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Industry Watch: Luxe Online Can Be Hard to Find

From MediaPost, November 2007  
For high-end goods, a Web search may be futile

You can buy plane tickets, percale sheets and paper clips on the Web these days. But if you’re looking for a new Rolex, you’re out of luck.

That’s because the company doesn’t sell its watches on the Web and doesn’t plan to any time soon due to a belief that a refusal to sell on the Web policy is the best way to keep consumers from being duped by counterfeiters.

Rolex isn’t the only company playing the wallflower when it comes to the Web. Concerns about fraud and a fear that the Web isn’t a pristine enough environment for their products have kept many luxury marketers from fully embracing the Internet, says Milton Pedraza, CEO of the Luxury Institute.

But the decision to eschew the Web also poses problems for luxury brands, which are losing the opportunity to use the Internet as a sales channel. Michael Koziol, executive vice president, North America, for digital shop Nurun (which counts LVMH, Loews Hotels and Evian among its clients), offers that brands need to cede some control in favor of functionality.

“The Web is not a completely controllable medium like broadcast or print,” Koziol says, “but it offers marketers the best ability to not only reach but also engage a targeted group of consumers and allow them to truly interact with the brand.”

But even Koziol says that luxury brands should be choosy about where they put their ads; he’s a fan of Style.com, the blog DailyCandy, and the interactive online sections of The New York Times.

While luxury brands are reluctant to go online, their customers aren’t. One study by JupiterResearch found that affluent Internet users (those with annual household incomes of more than $100,000) spend three more hours online daily than their less affluent counterparts. And a recent study by the Luxury Institute, which bumped the income minimum up to $150,000, found that around 99 percent of the survey respondents used the Web to research products and services, and about 98 percent shopped online.

Message in a Bottle
The purported bathwater of choice for celebrities across the globe recently took its image even more upscale with the introduction of the Evian Palace bottle, the brand’s take on luxury bottled water that’s available only in restaurants, clubs and resorts.

The bottle features a stainless-steel spout, an engraved stainless steel coaster, and a training session in its proper use. To introduce this überwater to the public, the company chose a mix of print, digital, PR events and television product integration, with a campaign that targeted fine dining consumers and the restaurant trade. The digital portion kicked off in September and is running through December of this year on three sites: DailyCandy.com, CitySearch.com, and nymag.com (the online home of New York magazine).

The ad itself was highly stylized and interactive. Users could click on arrows at the base of the bottle, spinning it slowly around for a 360-degree view, or click through to an Evian Palace bottle microsite for more information. The ad also listed venues where users could find the bottle; mousing over the venues gave their location.

While statistics on the success of the campaign were not available as of press time, Evian is continuing to advertise online, and recently launched an integration with Second Life.

The High-End Dream Kitchen
There may be no finer fridge in which to chill your Evian than a Sub-Zero. Fashion maven Isaac Mizrahi’s got one – as visitors to Epicurious.com found out when the site featured a video tour of his kitchen. People who took the tour were shown a “Dream Kitchen Sweepstakes” advertisement running to the right of the video.

That initiative was a prime example of the integrative effort that Christopher Parr, consumer marketing manager for Sub-Zero, says is a key piece of their online marketing strategy. “There wasn’t really a destination for high-end kitchen appliances,” says Parr. “So we decided to create that destination with the help of Epicurious.” Users who click on the ad are taken to a Sub-Zero branded microsite where they can enter a contest to win a new kitchen, learn more about the featured brands, and build their own design portfolio. The online ad is supported by both targeted e-mail blasts and a print campaign, all designed to drive customers to the Dream Kitchen microsite and to highlight a premium class of appliances (which also features Wolf, a brand owned by Sub-Zero, and the brands Asko and Kohler, who partnered with Sub-Zero on the campaign).

“The process to select Sub-Zero…products differ than a common discount refrigerator you can buy at Best Buy and toss in the back of a pickup truck,” says Parr. “Our products are built-in, which usually evolves around a kitchen remodel or a new home.” To capture that customer’s attention online, says Parr, you need to educate them about design options and installation and “show them beautiful kitchens.”

