Burberry accessories - a category expected to grow

Fueled by current consumption habits and key global markets, luxury goods revenues could grow as much as 50 percent faster than the global gross domestic product, according to a new report from Bain & Co.

The spring update to the “Luxury Goods Worldwide Market Study,” presented at a conference hosted by Italian luxury goods trade association Fondazione Altagamma, forecasts that the luxury goods segment will experience a 4-5 percent growth in 2013 and a 5-6 percent annual growth average until 2015. Leather goods and other accessories are expected to grow faster than other categories such as apparel and watches.

“Although the global economy isn’t necessarily healthy, luxury will continue to outpace any other category,” said Chris Ramey, president of Affluent Insights, Miami, FL. “And since luxury is strong, in that are many opportunities if you understand the market properly.

“It’s about the tactics, it’s about connecting with your customers on a one-to-one basis and it’s about ensuring quality and selling quality,” he said. “It is about being customer-centric, not company- or brand-centric.”

Mr. Ramey is not affiliated with Bain, but agreed to comment as an industry expert.

Bain & Co. was not available for comment before press deadline. The management consultancy’s Luxury Goods Worldwide Market Study analyzes the world’s leading luxury goods companies and brands and was first published in 2000.

Billions and growing
Global luxury goods revenues are expected to total more than $322 billion by 2015, according to the report.

Last year, luxury goods revenues grew by 10 percent – as reported at current exchange rates – but this year the segment is expected to experience 4-5 percent growth.

The luxury goods market is also expected to have grown five times as large in the 30 years from 1995-2025.

The report confirmed key drivers of global luxury goods revenues.

There are ten times as many HENRY consumers – high earnings, not rich yet – than there are ultra-affluent consumers in the world, making this group of growing importance to luxury goods marketers.

This was confirmed in a recent report from Unity Marketing that found that consumers who are increasing their spending are in the HENRY group and make $100,000-249,999 per year. There are 10 HENRY households for every ultra-affluent household (see story).

Additionally, absolute-luxury items – those with no visible logo and made with the highest quality and craftsmanship – are the bestselling luxury goods category.

Indeed, a recent report from the Luxury Institute asked affluent consumers with a household income of at least $150,000 what differentiates luxury from mainstream and 60 percent said quality. Among this portion were many respondents on the higher end of wealth and income (see story).

The report projects that leather goods and accessories will continue to grow faster than other categories, while watch purchases have been on the decline as retailers de-stock and Chinese luxury consumption slows.

Also, the cosmetics category is expected to grow in emerging market, but slow in mature markets.

Where in the world
Factors in each global market have resulted in different growth expectations for luxury goods consumption throughout the world.

In the United States, growth is expected due to high affluent consumer confidence levels, new store openings in cities and more cross-channel brand campaigns that link in-store shopping with ecommerce.

Twelve percent sales growth is expected in Central and South America, especially in Brazil and Mexico.

All together, the Americas should see a 5-7 percent growth.

In the Eastern Hemisphere, new store openings and strength in tier-two markets will cause an expected 20 percent growth in Southeast Asia.

China, as a whole, should experience 7 percent growth in luxury goods revenues, while Japan has 5 percent growth.

Last year’s Luxury Goods Worldwide Market Study found that Chinese consumers, including their spending as tourists, accounted for 20 percent of global luxury sales while all of the Asian consumer base accounted for 50 percent (see story).

Europe, due to slow tourism as travelers choose new destinations as well as a slowdown in spending among its citizens, is expected to have up to 2 percent growth.

Finally, the Middle East will grow steadily, driven by luxury goods sales and tourism to Dubai.

This year brought a more even distribution of global growth for the luxury goods sector, according to Bain.

“Perhaps the report further illustrates that global campaigns in the future will not be as successful as those that are highly targeted based on the growth of the market and the condition of that market,” Affluent Insights’ Mr. Ramey said.

“What resonates with an emerging Chinese middle class market won’t be the same that resonates with Europeans, even though they are buying the same brand,” he said.

“It will take the tenacity of strong leaders to future-segment their brands in order to reach each market effectively, because the buyers are culturally different and they are in different places – intellectually.”

Final Take
Tricia Carr, associate reporter on Luxury Daily, New York

Jacques Demy’s "The Umbrellas of Cherbourg"

French conglomerate LVMH Moët Hennessy Louis Vuitton is gaining exposure among attendees at the Cannes Film Festival by funding the digitalization and restoration of “The Umbrellas of Cherbourg.”

