Luxury Institute News

March 30, 2015

Digital channels influenced $1.5T in-store sales in 2014: report

Luxury Daily
By: Nancy Buckley
March 30, 2015

More than 70 percent of consumers expect brand digital channels to have knowledge of in-store product availability, according to a new report by L2.

Accommodating both digital and in-store trends requires brands to adapt to e-commerce expectations of click-and-collect or free shipping, but also adhere to in-store demands. Many traditional brands face pressure from online retailers to offer better options for consumers turning to digital for both browsing and shopping.

“While luxury fashion in the past required a high touch, in person sale, things have changed,” said Eleanor Powers, director, Insight Reports, L2. “Overall fashion brands are still focused on online e-commerce conversion (e.g. by providing free shipping options).”

Channel options
Prior to interaction with a sales associate, 80 percent of United States consumers know what they want and how much they plan to spend. This knowledge stems from Web rooming, a concept that should be encouraged by brands because it leads to 40 percent higher conversions.

Digital channels effect 50 percent of in-store sales, despite direct-to-consumer ecommerce only accounting for 4 percent of sales.

Ecommerce is being challenged by larger online retailers. When British retailer AllSaints began accepting Amazon Payments there was concern among fashion brands, which escalated with the rumors surrounding Amazon and Net-A-Porter.

Amazon may be in talks to purchase Net-A-Porter, if reports that have been rumored are true.

The etail giant has been unsuccessful in entering the luxury industry in spite of attempts in recent years, and this potential acquisition could be significant for the future of both companies. The impact that this purchase could have on Net-A-Porter is unclear, but the retailer has been not been profitable despite its popularity (see story).

Amazon Prime’s rewards encourage consumers to shop online and receive free shipping for an annual fee. The Prime membership concept has been adapted by ShopRunner, a platform used by one-fifth of luxury brands.

Without ShopRunner, consumers are shopping to a minimum spending level to receive free shipping, but even with that many consumers are pulled away from luxury brands to find less expensive items online.

Some brands, especially in Europe, offer click-to-collect. Without these options, consumers are Web rooming for products and then purchasing in-store. Even with this option, consumers expect brands to have easily accessible information about store availability.

Generational thing
Difference in digital options also vary across generations.

Consumers are split on their willingness to download luxury brand applications, but when dispersed into generations, 72 percent of millennials are inclined to download a branded app, according to a report from The Luxury Institute.

Digitization of the luxury world is slowly evolving as younger generations grow into being affluent consumers. Luxury clients differ across more than just generations, but understanding the prime and upcoming consumer can prepare marketing teams for the future (see story).

Changing to adapt to generational and technological changes requires brands to look internally and adapt within every channel.

“Brands also need to support the hand-off from digital to in-store to support a seamless shopping experience,” Ms. Powers said. “This requires investments in infrastructure for local inventory visibility and providing options for click-and-collect and in-store returns.”

March 10, 2015

Generational shift to luxury digital

Data sourced from Luxury Daily; additional content by Warc staff
March 10, 2015

NEW YORK: Affluent consumers in the US prefer to buy luxury goods in store but there is a discernible generational shift taking place as fewer millennials are concerned to shop this way with more inclined to explore options via an app.

A report from The Luxury Institute surveyed wealthy consumers in the US with a minimum household income of $150,000 per year and found that only 40% of millennials wanted especially to shop in store, while 72% would download a branded luxury app.

“There are clear generational differences where the boomers are less digital and millennials are extremely digital,” Milton Pedraza, CEO of The Luxury Institute told Luxury Daily.

“There is no one size all client experience,” he added, “and we have to understand the consumer not as a segment but as one individual, as a human being, in order to build a long-term relationship.”

That said, the differences leapt out in a number of statistics. Overall, 53% of luxury consumers did not download apps, while 47% did so, with most of these being in the younger generations.

Another instance came in social media, where almost two thirds (64%) of wealthy consumers didn’t follow any brands. But among millennials a similar proportion (68%) followed at least one brand and among Gen X the figure was 58%.