The Dream Kitchen campaign has been running yearly on Epicurious since 2004, which makes Sub-Zero a trailblazer among luxury advertisers. “If you look at which luxury marketers were advertising in 2004, it really wasn’t a lot,” says Christine DeMaio, vice president and publisher of Epicurious and Concierge. “The fact that they recognized the Internet as a great way to identify and find people who are in the market is really smart.” The campaign’s repeat performance speaks to its success, and so do the numbers—DeMaio says that click-through rates on e-mails sent to the site’s registered user base are between three and seven percent, with “overall click-through rates well above industry average.”

Parr believes that the online luxury audiences are looking for substance, sticky environments where they can spend hours educating themselves about a brand, and an opt-in mechanism. “Once you capture their information, you can continue to wine and dine the customer,” he says. “That’s when the relationship really begins.”

The Original SUV
Like the people who market Sub-Zero, those who market Land Rover value integration. “When we work with publishers we don’t simply buy media online,” says Joao Machado, online associate director for Mediaedge.

Machado’s team worked with Land Rover to set strategy and objectives for a campaign to launch the all-new 2008 LR2, Land Rover’s answer to a premium compact SSUV. The online portion of the campaign ran in April and May of this year, with ads targeted to adults ages 25 to 54 who are professionals, tech enthusiasts and live active lifestyles, and featured content similar to that of the television and print pieces (so that consumers could make a connection between all media).

The Web ads ran on several sites, including CitySearch.com, FastCompany.com, Weather.com and Runner’s World Online, with each ad tailored to the site it appeared on. Land Rover also worked with CitySearch.com to put together a “sophisticated city guide,” offering entertainment, dining and nightlife information relevant to the LR2 core demographic and a co-branded microsite with an affluent-audience-focused sweepstakes.
The out-of-home wireless ads ran on JiWire, which provides free Wi-Fi to customers in targeted business and luxury hotels throughout the United States. The ads themselves appeared on both the welcome screens and confirmation pages of JiWire users.

For the mobile campaign, they worked with Enpocket (which represents Sprint) to run ads across the entire Sprint network. The ads drove demo-targeted users to an LR-specific WAP site where users were able to view LR2 screenshots, learn about product features and locate a Land Rover retailer.

All the ads gave the user the option to click through to a Land Rover site, and many did. “In April there was a 21 percent increase in site traffic from unique visitors,” says Jonathan Renker, associate account director at Wunderman, which produced all the creative assets for the campaign. Site traffic to the LR2 section of LandRoverUSA.com increased by 28 percent, and Renker noted a “fairly significant” spike in the Build Your Land Rover section of the site.

But the mobile campaign turned out to be the real star for Land Rover. “Mobile became a great source of interaction for those interested in learning more about LR2,” says Machado. “Conversion rates went well beyond any expectations.” Land Rover plans a full WAP site supporting all nameplates in 2008.

Shopping for Luxury Kitchen Appliances…

If you are in the process of custom designing your home, you will want to put only the best appliances possible inside of your new kitchen. In fact, a kitchen just doesn’t make any sense unless the many fixtures inside of it are top notch, so you will want to take a close look at this list of luxury kitchen appliances.

1.AGA Cookers: AGA is so confident that their cookers are the best, this company actually markets their cookers as the “world’s finest and most complete cooker.” The AGA cooker is a heat oven that really heats things up in the world of cooking. In order to find out more, visit www.agasales.com.

2.Bosch: this company has been making quality appliances for many years now, and they really know how to stand by their products with excellent warranties, superb quality, and outstanding design. Bosch appliances can be seen at www.bosch.com.

3.Sub-Zero: when it comes to luxury refrigeration, there is no name quite like “Sub-Zero.” This company is more than proud of its world wide reputation for excellence, and there are many different types of systems available within this line (www.subzero.com).

Kitchens just seem to take on that extra glow when luxury appliances are added to countertops, floors, and nestled between designer cabinets. Since the kitchen is the one room where you will spend most of your time, why not add luxury appliances in order to give it that true custom, designer, feel? Luxury home furnishings start with your kitchen, and there is no better place to begin than with the appliances mentioned above.

Luxury kitchen cabinets and kitchen design

If you thought that luxury kitchen cabinets are only the privilege of the rich and elite, then you are wrong. You too can have a cost effective solution for a designer kitchen complete with luxury kitchen cabinets.

Luxury kitchen cabinets do not necessarily mean the cabinets that adorn the house of celebrities. It can mean quality functioning cabinets that have the necessary amount of aesthetic appeal. It should be in sync with the rest of the kitchen design and also with the décor of the home.