The restored version of French filmmaker Jacques Demy’s 1964 musical will be shown during the “Cannes Classics” series at the 2013 Cannes Film Festival May 15-26. LVMH is looking to raise awareness for its support of the heritage of its brands by funding the restoration project, per the conglomerate.

“Cannes is one of the biggest annual marquee events, attracting a wide array of notables from the crème de la crème,’” said John Casey, senior vice president at Havas PR, New York.

“At Cannes, luxury marketers have a unique opportunity to highlight their brands to a broad range of influencers including celebrities, financiers, athletes, models and jetsetters,” he said. “The effort is a very clever way to integrate the brand into one of the world’s most prestigious film festivals.”

Mr. Casey is not affiliated with LVMH, but agreed to comment as an industry expert.

LVMH was not available for comment before press deadline.

Lights, camera, action
State-of-the-art film preservation and digitalization techniques were used to restore The Umbrellas of Cherbourg to its original colors and enhance its musical soundtrack.

The film stars French actress Catherine Deneuve as Geneviève Emery, the teenage owner of an umbrella shop in Cherbourg, France.

Soon after her lover, played by Nino Castelnuovo, is drafted to the military and leaves for Algeria, she finds out she is pregnant.

Film still 

The musical goes on as both characters lead separate lives.

The Umbrellas of Cherbourg was the winner of the 1964 Cannes Film Festival’s highest award, the Golden Palm of Cannes, and nominated for five Oscars that same year.

2013 film poster

The film marks Ms. Deneuve’s first starting role and pushed her to be Mr. Demy’s theatrical muse.

After the screening of the restored film at the Cannes Film Festival, it will be shown in movie theaters worldwide.

LVMH chose to restore the film for a number of reasons, the most apparent being that it supports the preservation, heritage and creativity of its brands and therefore, supports those aspects of filmmaking as well.

The conglomerate is also looking to align with Mr. Demy’s “French elegance” and the film’s “art de vivre,” per LVMH.

Private screening
Other luxury marketers have been part of film projects recently.

For example, Chanel creative director Karl Lagerfeld produced and directed a new film called “Once Upon a Time” to show how the brand’s founder revolutionized fashion by creating a new style concept for modern women.

The 18-minute film with actress Keira Knightley, the longtime ambassador for Chanel’s Coco Mademoiselle fragrance, starts in 1913 when Gabrielle “Coco” Chanel has opened a namesake hat boutique in on the Rue Gontaut-Biron in Deauville, France.

Once Upon a Time premiered on the evening of May 8, the day before the Chanel cruise collection show at Singapore’s Loewen Cluster on Dempsey Hill. The film was shown during a private screening at the Raffles Hotel, Singapore (see story).

In addition, Prada Group’s namesake brand presented “A Therapy,” a short film starring Helena Bonham Carter and Ben Kingsley that demonstrates how the brand’s items are recognizable and coveted by everyone.

The film was directed and co-written by French-Polish film director Roman Polanski and premiered at last year’s Cannes Film Festival before a showing of a restored version of his 1979 film called “Tess” (see story).

LVMH’s funding of The Umbrellas of Cherbourg restoration – similar to the $2.5 million that its Fendi brand put down to fund the restoration of Italy’s Trevi and Four Fountains – gives consumers something of value without a brand or corporate name built into the project.

The effort will underline LVMH’s standards more than push its brands and it seems that its name will appear on movie posters at the least.

“Film aficionados will appreciate the brand’s efforts to revitalize a revered classic, and as such, provide the brand with an opportunity to highlight its passion of preserving and perpetuating creative practices and skills inherited from the past,” Mr. Casey said.

“Actually doing something to help reinvigorate a beloved film goes a step beyond the usual sponsorship and product placement opportunities,” he said.

Final Take
Tricia Carr, associate reporter on Luxury Daily, New York

Dolce & Gabbana spring/summer 2013 menswear

Italian label Dolce & Gabbana is gaining exposure for its new London boutique through a celebration with British GQ that will be a part of the British Fashion Council’s London Collection: Men’s spring/summer 2014 showcase.

On June 13, designers Domenico Dolce and Stefano Gabbana will join Dylan Jones, editor in chief of Condé Nast’s British GQ magazine, to celebrate the opening of the boutique and present the summer 2014 collection. Opening a new retail location with an exclusive event and a media partner can help the store get noticed by consumers.

“With so many luxury brands opening new stores all over the world, it is a good idea to have a media partner to ensure coverage of the opening,” said Jordan Phillips, author of “The Lure of Luxe,” New York. “New stores are not necessarily big news anymore.