But more than one third (38%) of baby boomers also claimed to have downloaded branded luxury apps.

“Boomers are behind in digitalisation, [but] they are by no means not digital,” said Pedraza, “especially the highly educated global traveller.”

The Luxury Institute drew attention to the role of fashion bloggers in reaching and influencing the younger generation.

It found only 15% of boomers followed a fashion blogger compared to 62% of millennials. And followers had made an average of 4.2 purchases from blogger suggestions.

Even if these bloggers can find it difficult to maintain a leading edge position, Luxury Daily observed that their followings can compare favourably with magazines, the traditional influencer in luxury fashion.

The influence of technology is inexorably influencing purchase decisions in some way: 61% of all affluent consumers said it allowed them to make more purchases, while 65% said it was changing the way they shop with luxury brands.

Can Apple Sell Wealthy Shoppers on a Luxury Watch?

The New Yorker
By: Vauhini Vara
March 9, 2015

Because Apple first unveiled its smartwatch six months ago, and little has changed about the product since then, there wasn’t much for the company’s C.E.O., Tim Cook, to tell his audience on Monday, when he took the stage at a theatre in San Francisco for a follow-up event. Everyone already knew about the watch’s cool, if not necessarily essential, features and its stylish design. Cook did reveal one bit of news, though: the price of a high-end version of the watch, encased with a special kind of eighteen-karat gold that is, according to Apple, twice as hard as regular gold, will start at ten thousand dollars.

Apple had previously explained that there would be three different versions of the watch—Apple Watch Sport, Apple Watch, and Apple Watch Edition—but hadn’t disclosed how much each type would cost, beyond announcing that pricing for the least expensive model would begin at three hundred and forty-nine dollars. The Apple Watch Edition, with its gold casing, was expected to be expensive, but the ten-thousand-dollar starting price still took people by surprise; John Gruber, who runs Daring Fireball, a popular and authoritative Web site about Apple, had guessed that Edition watches might begin at seven thousand four hundred and ninety-nine dollars.

As I have written in the past, smartwatches are a bit confounding, as tech products go. People tend not to gravitate toward gadgets unless they fulfill some unmet need. But smartwatches don’t do anything that existing devices, like smartphones and fitness trackers, aren’t capable of, and it’s unclear whether the convenience factor—having the device strapped on your wrist rather than stuck in your pocket—will make up for that fact.

Apple executives seem aware of that pitfall, and so, while they have pitched the Apple Watch as a tech product, they have also taken another tack, as if to hedge their bet: marketing it as a high-end fashion item. Last year, when the watch was still only a rumor to the outside world, Apple hired Angela Ahrendts, the well-regarded former C.E.O. of Burberry, as its head of retail; the year before, Apple had convinced Paul Deneve, a former employee who had gone on to become the C.E.O. of Yves Saint Laurent, to return to the company. Ahrendts and Deneve were surely influential in guiding the development of the deluxe watch, but so were more long-established Apple executives; in Ian Parker’s recent Profile of Jonathan Ive, the senior vice-president of design at Apple, a friend of Ive’s told Parker that Ive had “always wanted to do luxury.”

It’s relatively rare for a single watchmaker to simultaneously sell a three-hundred-and-forty-nine-dollar watch and a similar ten-thousand-dollar version; for the Apple Watch to be successful, the company will have to market to a mass audience and a luxury one at the same time. Some tech bloggers, accustomed to seeing high-end products priced at most in the hundreds of dollars, immediately balked at the ten-thousand-dollar price tag on the Apple Watch Edition, especially given that the guts of the watch—what’s inside the gold casing—are the same as what’s in the other, less expensive versions. But people from the luxury-fashion world were not particularly surprised; by their standards, the price was somewhat modest. Milton Pedraza, the C.E.O. of the Luxury Institute, a consulting firm, told me, “At ten thousand dollars, I would call that more of a premium watch”—that is, something less than a luxury watch, a term reserved for the highest-end watches that sell for six figures. The luxury-goods business model relies on selling exorbitantly priced items to small numbers of people, which means not having to persuade the masses (tech bloggers included) that the price tag is reasonable. Profit margins for luxury watches tend to be around thirty per cent, compared with ten per cent or less for mass-market watches.

