods,” Danziger concluded.
Gitanjali USA Creates Aston Luxury Group
Jewelry Marketing Company (JMC), a division of Gitanjali USA, announced plans to implement a strategic brand identity program under the name “Aston Luxury Group” that will create a new level of attraction for the consumer through the marketing, ecommerce, philanthropy and unique distribution of its products.
“The Aston Luxury Group will be the umbrella company for all of our current and future brand distribution in the U.S.,” explained Jon Mitchell, president of the Aston Luxury Group. Jamison Ernest, the group’s newly appointed creative director, will lead the rebranding effort.
Amazon Beats Blue Nile in Customer Satisfaction
In its annual assessment of the top 100 online retailers, ForeSee Results reported that customer satisfaction with e-retail remains at an all-time high, scoring 78 out of a possible 100 points. Moreover, not a single retailer scored below 70 points in contrast to only two years ago, when 15 percent of the top 100 retailers scored 69 or lower. The assessment also measured “purchase intent,” or a consumer’s likelihood to purchase from a retailer through any channel, online or offline.
Amazon.com scored the highest overall with a satisfaction rating of 86 points and a purchase intent score of 93 points, beating out Netflix, which led the Index for six years.
Blue Nile received a satisfaction score of 75 points and a purchase intent rating of 72 points. Top performers that sell jewelry included Avon.com, QVC.com, HSN.com, JCP.com (JC Penney) and Kohls.com. Websites with scores of less than 80 points included Walmart, Macy’s, Nordstrom, Saks and Neiman Marcus. RueLaLa.com was last on the list with a 70-point satisfaction rating and a 71-point intent to purchase score.
“Time and again, our research shows that customer satisfaction drives loyalty, positive word of mouth and future purchase intent,” said Larry Freed, president and chief executive officer (CEO) of ForeSee Results. “Even as this economy slowly recovers, competition for the consumer dollar has never been tighter, so companies cannot afford to be complacent with their single most important consumer interface: the website,” he added.
Stuller Introduces StudioFlex
Stuller Inc. launched StudioFlex, a digital program that enables jewelers to order select mountings customized to the specific center-stone dimensions. The program eliminates the need for jewelers to purchase stock-sized mountings and rework the pieces themselves.
“Jewelers’ number one customization request is to adjust the center stone size to fit a uniquely sized diamond or gemstone,” explained Lori Carter, Stuller Studio’s business manager. “StudioFlex saves the jeweler time and money by virtually offering them any size mounting they need, for any job, in just six to eight days,” she added.
Georg Jensen Helps Japan Relief
Georg Jensen plans to donate 100 percent of the profits derived from the sale of a special collection of AMBUSH® Koppel watches to support relief efforts in Japan. The donation will be made through the Danish Red Cross.
The special edition AMBUSH® Koppel pendant watch is based on a design originally created by Henning Koppel in 1981. This exclusive line is created by Japanese designers Verbal & Yoon, founders of the Tokyo-based design collective AMBUSH®. Only 500 pieces of the Swiss-made watch are available worldwide.
James Avery Plans Second Store in Fort Worth
James Avery will open another jewelry store in Fort Worth, Texas at the Alliance Town Center. Scheduled to open in late August, the store will feature predominantly handcrafted jewelry in sterling silver and 14-karat gold with gemstones.
The store will be the eleventh location for the jeweler that currently operates 61 stores across Texas, Oklahoma, Louisiana, Georgia, Alabama, Tennessee and Arkansas.
