Milton Pedraza is an expert on the nation’s über-wealthy
If you’ve ever done any research on the luxury market, chances are you’ve come across a study by Milton Pedraza. As CEO of the Luxury Institute in New York, Pedraza presides over an independent institution that puts out The Wealth Report as well as research on more than 35 different luxury categories, from bath fixtures to hotels to jewelry. “We noticed that not a lot of consumer research was being done by and about the luxury industry; we also noticed a lot of new millionaires,” Pedraza says of his rationale for founding the Luxury Institute in 2003, after serving as a consultant to luxury firms in the real estate market and for the travel and leisure division of the Cendant Corporation. Dedicated to channeling “the voice of the consumer,” his organization regularly seeks the opinions of high-net-worth individuals — the top 10 percent of America’s wealthy — and uses that information to guide companies that cater to them on leading trends, consumer rankings of luxury brands, and best practices. Here, he gives us a snapshot of the luxury market in mid-2008.
Couture International Jeweler: Your research covers a broad range of luxury products and services. What’s the common link? Milton Pedraza: Unsurpassed quality. That’s the cost of entry. Two, a great customer experience. Three, it’s unique and exclusive. Then I think there’s something called artistic value. It almost transcends the fact that it’s a piece of jewelry. Styling, aesthetics, colors — the artistic part is where you’re doing something so unique and exclusive and so rare that it’s worth paying a very significant premium for. It’s beyond unique and exclusive. It’s worthy of hanging in a museum.
CIJ: Based on these criteria, which jewelers come to mind? MP: Wealthy consumers say Harry Winston is by far the most unique and prestigious jewelry brand. They talk about its Hollywood glamour and the celebrity connection. Buccellati is recognized for its handmade Italian craftsmanship, and Van Cleef & Arpels is the iconic brand through the ages. It’s got heritage, pedigree and France.
CIJ: What other categories could jewelers learn from? MP: You could admire the way Rolex and Patek Philippe have positioned themselves. Patek’s positioning is all about the fact that you don’t “own” their watches, you’re a “caretaker.” Rolex is the achiever’s brand. It’s the watch most associated with being a winner. Those kinds of consumer hooks are what you need to create an emotional investment. They are authentic and sincere and address you for who you are.
CIJ: We just wrapped up the Couture show in Las Vegas, and some exhibitors said they’d had fantastic shows. How do we reconcile that with what we’re hearing about the economy? MP: If they’re doing Couture, they’re probably OK. There are still a lot of wealthy people, and they still have a lot of money. Eight-five percent are self-made and want to reward themselves. The trajectory of the world has never been better. More people are being lifted out of poverty, and more millionaires are being minted than at any time in history.
CIJ: In a general sense, what makes a luxury provider successful? MP: If your positioning — what you stand for, who you serve — is not crystal clear, then you’re not going to be as successful. Christie’s, for example, doesn’t handle any properties under $1 million. You have to be really pure. It’s not about hedging your bets and serving everyone. You have to surgically carve out your niche, and you can’t change your mind every six months. Some people will be alienated by that. But the ones who love the concept will be clients for life. You can’t be all things to all people. You need to be the neurosurgeon of your profession. Why is it that the specialists always make the most money?