To Pedraza, the ten-thousand-dollar price tag seemed eminently justifiable. For one thing, the gold casing adds significant cost—in the high hundreds of dollars, at least—to the Edition watches. Perhaps more important, though, is that no one expects luxury products to be priced based on the value of their components; what’s being sold is cachet. “With the first caveman or cavewoman, the one who found the shiniest shell to make a necklace had an advantage, and ever since then people have been trying to one-up themselves,” Pedraza said.

Selling cachet, of course, requires special tactics. Pedraza noted that Apple’s marketing has tended to focus on the possibilities of achievement that are contained within a computer or a smartphone. The finest luxury brands, he said, draw their prospective customers’ attention, instead, to what a product suggests about the owner’s acquired achievement. In other words, he said, Apple might do well, with the Edition watches, to focus less on what the watch allows its wearer to do than on what it conveys to others about what the wearer has already done. “It’s about how people look at me and see me and how I want to be seen in the world,” Pedraza said. To an extent, Apple seems to appreciate that message; at Monday’s event, Christy Turlington, the supermodel, appeared onstage to show off her watch.

Apple will face another challenge with its Edition line. The luxury watchmaker Patek Philippe advertises its watches with the tagline “You never really own a Patek Philippe. You merely look after it for the next generation.” The point, of course, is that Patek Philippe watches—many of which are priced at twenty thousand dollars or more—are investments. Like art, they don’t lose value as time passes; they may even gain value. It’s hard to make the same case with an Apple Watch; at best, new technologies last for three years or so before they are seen as obsolete. “If you spent ten thousand dollars on an Omega gold watch, theoretically, in two years time, it should hold most of its value,” Bassel Choughari, a luxury-goods analyst at Berenberg, told me. “What are you going to be left with in three or four years time with your fifteen-thousand-dollar Apple Watch?”

Apple executives are surely aware of this issue; it could be one of the reasons the Apple Watch is built with removable straps, which can, at least theoretically, be removed from an obsolete watch and attached to the next version when it comes out. There is also some precedent for attempting to sell luxury tech products. A British firm called Vertu makes high-end smartphones that sell for tens of thousands of dollars. “A phone is more, in a way, like a car,” Vertu’s creative director, Ignacio Germade, told Sam Byford, of the Verge. “You don’t buy a luxury car because you want to buy it for the next 10 years or 20 years or 100 years; you buy a luxury car because even if you use it for two hours every three days, you want to have the best experience that you can have. If you look at the difference between when you buy a car and when you sell a car, you will realize that it’s actually a huge investment for a product that you use a few times a week.” Notably, in his Profile of Ive, Ian Parker quoted Ive’s friend as saying that Ive was “very interested” in Vertu.

March 9, 2015

68pc of millennials follow luxury brands on social media: report

Luxury Daily
By: Nancy Buckley
March 9, 2015

Consumers are split on their willingness to download luxury brand applications, but when dispersed into generations, 72 percent of millennials are inclined to download a branded app, according to a report from The Luxury Institute.

Digitization of the luxury world is slowly evolving as younger generations grow into being affluent consumers. Luxury clients differ across more than just generations, but understanding the prime and upcoming consumer can prepare marketing teams for the future.

“There is no one size all client experience and we have to understand the consumer not as a segment but as one individual, as a human being, in order to build a long term relationship,” said Milton Pedraza, CEO of Luxury Institute, New York.

“There are clear generational differences where the boomers are less digital and millennials are extremely digital,” he said. “If you want to look to the people with the most money, you want to cater to the older individual, who are not digital, but as you cater to the digital and the millennials.”

The Luxury Institute has conducted research on consumer attitudes and behaviors by surveying wealthy consumers in the United States with a minimum household income of $150,000 per year.