“Dolce & Gabbana is wise to throw the opening party for its New Bond Street store in partnership with British GQ during a major menswear event,” she said.

“The brand is looking to expand its presence in London, and British GQ seems like a natural fit to do so.”

Ms. Phillips is not affiliated with Dolce & Gabbana, but agreed to comment as an industry expert.

Dolce & Gabbana did not respond by press deadline.

Mixing cultures
Dolce & Gabbana’s presentation of its summer 2014 tailoring collection for men will be presented June 13 during the London Calling: Men’s official event.

Dolce & Gabbana spring/summer 2013 menswear

This event will help launch the new retail location, which is located at 53-55 New Bond St. in one of the city’s shopping districts.

This will be the label’s fourth boutique in London.

However, this boutique on New Bond Street blends the classic Dolce & Gabbana look with the identities and traditions of the city in which it is located since it is part of a creation of special stores by the brand.

The boutique’s structure was also designed to combine British and Italian culture.

Coming in with a bang
A few luxury brands have creatively opened stores to gain consumers’ attention.

For instance, British fashion house Burberry celebrated the opening of its Chicago flagship store with a physically- and digitally-immersive event that showcased weather and city residents.

The event Nov. 29, 2012 showcased Burberry’s Art of the Trench images that featured Chicagoans wearing the brand’s iconic trench coats. The images were shown in the store, around the city and across the brand’s social media (see story).

Also, Jeweler Tiffany & Co. celebrated the opening of its SoHo store in New York by allowing artists to create images of what they believe true love to be on the hoarding that surrounds the storefront.

Throughout the summer of 2012, the artists added to the hoarding to create murals inspired by True Love (see story).

Since consumers are currently buying luxury, brands should look to expand their retail presence where consumers demand it.

“Though I am in favor of tightly-controlled brick-and-mortar growth for luxury brands, now does seem like the right time to expand in the major shopping capitals,” Ms. Phillips said.

Final take
Erin Shea, editorial assistant on Luxury Daily, New York 

Montblanc's Nicolas Rieussec watch

Richemont is attributing its full-year sales increase to demand in China and Asia-Pacific, contributions from currencies and exchange rates and the broad growth from its brands across all regions.

Luxury conglomerate Richemont reported a 14 percent increase in annual sales to approximately $13 billion in 2012, compared to last year’s sales of $11.4 billion.

Richemont also reported that its profits for the year are up 30 percent to $2.6 billion from $2 billion in the previous year, much of which can be attributed to the sales in Asia-Pacific. The conglomerate released its results May 16 for the fiscal year that ended March 31.

“The Chinese and the Asians have a very healthy appetite for jewelry,” said Milton Pedraza, CEO of The Luxury Institute, New York.

“I think that ready-to-wear products may be oversaturated [in Asia], and handbags may be oversaturated, so watches and jewelry tend to be valuable,” he said.

“There are some companies in luxury that continue to grow, despite the global economy.”

Mr. Pedraza is not affiliated with Richemont, but agreed to comment as an industry expert.

Richemont, which was not able to comment directly, owns a number of luxury brands including Vacheron Constantin, Jaeger-LeCoultre, Baume & Mercier, A. Lange & Söhne, Cartier, IWC, Piaget, Alfred Dunhill, Van Cleef & Arpels, Montblanc, Chloé and Roger Dubuis.

Asian expansion
Richemont attributes its sales results to an increased demand in China and Asia-Pacific, contributions from currencies and exchange rates and the broad growth from its brands across all regions.

The company said that it works on a long-term basis of benefiting from the prestige and heritage of its brands, which will continue in the future.

However in the short-term, Richemont said that economic troubles may impact consumer confidence in some markets.

Overall, the conglomerate is cautiously optimistic about the future.

During this past fiscal year, Richemont reported that Asia-Pacific accounted for the majority of its sales, with 41 percent of the group’s total sales coming from that area. Hong Kong and mainland China are its two largest markets.

Europe, including the Middle East and Africa, was responsible for 36 percent of Richemont’s overall sales.

The conglomerate says this area’s growth was a result of demands from tourists.

The Americas region had a third consecutive year of double-digit growth. This year, it accounted for 15 percent of group sales.

Compared to other regions, Asia-Pacific is the area that is leading Richemont’s growth.

“Asia-Pacific is still a vibrant part of the world and there are some companies that are doing well there,” Mr. Pedraza said.

“Some brands are doing a fantastic job in that area,” he said. “Richemont is doing a fantastic job.”

