Luxury Retail: The Folly of the Discount

"When you discount your luxury product, the perceived value deteriorates and so does your ability to charge a premium. Suddenly, more customers are wearing the same purse, the underlying value has not changed significantly, but the perceived value certainly has. A true luxury goods retailer should never discount their products; especially their flagship products. In fact, discounting is a disservice to customers. Why punish your customers who value the product and are willing to pay full price?"

Read article at Seeking Alpha

QuietC.net Launched

Quiet C Holdings was founded by Louis Sterchi, a former Carlyle Group associate, to invest in businesses in times of stress and opportunity. DC-based Quiet C will consider just about any kind of business for partial or full acquisition - perfect for business owners who are looking to retire and pass on the company to strong management. See the ultra simple site at quietc.net.

The image underlying the website is called Midmorning/Silver, 1988 by famed photographer Joel Meyerowitz.

Excuses, excuses. Luxury prices at a tipping point

BY KRYSTINA GUSTAFSON for CNBC

"The value of a discretionary item rests in the eye of the beholder—particularly in the high-end luxury market, where price tags rely more on a shopper's aspirations than on the product's actual worth. As a result, luxury brands including Hermes and Louis Vuitton have been marking up prices over the past few years, as rising stock markets, improving home values and an overall stronger economy make the rich even richer. But are high-end brands in danger of alienating wealthy shoppers, who are increasingly spending their fortunes on experience-driven purchases such as travel?"

READ ARTICLE HERE

FairholmeFunds.com Launched

We recently imagineered and launched the website for Bruce Berkowitz's Fairholme Capital Management and Fairholme Funds. Bruce is regarded for his high returns over the past decades, and he has been lauded as Morningstar's Domestic Equity Fund Manager of the Decade, and Institutional Investor's Money Manager of the Year for 2013. Lanzara Studio first began working with Bruce and Fairholme Capital in 2004, and we have worked on numerous projects together. 

The lead image on the Fairholme site is a rendering of Fairholme's upcoming Miami headquarters, which will serve double duty as a museum housing iconic works by James Turrell, Richard Serra, Basquiat, Richard Prince, and Warhol, to name a few.  LanzaraStudio followers may be most interested in the website section about Philanthropy, and may also want to read the Miami Herald article about Fairholme's new digs. 

Rude sales people can boost luxury sales

BY PATRICK M. SHERIDAN FOR CNNMoney

Apparently, rude sales people and fancy brands go well together.

At least that's what a recent study shows. Shoppers appear to want to buy more of the high end brands after being treated badly, according to research conducted by two professors.

"As upsetting as it is to be condescended to, in a luxury environment it appears to work in the brand's favor," said Morgan Ward, who teaches at Southern Methodist University. He said it's about wanting to be "part of the tribe" or the in-crowd.

Ward co-authored the research paper, which was based on several scenarios in which participants interacted with phony salespeople they thought worked for upscale brands such as Gucci, Louis Vuitton or Burberry. Some of the people posing as sales staff were rude and some were not.

Surprisingly, customers in the simulations had an increased desire to buy the luxury goods after being treated rudely. In fact, the ruder they were, the higher the desire to buy the posh items.

READ ARTICLE HERE

Detroit: the bankrupt city turned corporate luxury brand

BY ROSE HACKMAN FOR THEGUARDIAN.COM

Makers of vodka, watches and luxury cars are promising to help Detroit in exchange for its grit, authenticity and brand potential

READ ARTICLE HERE

Bloomberg: Luxury Brands Are Stupid to Snub the Internet

KURT SOLLER/BLOOMBERG BUSINESS WEEK:

Ninety percent of luxury purchases, which some analysts say is a $300 billion industry, still happen in stores, according to Forrester Research (FORR), but that’s skewed by the limits of acquisition placed on most high-end shoppers. The real business failing, says Forrester analyst Sucharita Mulpuru, is that “there are a lot of affluent people who are intimidated or annoyed by shopping at luxury retail stores.” 

READ ARTICLE HERE

Soaring Luxury-Goods Prices Test Wealthy's Will to Pay

By SUZANNE KAPNER and CHRISTINA PASSARIELLO for The WALL STREET JOURNAL

Despite expanding into new markets, the luxury-retail business has been relying on price increases to drive sales. Now, even the very wealthy are nearing the limits of what they are willing to spend.

In the past five years, the price of a Chanel quilted handbag has increased 70% to $4,900. Cartier's Trinity gold bracelet now sells for $16,300, 48% more than in 2009. And the price of Piaget's ultrathin Altiplano watch is now $19,000, up $6,000 from 2011.

Such increases for some of the world's most expensive indulgences far outpace inflation and contrast with the middle and lower end of the retail market, where even small increases can turn off shoppers.

CLICK HERE TO READ ARTICLE

Why High-End Luxury Brands Are Losing Their Luster

By Fani Kelesidou, for The Motley Fool

"The best things in life are free. The second best things are very, very expensive," the queen of elegance Coco Chanel once stated. And she was right. In the world of "true" luxury, the relentless effort to create something that's in a class by itself was always rewarded with a sky-high price, which only an exclusive group could afford.

During the last half decade, however, an emerging "luxury for less" or "affordable luxury" industry thrives on emulating what once was considered exclusive and making it accessible to the masses. But, "true" luxury was never meant to be accessible. And this massification is causing an identity crisis, one that could have severe implications for high-end luxury brands down the line. 

Click HERE to read article

Wall St Journal to Investors: Avoid these luxury brands

By Margaret Bogenrief for WSJ Market Watch

CHICAGO (MarketWatch) — In 2013, many retailers, particularly those in the luxury space, are finding themselves in a difficult position, caught between pricing and profitability.

While higher prices may automatically trigger dreams of high revenues and higher profitability, there are, interestingly, some luxury brands that, lured in by the seemingly promising formula of “lower prices equal more consumers,” now find themselves with less revenue, lower profits, and fewer shoppers.

Here are three luxury brands that, in trying to be all things to all customers, risk losing even more market share in 2013.

Continue reading article HERE

How to Build a Luxury Brand? Passion is Still the Key

Excerpt by Horacio Fabiano, The Huffington Post:

What does luxury really mean? How do you create a luxury brand? What does time tell us about luxury? Ketty Pucci-Sisti Maisonrouge's latest book, The Luxury Alchemist, is sure to appeal those who want to find the answers to these questions and take an insider's look at the premium market.

Among the many tools described by Maisonrouge there is one that is the most basic of them all: passion. Passion is the fundamental pre-requisite to starting a luxury brand. "It's all about passion" Maisonrouge explains. "When you have true passion, you only want to create perfection". She recognizes that passion is a requisite for every industry, but "in the luxury field this passion cannot disappear because you don't sell a product to your clients -- you sell a dream. Without passion, it's difficult to share that dream".

Read more HERE

Inside Japan’s Most Insanely Expensive Fruit Parlor →

It is the flagship store of the Sembikiya fruit emporium. Run by the same Samurai-descendant family since 1834, Sembikiya began as a discount fruit store. But the wife of the second-generation owner decided they could make more money the other way around.   READ ARTICLE HERE