With the right amount of planning, you too can have a kitchen that looks as good as the one that you see in designer catalogues.

The plan

• This is the first step towards a proper functioning and good looking kitchen. Draw out a plan and make sure that you put all your expertise into it.

• If you feel that you are unable to do justice to the plan, then you can always seek the services of an expert.

• A kitchen cabinet is the most prominent thing that will stand out in your kitchen. It should be in the perfect location, should support proper storage and do not forget the luxury aspect.

• You can opt for readymade cabinets or have them custom made.

• Everything from wooden cabinets to modular ones can be purchased off the shelf or custom made.

• The advantage of having them custom designed is that you can get the size and the shape that most suits your kitchen.

Types of cabinets

You can opt for face framed ones or frameless European ones based on your overall kitchen design. The luxury kitchen cabinets should be designed in such a way that they make maximum usage of space and compliment the storage area, the cooking area and the sink.

Beautiful Kitchen

Are shoppers going to Trade Up or Trade Down on their Luxury Kitchen?

As the New York Times‘ Michael Barbaro reports, people are “Thinking Twice About That $400 Handbag.”

It was a retail juggernaut that swept through America’s shopping malls and bedroom closets, rewriting the rules of class and consumption.

But affordable luxury is not looking so affordable — or sustainable — anymore.

During the 2007 holiday shopping season, the middle-class consumers who spent the last decade splurging on $300 saucepans and $600 scarves, tightened their purse strings in the face of slipping home prices and rising energy costs.

As a result, an entire economy built around aspiration is starting to collapse. Affordable luxury purveyors like Tiffany & Company, Nordstrom and Coach have experienced slowing sales and plunging stock prices, problems likely to deepen after the stock market’s continued slide last week reinforced fears of a recession.

But one of the biggest casualties may be the illusion of wealth that millions of Americans enjoyed for years, one Burberry trench coat at a time.

“You had a lot of people who graduated to a level of consumption they could not really afford,” said Adrianne Shapira, a retail analyst at Goldman Sachs. “Two-hundred-dollar pairs of denim were plausible when home values soared, but now $100 jeans are looking more reasonable.”

The phenomenon earned many nicknames — mass affluence, new luxury, masstige — and was best summarized by the retail experts Michael J. Silverstein and Neil Fiske in their 2003 book, “Trading Up: The New American Luxury.”

They posited that Americans with household incomes of $50,000 and above tend to “trade up” to high-end products in categories like kitchen appliances or bedding that are emotionally important to them, while perhaps pinching pennies elsewhere to compensate.

Dozens of chains rode this masstige wave, and earned billions in the process. Coach persuaded women to buy $400 handbags when a $60 version from Macy’s could have sufficed. Williams-Sonoma trained shoppers to covet a $35 stainless-steel hand-crank can opener, even though Wal-Mart sells a high-quality electric model for less than half the price. And 7 for All Mankind convinced people that they wanted a $200 pair of jeans made from the same material in a $30 pair of Wranglers.

But trading up was always a fragile phenomenon. It rested, in large part, on consumer psychology — a feeling of wealth derived from soaring home values and the steady growth of real income, that is, income adjusted for inflation.

Today, any growth in real income is all but canceled out in consumers’ minds by falling home prices and rising energy costs. Michael J. Kowalski, the chief executive of Tiffany, calls this “the wealth affect.”

Even if people have plenty of money on paper, he said, they suddenly feel less rich. “It is a reaction to the general economic uncertainty that everyone is feeling,” Mr. Kowalski said.

At Tiffany, the wealth effect translated into sluggish holiday sales of jewelry priced between $1,000 and $10,000, items aimed at what the chain calls its “midtier luxury consumer.”

Stephen I. Sadove, the chief executive of Saks Fifth Avenue, observed the same pullback in December. “The customer who aspires to luxury is slowing down,” he said. “But the high end of luxury retailing remains strong.”

So what will become of masstige if the economy actually tips into a full-blown recession?

Trading down, of course. Experts predict Americans will now grudgingly shift to cheaper brands for much of their shopping. For his part, Mr. Silverstein, the grandfather of trading up, is confident that consumers will pay a premium for the products that matter most to them.

“The trading up phenomenon is quite recession-proof,” Mr. Silverstein said. “It might slow. But it’s way too early to say it’s over.”

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