Retail v. wholesale
Another aspect responsible for Richemont’s growth is its individual brands’ focus on retail over wholesale.

Cartier boutique

For the Asia Pacific and Europe, Richemont reports that its brand’s own boutiques had the highest growth rates.

In Asia, the brand boutiques had higher sales growth than the company’s wholesale partners. This is in part due to the expansion of the boutiques in the region.

“Richemont has set out over the last few years to try to keep its own distribution,” Mr. Pedraza said.

“Retail is outselling wholesale, which can help a company grow faster,” he said. “You can have faster growth when you are de-emphasizing wholesale and emphasizing retail.

“Most luxury brands want to control their own distribution. Watch brands tend to be more retail-oriented.”

Final take
Erin Shea, editorial assistant on Luxury Daily, New York 

Brian Atwood #ShoeLover contest

Footwear label Brian Atwood is increasing its follower base on Instagram with a contest to acknowledge loyal customers.

The brand is hosting the #ShoeLover Instagram contest that could increase the number of candid images of its footwear on the mobile-social platform. Since Instagram is a visual channel and growing in popularity among young consumers, it is likely one of the most effective ways to reach a young, affluent audience.

“Instagram is a photo-sharing social application where visual content is king,” said Christine Kirk, CEO of Social Muse Communications, Los Angeles. “Luxury brands can leverage Instagram to show the audience their exclusive products rather than telling them through tweets or status updates like on other social platforms.

“An engaged audience is interacting with the brands on a personal level, resulting in a customer base with built-in loyalty towards the brands,” she said.

Ms. Kirk is not affiliated with Brian Atwood, but agreed to comment as an industry expert.

Brian Atwood declined to comment directly on this matter.

Foot in the door
The label announced the #ShoeLover contest last week by asking its U.S.-based social fans to follow @Brian_Atwood on Instagram and upload original “selfie-style” photographs of their Brian Atwood or B-Brian Atwood shoes.

The brand looked to bring together its community on Instagram around a common love, per Brian Atwood.

Participants have the chance to win a pair of “coveted Brian Atwood shoes” each week through June 6.

Instagram users can enter two images per week. They must tag @Brian_Atwood and use the hashtags #ShoeLover and #ChicHaven.

The brand previously introduced the #ChicHaven hashtag to generate interest in the first Brian Atwood boutique located at 655 Madison Ave., New York.

As of press deadline, there were nearly 600 entries tagged with #ChicHaven, but more than 62,000 tagged with #ShoeLover. By tapping an already-popular hashtag, Brian Atwood could increase product awareness among Instagram users.

Image tagged with #ChicHaven

The brand is also acknowledging contest participants by announcing the weekly winner through the @Brian_Atwood handle and sharing a group of the designer’s favorite entries across its social media accounts.

Mr. Atwood’s favorites 

The brand’s goal for its Instagram channel – established to be from the designer’s point of view – is to facilitate a two-way experience for its followers, per Brian Atwood.

Instant gratification
Many fashion marketers use Instagram to engage with young brand fans.

For example, British fashion house Belstaff pushed the brand’s adventurous side in a week-long Instagram campaign that prompted brand engagement.

The brand gave away one of its iconic Roadmaster jackets each day during the #PureAdventure contest (see story).

In addition, fine jewelry maker David Yurman is leveraging the brand’s presence on Instagram by incorporating customer images into its spring collections push.

The jeweler added the Instagram element to its spring campaign to capture consumers’ own styling of its new lines via the #DavidYurman hashtag (see story).

Instagram remains to be an effective marketing tool because it is visual, social and authentic, per Marko Z. Muellner, senior director of marketing at Shoplgniter, Portland, OR.

“Taking photos is fun and easy with smartphones and Instagram’s magic is that it turns everyone into a great photographer,” Mr. Muellner said. “Filters, blurs and frames all make the most boring photos look nice.

“Even when a professional photograph is posted, it fits in nicely with all of the user-generated images,” he said.

Final Take
Tricia Carr, associate reporter on Luxury Daily, New York

Land Rover thanks one million Facebook fans

Land Rover North America is celebrating its more than 1 million Facebook fans with a social video that pays homage to their customers.

In the 76-second video, the automaker showcases its vehicles in a variety of settings and thanks fans for making the brand a part of their lives. Other automakers have created similar social videos to celebrate social media milestones, which can help show fans that the brand cares.

“The video is our way of saying thank-you to our fans for choosing to engage with Land Rover,” said Kim Kyaw, digital marketing and social media manager at Land Rover North America, Mahwah, NJ.

