Because wealthy consumers are the most profitable customers for luxury retailers, the holiday shopping period each year is of paramount importance to their bottom line, according to the US-based Luxury Institute, which has published new research explaining how the wealthiest consumers rate and choose luxury gifts.
The 2006 Luxury Brand Holiday Gift-Giving Guide relies on brand status ratings and rankings by wealthy consumers of luxury retailers and companies operating in 18 categories, including fashion designers, fragrances, hotels, casinos, cruise lines, jewellery, ultra-luxury watches, and so on.
Word of mouth is key
Not a demographic that is prone to fads and trends, in addition to personal taste, the wealthy will do their gift buying based largely on a company's reputation and standing with fellow wealthy consumers.
Helped by stock market gains countering the effects of the slowdown in real estate, luxury consumers are in good financial shape and in a mood to spend significantly on gifts this holiday season, the research found. The brands listed have cultivated a strong image with their best prospects and customers and should reap significant rewards this holiday season.
Nordstrom leads six US luxury retailers in terms of providing an exemplary customer experience. Wealthy consumers also give Nordstrom top marks in critical areas such as retention, referrals and worthiness of a premium price. Bergdorf Goodman should also see brisk holiday business as wealthy consumers familiar with Bergdorf think quite highly of the ultra high-end division of another leading luxury retail brand, Neiman Marcus.
One of the gems in Gucci Group's crown, Bottega Veneta, earns the highest Luxury Brand Status Index score in fashion. Customers who know Bottega Veneta rate it highest in quality, uniqueness and exclusivity, and say it is the brand most used by people who are admired and respected. They also say that it is the brand most able to make its customers feel special, and that it is the most worthy of a significant price premium. Armani and Hermes round out the top three most prestigious fashion designer brands.
In terms of luxury men's fragrances, among the current favourites are Boucheron Pour Homme eau de parfum, Cartier Santos Concentree, and Jaipur Homme by Boucheron. For women, Cartier fragrance brands are among the most esteemed, including Le Baiser du Dragon and Panthere. Angel by Thierry Mugler earned a high brand status ranking from the wealthy.
In terms of ultra-luxury jewellery, diamonds are still a girl's best friend, especially if they're from Harry Winston. The New York jeweller finishes first in all four critical metrics of luxury brand prestige: consistently superior quality, uniqueness and exclusivity, social status, and the ability of the brand to make customers feel special throughout the entire customer experience. Tiffany and Cartier tie for second place, while Japanese pearl specialist Mikimoto comes in third.
For ultra-luxury watches, among 17 brands whose top offerings retail for US$50,000 or above, wealthy Americans have particularly high regard for Franck Muller and Patek Philippe, two brands earning the highest rankings in the category. Other especially prestigious brands in the eyes of the wealthy: Vacheron Constantin, Audemars Piguet, and Breguet.
In terms of luxury writing instruments, fine pens are popular gifts for friends or business associates. Status and exclusivity come with the Ducati and Jaguar offerings from Italian firm Aquila. Other options include Montblanc, which earned top marks for delivering consistently superior quality, and Tiffany, which wealthy consumers say does the best job of making them feel special throughout the customer experience.
In luxury autos, Porsche pulled ahead of the pack in terms of overall brand prestige. Gifts from Mercedes or Lexus would not disappoint either - the two brands which round out the top three most prestigious brands in the automotive category.
And for ultra-luxury autos (US$100,000 or more), Rolls Royce rolled higher one spot from 2005 to overtake Maybach as the most prestigious ultra-luxury auto name. Maybach ceded all but one of the pillars of luxury brand status to Rolls, but it topped the list of 10 ultra-luxury makes in social status. Bentley also finished near the top of the rankings, and is the brand that the wealthy are most likely recommend to family and close friends.
In the home
In home appliances, kitchen renovations are among the most popular home improvements, and in this important area, a handful of brands dominate. California's Wolf Range is the top-ranked home appliance brand. Britain's AGA and Germany's Gaggenau rank second in the LBSI for home appliances, followed by Viking and Sub-Zero.
In home furnishings, the most highly esteemed brands are extensions of famous fashion houses: Armani Casa, Maitland-Smith, and Stickley are the top brands according to America's wealthy. Also in the top 20% are Fendi Casa, Pierre Deux, and Roche Bobois.
For glassware (crystal) gifts, Lalique enjoys the best reputation among ultra-wealthy consumers who know the storied French brand. Another French brand, Baccarat, finished second overall, followed closely by Steuben and Chistofle.
And for fine china, Hungary's Herend Porcelain is the brand that stands head and shoulders above its peers, and is the brand with the most improved image in the past year. Hermes and Waterford round out the top three fine china brands, followed by stalwarts like Cartier, Tiffany, and Rosenthal.
In consumer audio, Bang & Olufsen comes first. The Danish company edged out Bose for the highest ranking in consumer audio, followed by Nakamichi. For video, it's Bang & Olufsen again. Nakamichi, a runner up in the consumer audio category, was also placed along with Sony in the top three brands (out of 25) in consumer video.
In luxury hotels, despite its rapid expansion over the past several years, Ritz-Carlton is still tops in brand prestige among the wealthy, edging out Peninsula. Small Luxury Hotels of the World and Four Seasons tied behind Peninsula in the ranking of 19 leading luxury hotel brands. Particularly impressive for the category as a whole, and for Ritz in particular, is that the luxury hotel business gets the highest marks of all luxury industries in terms of product, customer service, innovation, and trust.
In terms of cruise lines, the wealthy prefer smaller lines such as Seabourn, Silversea, and Lindblad. Seabourn steamed to a first-place finish, just ahead of Silversea. The overall winner in 2005, Lindblad, also finishes among the top three brands.
The favoured Casinos this year include Bellagio and the Wynn (Las Vegas). In Atlantic City, it's the Borgata.
Finally, the desire of high net-worth individuals to get away for a memorable holiday is driving sales of high-end adventure travel - truly a niche for the rich. In this category, Abercrombie & Kent, a market pioneer, is the most prestigious tour operator, followed closely by Tauck World Discovery and Wilderness Safari.