Technology changes all
Adapting to changes in technology can be difficult, but when looking at statistics, over half of affluents prefer to buy luxury products in-store. However, this number is about 40 percent when it comes to millennials and generation X.

Millennials also change the numbers when it comes to following brands on social media. Sixty-eight percent say they follow one or more brands on social media, while 64 percent of wealthy consumers follow zero brands.

Generation X also follows brands, with 58 percent reporting to follow at least one.

When it comes to brand apps, luxury consumers are about even among those who download and those who do not. Fifty-three percent do not download apps, but 47 percent do. The majority of these consumers are in the younger generations, but 38 percent of baby boomers claim to download branded luxury apps.

“As boomers are behind in digitalization, they are by no means not digital,” Mr. Pedraza said. “Especially the highly educated global traveler.”

When it comes to fashion bloggers, baby boomers are even more separated from the younger population. Fifteen percent of boomers follow a fashion blogger whereas 62 percent of millennials say the same.

These bloggers are having influence upon the luxury consumer with the average of 4.2 purchases made from blogger suggestions among those followers.

Overall, technology is influencing decisions. Sixty-one percent of all affluent consumers believe that technology allows them to make more purchases, and 65 percent report technology changing the way they shop with luxury brands.

Blogging influencers
Since fashion bloggers arrived on the scene about a decade ago, they have gained influence and grown to be leaders in the industry, says a report by Fashionbi.

As these bloggers gained an audience, brands began to partner with them for advertising campaigns, events and other marketing efforts. While it may seem that fashion bloggers are losing their luster, they still have large followings that can rival magazines, creating an opportunity for luxury brands to reach a large, fashion-focused audience (see story).

Department store chains increasingly partner with fashion bloggers to promote new initiatives and publicize their stores.

Fashion bloggers often have a large degree of influence and many followers, making them the ideal spokespeople for high profile marketing campaigns and events. Retailers such as Bergdorf Goodman, Harrods and Bloomingdale’s have recently partnered with a variety of bloggers to promote their products (see story).

Digital is slowly immersing into luxury, and eventually it will alter the consumer’s experience entirely.

“[In the future,] there will be digital aspects that help the sales associate be a far more effective relationship builder,” Mr. Pedraza said.

January 23, 2015

Study says luxury brands fundamentally misunderstand their audience

Retail Customer Experience
December 29, 2014
By: Retail Customer Experience

Luxury brands lose 50 percent of their top customers annually because they routinely misidentify their demographic and economic profile while also failing to create a personalized sales experience for them, according to new research from Epsilon and The Luxury Institute.

The survey analyzed and compared 30,000 luxury shoppers to uncover insights, myths and stereotypes of the luxury shopper, according to the companies.

Luxury brands mistakenly believe their customers are typically female and on average 45-years old with a net worth over $1 million, the study found. However, 57.5 percent of luxury spenders are in fact, male. They are likely to be of Asian and Middle-Eastern descent with a net worth over $500,000. Additionally, nearly 13.8 percent of shoppers with a net worth over $1 million invest mostly in modern, contemporary décor and gifts as opposed to high-ticket apparel items.

“Luxury brands need to truly understand who their customers are and what they are looking for in a luxe shopping experience,” said Jean-Yves Sabot, vice president, retail business development at Epsilon. “This is critical in creating a personalized experience for the customer that drives engagement, retention and satisfaction.”

The study also found that online shopping accounts for less than a quarter of sales for multichannel luxury retail brands, because these consumers typically want to see and touch the product. While 98 percent of luxury shoppers use the Internet regularly, more than 50 percent of the time they are researching products and comparing prices on their mobile devices. Luxury shoppers crave the experience of the brand and look for a VIP interaction, according to the report.

Luxury brands must understand consumer spending levels

Luxury Daily
December 31, 2014
By: Nancy Buckley

When it comes to luxury products, 73 percent of luxury consumers consider quality to be the most important attribute, according to a study by the Luxury Institute and Epsilon.

The report focuses on defining the different tiers of luxury consumers, focusing on those who are true luxe customers and those who are aspiring to that level. By understanding their consumers, luxury brands will be able to adjust their marketing tactics based on the individual’s level of consumption.