“We asked our fans to submit photos of their favorite Land Rover and memories with their vehicle,” she said. “Since our fans are an integral part of Land Rover’s success, we wanted to ensure they were acknowledged and part of the story.

“Social media plays an important part of  our relationship with consumers and has been instrumental in communications for some of our latest product launches such as the 2013 Range Rover and the new Range Rover Sport.”

British-based Jaguar Land Rover, part of India’s Tata Motors family, owns car brands such as Land Rover, Range Rover and Jaguar.

Reaching 1 million
The Land Rover USA Facebook page announced that it reached 1 million fans May 15 by posting the video on its Facebook page.

Facebook post

The short video was created in a paper-animation style that includes a medley of  images of Land Rover vehicles and images from fans.

The video starts out with a hand holding up a card that reads, “Over the last six decades Land Rover has gained a following home and abroad.”

Then, the hands cut out a garage from a photograph and places it on a piece of paper along with other items to create a background.

The hand holds up another card that says, “You’ve shown us where you come from.” The card is placed on the table and then the hand opens up the paper garage as a Land Rover drives out.

Video still

The vehicle drives through the suburbs, the city and the country as it morphs from model to model.

Next, the video shows various pieces of paper that give a short sentence of how Land Rover’s fans have involved the brand in their lives. In between the shots of the paper, there are clips that incorporate fan images into the Land Rover vehicles.

The vehicle continues driving and a final card reads, “Over a million fans later, we just want to say …” as the vehicle reaches its destination and the stars in the sky spell out, “Thank you.”

1 million Facebook fans

Celebrating a milestone
Other luxury automakers have celebrated their Facebook fans.

For instance, German automaker Porsche honored its 5 million fans by letting them collaborate to design a 911 Carrera 4S vehicle.

Porsche announced that it hit the 5-million-fan milestone Jan. 31 by updating its cover image to say, “Thank you for 5 million likes.” To celebrate, the automaker launched an interactive campaign on a Facebook application where fans were able to vote on the characteristics of a 911 Carrera 4S (see story).

Also, German automaker Mercedes-Benz USA thanked its 9 million fans by releasing a video that featured its CLS-class vehicle and light painting special effects.

The video titled “Light-Painting in Real-Time” shows off the automaker’s CLS-class  in a live-action painting with light video by Finnish director Anssi Määttä. The video was promoted on the mb! by Mercedes-Benz’s Web site and the brand’s Facebook page (see story).

Luxury automakers could increase brand loyalty and gain more enthusiasts by engaging with and thanking their fans on social media.

“Our Facebook fans comprise owners, enthusiasts and people who aspire to own a Land Rover one day,” Ms. Kyaw said. “On a daily basis, we strive to engage with our fans in a meaningful and authentic way.

“Land Rover is known for having some of the most loyal and engaging fans, so we wanted to take a moment to thank our fans for their continued enthusiasm and support,” she said.

Final take
Erin Shea, editorial assistant on Luxury Daily, New York 

Carolina Herrera spring/summer 2013

Today in luxury marketing:

Carolina Herrera puts renewed focus on Asia
When Carolina Herrera first came to Asia, Ronald Reagan was in the White House and Japan was slated to become the world’s No. 1 economy, WWD reports.
Click here to read the entire story on WWD

New Mercedes-Benz S-Class unveiled
The new Mercedes-Benz S-Class has been revealed ahead of going on sale in September, The Telegraph reports.
Click here to read the entire story on The Telegraph

Audi sees new performance cars joining A3 to drive 2013 growth
Audi AG, the world’s second-largest maker of luxury cars, said high-performance cars such as the the RS5, as well as the new version of the A3 compact, will help propel sales this year amid intensifying economic headwinds, according to Bloomberg Businessweek.
Click here to read the entire story on Bloomberg Businessweek

Richemont chairman to take a break
Johann Rupert, the chairman of Cie. Financière Richemont SA, surprised investors by saying he would take a one-year sabbatical, per The Wall Street Journal.
Click here to read the entire story on The Wall Street Journal

Mickey Alam Khan is editor in chief of Luxury Daily

Each day’s headlines are dominated by the key movers and shakers in mobile – Apple, Google, eBay’s PayPal, Amazon, Facebook, Twitter and Samsung. Left out of this discussion is the one company that once set the agenda for business tools and processes and now threatens to join Kodak and Polaroid in the hall of has-been pioneers: Microsoft.

While cofounder Bill Gates stepped away from the CEO’s job in 2000, handing over the day-to-day running to lieutenant Steve Ballmer, he cannot be blind to the obvious: his legacy is about to be undone. Unless Microsoft gets its product and customer focus right, it will wither on the vine.

Windows open, but doors shut
Each smartphone and tablet sold is another vote for mobility. Eventually, consumers will learn to live without personal computers and, by association, the need for a Windows operating system and the Office suite comprising Word, Excel, PowerPoint, Outlook and Exchange.

No matter how much revenue Microsoft makes from its Xbox and ancillary ventures and enterprise efforts, if it cannot keep pace with where consumers are conducting their work, play and home lives, it will teach its audience to live without its core products.

Microsoft’s strategy should not be to produce a better phone or tablet or to be the best mobile content provider. It cannot out-Apple Apple. Instead, it should focus on what it used to do best: make easy-to-use software tools that enabled business to do business better.

In other words, Microsoft should focus on making Windows, Internet Explorer and Office the best applications on mobile devices, including smartphones and tablets, and at some point, extend them to television when that medium becomes truly interactive and linked to mobile.

As things stand, the Windows operating system has won few fans among handset and tablet manufacturers that worry about investing in a platform that has little traction from the broader consumer market.

It is a chicken-and-egg situation. If Microsoft cannot land enough phone and tablet manufacturers ready to install its Windows OS, it does not have enough opportunities to reach the mass market.

All may not be Microsoft’s fault.

Same old story: galaxy domination
Wireless carriers such as AT&T, Verizon Wireless, Sprint and T-Mobile may not want to face the fate of computer manufacturers who are largely beholden to Microsoft for the software guts of PCs. Carriers want to keep control and not let Microsoft extend its PC dominance to mobile.

That is one reason.

The other reason is manufacturers such as Samsung and HTC who prefer an open OS versus a controlled system. It keeps them in charge of their total phone and tablet package. Apple is an exception in that it makes the phone, tablet and the operating system, as well as controlling content, commerce and payment.

So, right off the bat, Microsoft is faced with these two challenges. Carriers and manufacturers are leery to let Microsoft into their ecosystem – of that there is little doubt.

Add to that a public relations battle that Microsoft has lost to Apple, Google, Samsung and Amazon.

However, what the media raises high, the media brings low. Not a day goes by now without virulent criticism of Apple and its CEO, Tim Cook. His main fault: he is not Steve Jobs.

Soon, the knife will turn on Samsung. Already the reviews for the Galaxy S 4 smartphone are tepid: the screen is too brittle, too much gimmickry and it is a mild improvement over Galaxy S 3.

Once-dominant BlackBerry and Nokia have been humbled in the market and the media. Google, too, faces its fair share of censure over privacy issues and lack of focus – or how it passes off its various sideshows including Google Glass.

Facebook Home, so far, has failed to hit a home run. And Twitter is a media vehicle in denial banking on sponsored posts and display ads – Facebook’s weakness too – for revenue and investor returns. Good luck.

Suite nothings
While it would seem presumptuous to tell a $71 billion, 37-year-old company what to do, common sense is itching to break the banks of this river: Microsoft should stick to its knitting and focus on what it does best. So here goes.

First, cut back the time spent on the Windows Phone operating system.

Make it easy enough for manufacturers to use Windows should they choose to offer variety other than Google. Because, at some point, Google turns from friend to frenemy of all its partners. So does Apple. And that is when Windows will look attractive. Its ambitions or usurpations will be clear for all to see.

Next, make Office extremely mobile-friendly and easy to use on tablets and smartphones. That will be the single-biggest tipping point for consumers to switch their production tasks to mobile devices.

The downside to making Office mobile is the devastating impact it will have on PC sales worldwide. But the proliferation of cheaper, smarter and lighter tablets has already convinced many consumers that their next upgrade from home PCs and laptops is a tablet.

So the die is already cast – consumers are adopting tablets for play and mild work, even in the absence of Office apps such as Word for documents, Excel for spreadsheets, PowerPoint for presentations and Outlook for email. They are turning to paler imitations from Apple, Google and other developers, paying way lower prices. Further inaction will reduce that work-tools category to commodity status.

Microsoft, in other words, will not be able to charge a premium – or at least keep the price consistent with Office on PCs – for its Office version on mobile.

A smart leader at Microsoft would make this call: release the best version of Office for smartphones and tablets, charge the same price as it does for Office on computers and then offer cloud-based services to handle the data load and cross-device access to apps and programs.

Then Microsoft should take the next step and tackle the retail point-of-sale software market as more retailers and small merchants turn to iPad tablets and Square for last-mile use. That is where Microsoft’s colorful tile-based Windows operating system will be perfectly at home.