“The only way you can have a good understanding of a human being is to have honest dialogue with them,” said Milton Pedraza, CEO of Luxury Institute, New York.

“You have to treat people as an individual and you have to have an honest and open dialogue with them,” he said.

Deeper understanding
Interacting with consumers in a relevant and personal manner is key for brands looking to make a connection, especially since 50 percent of luxury brands lose their top clients every year. Also, since 47 percent of consumers say it is the customer service that defines a luxury brand, understanding and catering to the top customers is vital.

The study breaks down the luxury consumers into four categories: aspirational shopper, moments of wealth, dressed for the part and true luxe.

An aspirational shopper is that individual who wants to own luxury items, but cannot afford to on a regular basis. They typically shop at outlet stores or on discount Web sites and purchase low-ticket designer brand items.

Those categorized in the moments of wealth section of luxury shoppers may save for a specific piece from a specific luxury brand, but they are not a regular consumer of the brand.

Understanding luxe consumer

Dressed for the part shoppers purchase luxury items to present themselves as someone living a luxurious lifestyle, but do not have the finances to be true luxe shoppers.

True luxe shoppers do not have any financial concerns when purchasing and buy from luxury brands on a frequent basis.

Understanding where individuals lay in the scheme of luxury shopping and where they may jump to is important for brands. With a degree or a job change, consumers can move up a level of luxury shopping.

True luxe shoppers are statistically male and between the ages of 25 and 44. Fifty-two percent of them are single and 42 percent are college graduates. They are worth more than $500,000 and have annual incomes between $125,000 and $250,000.

Online shopping is less than 25 percent of sales for luxury brands, since consumers are still shopping in-person, leaving an opportunity for brands to offer more traditional white glove experiences.

However, this does not mean that luxe consumers are not actively online. Ninety-eight percent regularly use the Internet and more than 50 percent research products before purchasing. Also, 75 percent compare prices on their mobile devices.

Seventy percent of these consumers are on social media, but less than 25 percent engage with brands on Facebook. The digital nature of these consumers allows brands to have an online presence and attract consumers online, but offer customer service in-person.

The report suggests that brands organize and analyze housefile information to best understand their consumer’s habits and purchasing history.

Big data for personal results
Luxury brands are delving into more bespoke options and marketing, according to Wealth-X’s president at Luxury Retail Summit: Holiday Focus 2014.

Mr. Friedman spoke about the necessity among brands to understand their consumer, who they are, what they do and who their friends and family are in order to gain a full understanding of these individuals in order to effectively market. Luxury brands can learn from Wealth-X’s research on the ultra-high-net-worth individuals to create specific marketing strategy for the ultra-affluent (see story).

Some brands are adopting data trackers to attempt to understand in-store sales and trends.

For instance, Italian lingerie maker La Perla has teamed with a software platform to create a platform that will be implemented for all La Perla boutiques and fashion stores where its products are sold.

La Perla worked with MicroStrategy Mobile to analyze sales and other company data points through key performance indicators. This new technology will allow La Perla to be aware of information in all its stores and make necessary alterations to tactics without too much delay (see story).

Taking these opportunities to learn about and understand clients is vital for brands looking to engage and maintain a relationship with individuals.

“I think from the targeted marketing perspective if they understand who their clients are deeply they can really target those individuals and make it personal,” Mr. Pedraza said.

“People will be excited about the human approach,” he said. “It gives you a wonderful opportunity to connect with [them] in a truly unique and personal way.”

Source: http://www.luxurydaily.com/luxury-brands-must-understand-consumer-levels-from-aspirational-to-true-luxe/

 

January 22, 2015

Luxury Institute Analysis Shows Strong Potential for Firms Serving Wealthy Consumers as Ranks of High-Income Americans Swell to All-Time High

Marketwired
January 21, 2015
By: Luxury Institute

A surge in the number of high-income households signals a source of potential strength for firms selling high-end goods and services, according to a metadata analysis of the Federal Reserve’s 2013 Survey of Consumer Finances by the New York-based Luxury Institute. The number of U.S. families earning at least $150,000 has grown 25% from 10.6 million households in 2010 to 12.8 million 2013, but even as more Americans achieve “high-income” status, luxury merchants still face challenges in turning these high-earners into loyal customers.