That said, Office for mobile should be tailored to smartphone and tablet usage, and not just simply adapted. Consumers use mobile devices differently than they do PCs and laptops: it is a two-finger world versus two hands.

IT IS BETTER for Microsoft to cannibalize its own products on PCs rather than wait for Apple, Google and Amazon to wean consumers and businesses off Office.

Indeed, Microsoft should focus on the part of mobile that makes the consumer’s life better, regardless of phone, operating system or carrier. Office adoption on most smartphones and tablets will do what others have failed to do: make devices and operating systems commoditized.

At that point, only the guts of the devices will matter. Microsoft’s play should be for the guts, not the skin.

Office and the development of similar app and mobile Web software suites for mobile is the future of Microsoft. Let others build the shell. Let them clamor to be gatekeepers. Best for Microsoft to be the diamond that is guarded than be the building, door or glass box.

Andy O’Dell is chief commercial officer of Clutch

By Andy O’Dell

If you hop into the Wayback Machine and transport yourself back 15 years in time, you will find out that there was quite a bit of teeth-gnashing taking place that is very similar to what is happening now.

That is when merchants everywhere were figuring out how to establish their ecommerce presence. Return to today, and we are at the same point with mobile commerce.

Now, almost all small to midsized merchants are asking the question, “How can we get a mobile commerce presence like Starbucks?”

After all, Starbucks pioneered the ability to gain tremendous visibility into the purchasers of its loyalty and gift cards by bringing them to its mobile application through which they can receive offers and make purchases.

It is a daunting question.

As it stands now, most merchants have no visibility into who purchased their gift cards or who the ultimate recipient is.

This lack of visibility represents significant loss of opportunity for merchants to distribute targeted promotions, incentives, discounts and special offers to their best customers.

Most are sorting through the issues and concerned with whether to build or buy the technology to help them get there.

Hard reality of building it right
When retailers are looking at the build versus buy scenario, the decision quickly boils down to economics.

For merchants to build their own Starbucks-type mobile commerce app, they have to find a shop that has the capability to build them an app based on a defined specification and are looking at a six-figure price tag.

For that, they get a static app that they have to manage themselves. If they want to add to it – because it is never going to be perfect the first time – the hard-dollar cost increases. And this is not counting the soft-dollar costs, including the distraction from strategic initiatives.

There is a deeper issue, however.

Most retailers do not have the internal skillset to understand how mobile is different than ecommerce. They say, “We need mobile because we need mobile, this is what we think our consumers want and this is what we are going to build it.”

However, marketing approaches and use cases are not the same as an ecommerce experience.

Until now, merchants executed marketing strategies for three channels – in-store, out-of-home such as billboards and display advertising, and online.

With the emergence of mobile, merchants trying to figure out where to fit it in typically consider two options. Do they treat it as a separate, fourth silo, or do they wedge it into their online mix?

It is important to understand that mobile is not a fourth channel, but rather it is a means of engagement that cuts across the three existing channels.

With mobile, merchants not only can do online communication, but also can promote and leverage in-store and out-of-home promotional channels.

Mobile represents a completely transient marketing opportunity, meeting the consumer wherever they are with their mobile phones whether it is in the store, out of the home or in the home.

It is equally important for mobile commerce to provide consumers with a unified experience that incorporates a digital wallet, shopping, gifting, loyalty, daily deals and social within an app.

This not only makes it easier for them to shop, it gives merchants a richer amount of information to engage their most loyal customers.

What about the buy decision?
What we will see this year and beyond is the emergence of white-label platforms for all other merchants that want the same capabilities of a mobile commerce app such as Starbucks, but lack budget, time and know-how.

This new platform will provide the brand direct contact with the card buyer and the card recipient. This 1:1 relationship increases brand awareness, amplifies consumer mindshare and engages customers in real-time.

This platform will include a private-labeled consumer mobile app that integrates shopping, gifting and loyalty solutions with users’ real-time location, preference and friend data.

Indeed, this empowers merchants to provide relevant and timely information to customers to help them get better offers and give better gifts.

Merchants benefit from a direct-to-consumer marketing channel informed by rich data across retailers, gift lists created by the app user and their Facebook friends, past responses to offers and geo-location information.

Additionally, the platform will include a registration process so that gift card buyers and recipients are no longer anonymous, enabling brands to identify and engage more of their customers.

At the end of the day, merchants get a custom app that costs tens of thousands of dollars versus six figures, and is hosted so they do not need to worry about the skillsets and learning curve.

ONLY THROUGH a white-label and integrated, functional platform can merchants of any size effectively get into the mobile commerce game without having to build it all from the ground up.

This will help them realize the potential of highly targeted, personalized, local and actionable promotional campaigns and messaging to the individual consumer.

It will be interesting to see how the build versus buy dynamic develops.

Andy O’Dell is chief commercial officer of Clutch, Philadelphia. Reach him at andy.odell@clutch.com.

Ian Truscott is vice president of product marketing at the SDL content technologies division

By Ian Truscott

According to a recent survey from IDC and Appcelerator, an impressive 93 percent of mobile developers anticipate that most retail companies will have mobile commerce strategies this year. And it is easy to see why.

Gartner predicts that 2013 will be the year that mobile devices overtake PCs as the most common Web access device worldwide. Knowing that it is very likely that a mobile device will be used at some point in the customer’s journey, what can marketers do to prepare for the mobile shift?

The truth is there are many different ways for businesses to go mobile. And while this may be good news for some organizations, others may be confused by the number of options available.

In addition, some tactics, such as producing a native application or optimizing a Web site for the mobile screen, may work better for one organization but not for another.

To help determine which mobile strategy is the best fit, I suggest considering the following six key points:

1. Take a task-oriented approach
All organizations should consider a task-oriented approach to viewing their Web site.

Not only is this a best practice, but mobile customers are typically even more task-focused than someone using their PC due to lower bandwidth and the limitations of the small screen.

Businesses should also have an understanding of why their customers are using their mobile device.

Are they using their phones while shopping in your store? Are they on the street looking for your nearest shop? Or are they at home on their tablet while watching your commercial on television?

As you can see, defining the task is critical as it enables you to decide what content you need to optimize and what e-services you need to mobilize.

2. Determine the frequency of the task
Once you have understood what tasks your customers are looking to perform with your mobile offerings, you should then consider the frequency of the task to help decide if developing a native app is worth the investment.

For example, will your customers be using your app every day for tasks, such as checking account balances? Or will they only need the app occasionally for tasks such as finding the nearest ATM?

The goal here is to avoid the expensive exercise of building an app to do something basic that can be achieved on a mobile Web site.

3. Consider how mobile device features fit into your task
One of the advantages that a native app offers is that it can access a mobile device’s existing functionality – such as the camera or GPS – to fulfill certain tasks. This makes it perfect for infrequent tasks, such as submitting a car accident insurance claim.

The app can take photographs of the car, the GPS can report the location, and a unique interface allows the user to draw vehicle positions and indicate damage.

These functions considerably increase a customer’s ability to successfully perform a task while adding real-time business value for your organization.

4. Do not forget about interactive experiences
Another point to consider is that mobile devices often have capabilities to effectively render creative content, such as a game or other interactive experiences, for customer engagement.

Recent advances in HTML5 have provided developers with plenty of options for rendering interactive mobile Web applications.

With the mobile Web making this capability much easier to achieve, developing an app with interactive features is absolutely within reach – when it is appropriate.

5. Android or iPhone?
One of the limiting factors when developing a native app is that they are designed specifically for one type of device to best leverage the native functionality inherent in that phone.

So an app developed for Apple’s iPhone will not work on Google Android phones and vice versa.

In addition, each app marketplace also has differing design considerations, deployment options and policies.

This can be a challenge to navigate, so it is important to understand which devices your customers are using to help prioritize your deployment plans.

Web analytics reports are an excellent tool to help understand which devices your customers are using to complete their online tasks so you can develop the right native app for the right platform.

6. Do not forget about the cross-channel experience
Ultimately, your audience will engage with your brand with whichever channel is easiest for them to use and most immediately at hand, whether it is your mobile app, corporate Web site or call center.

For this reason, it is important to consider that your customer’s impression of your organization will be formed as he or she crosses between these channels.

For example, think about how your marketing campaign emails appear on your customer’s mobile device versus on their PC.

Also, when your mobile user clicks on the call-to-action button in the email, does it bring her to your Webpage or will it launch an app that uses the phone’s GPS to direct her to your nearest store?

A content delivery tier can help optimize this cross-channel experience, helping you adapt to the context of the user, the task she is trying to complete or the data you know about her already.

ONE SURE WAY to succeed with your mobile strategy is by making mobile engagement easy for your customers.

Organizations should step back and think about why mobile users are making the effort to engage with them on the small screen.

Ian Truscott is vice president of product marketing at the SDL content technologies division, New York. Reach him at itruscott@sdl.com.