Favorable trends in household finances, since 2010, have thus far failed to produce a broad-based rebound in luxury on par with the boom before the Great Recession. Despite rising levels of income, wealth, and recoveries in stocks and real estate to pre-recession levels, many providers of high-end goods and services continue to struggle with sales growth more than six years after the financial crisis that devastated asset values and consumer confidence.

Long memories of the crisis are partly to blame for restrained spending: 30% of consumers from households with at least $150,000 in annual income say that they spend more when their assets appreciate in value, but the wealth effect cuts both ways, and even more deeply when asset values decline. Two-thirds of high-income Americans say that when the value of what they own goes down so does their spending.

In addition, luxury marketers are also facing fundamental shifts in consumer shopping habits brought on by the ubiquity of tablets and smart phones, and the influence of social media.

“Compelling products and extraordinary experiences lead to long-term client relationships in luxury,” says Luxury Institute CEO Milton Pedraza. “Firms thriving today are those with systems and personnel in place to leverage new technologies into smarter ways of communicating and doing business with customers that reflect the new reality.”

Conducted every three years since 1983, the Survey of Consumer Finances provides detailed demographic profiles and insights into household wealth, income, saving, and spending. Since 2004, the Luxury Institute has mined the survey data to identify emerging trends that can impact companies serving a wealthy clientele.

Source: http://www.marketwired.com/press-release/luxury-institute-analysis-shows-strong-potential-firms-serving-wealthy-consumers-as-1985040.htm

January 6, 2015

The customer comes first

Retail Gazette
January 2, 2015
By: Veebs Sabharwal

A new report by the Luxury Institute and marketing company Epsilon, emphasises the need for luxury brands to know their customers’ profiles. While merchandise and the overall experience are unarguably important elements to a luxury brand’s success, research has shown that luxury brands could be missing major opportunities by skipping the fundamental influence on their profits: the customer.

While luxury brands tend to have a higher price point and average order value by definition, many luxury brands lose 80-90% of the customers in any given year. Those same brands struggle to retain the top 50% of their customers. In addition, only 10-15% of luxury customers cite a first-name relationship with a sales professional.

Milton Pedraza, CEO of Luxury Institute confirms:

“Luxury brands lose half of their top customers every year. The biggest reason why a consumer won’t come back isn’t the product – it’s a rude or inattentive salesperson.”

It’s therefore crucial for a luxury brand to understand their customer from a high macro level, which could be part of a brand’s marketing and advertising, down to a granular level, which could be leveraged by individual sales associates in the course of customer relationship management.

Luxury is more often than not, associated with having the financial means to afford higher price points, and to some extent this is true but how exactly can the concept be defined? Says the report:

“Luxury” is a very broad category – it can encompass retail, travel, auto and finance but there is a wide range in these groups. For instance the pricing different between a Coach handbag and a Hermès Birkin bag is substantial. The same is true for BMW 3 Series and Bentley Continental GT. So is the luxury market that vast? Is it tied only to affluence?”

Wealthy consumers believe that luxury is defined by exceptional quality (the most significant attribute) followed by a brand’s design and finally customer service.

According to American Express and The Harrison Group, luxury customers prefer elegant stores and wish to feel an in-store experience that is in line with owning an indulgent item. Luxury is a state of mind, and for these customers, close relationships with select sales associates are valued.

The report suggests that typically, there are four shoppers who buy into the luxury market:

Aspirational Shopper: This consumer desires the pieces of high end brands, but does not have the finances to do so on a regular basis. Instead, aspirations are met through outlets, boutiques or low-ticket designer brand items eg. cosmetics.

Moments of Wealth: This type of shopper will save for a specific item from a lux label, investing in one-off purchases over long periods of time.

Dressed for the Part: These are the customers who purchase luxury items to maintain the appearance of someone who lives a luxury lifestyle, but doesn’t have the means to be a true luxury buyer. This fashion-conscious shopper devotes his/her time on curating a handsome collection of items across fashion and accessories, or a car, rather than on an expensive home.

True Luxe: The True Luxe can afford to purchase luxury items without any concern for the price. This is the consumer who frequents luxury retailers throughout the year.

It’s imperative that luxury brands understand which customers to place into which category, as there are opportunities for acceleration eg. Aspirational shoppers may complete their degree and obtain a well paid job, after which they may upgrade to the Moments of Wealth or Dressed for the Partcategory.

Source: http://www.retailgazette.co.uk/articles/20344-the-customer-comes-first

December 30, 2014

Lose Insight Into the Customer, Lose the Customer: Here’s Proof

Loyalty360
December 30, 2014
By: Bill Brohaugh

We all understand the importance of knowing your customer, but every so often a needed reminder hits us hard. A recent hit comes from a joint study conducted by Epsilon and The Luxury Institute. The study—The New Face of Luxury: Breaking Down the Myths and Stereotypes of the Luxury Shopper—comes out swinging in a press release announcing its publication: “Luxury brands lose 50% of their top customers annually because they routinely misidentify their demographic and economic profile while also failing to create a personalized sales experience for them.”

Half of your top customers out the door is a big hit indeed.

The study reports findings about the demographic characteristics of luxury customers in particular, but the overall lessons are clearly adaptable to brands and customers of all sorts.

Don’t be fooled by stereotypes. It’s well-known that most luxury shoppers are women, right? Except that the study knows that 57.5% of those shoppers are male.

Don’t be fooled by assumptions. In this prolonged age of conspicuous consumption, the best way to show off is in person, with expensive clothes, correct? But 13.8% of luxury shoppers indicate that their top merchandise categories are décor and gifts, more than those who indicated apparel. (But apparel is certainly in the running.) Hunting and fishing—no surprise—are pretty low on the list, so maybe that assumption was OK.

Fight internet pillage of your brand with instore experience appropriate to the customer. Reports the study: “Luxury shoppers crave the experience of the brand and look for a VIP interaction,” according to the report.

The white paper recommends: “Combine housefile information with third-party data including purchase behavior, to get the real picture of your shoppers. Use this information to segment your housefile into shopper personas.”

Source: http://loyalty360.org/resources/article/lose-insight-into-the-customer#sthash.c4kwQ3gJ.dpuf

 

Hey, big spender: Luxe buyer not who you may think

CNBC
December 29, 2014
By: Krystina Gustafson

Take a minute to picture the stereotypical luxury shopper.

What do you see?

If the vision of a 45-year-old, fur-clad woman immediately comes to mind, you’re making the same mistake as many of the brands targeting high-end buyers.

According to a new study by Epsilon and the Luxury Institute, 57.5 percent of luxury spenders are actually male, and many are of Asian and Middle Eastern descent. But categorizing shoppers by their age, sex and net worth still isn’t enough to get a real gauge on consumers who crave nice things.

The report, which examined 30,000 high-end shoppers, found that luxury brands lose 50 percent of their top customers each year by not correctly identifying them, and thereby failing to create a personalized shopping experience.

According to the study, there are four distinct groups of luxury shoppers for brands to identify, which account not only for net worth, but purchase behavior. They are:

  • “Aspirational” shoppers, who covet luxe brands, but don’t necessarily have the means to purchase them on a regular basis;
  • “Moments of wealth” shoppers, who save up for a certain item, but don’t buy the brand frequently;
  • “Dressed for the part” shoppers, who spend on high-end items to appear as if they live a luxury lifestyle, but may not have the wealth to be a true luxury spender, and
  • “True luxe” shoppers, who can purchase luxury items whenever they want, without financial concern.

“Luxury brands need to truly understand who their customers are and what they are looking for in a luxe shopping experience,” said Jean-Yves Sabot, vice president of retail business development at Epsilon. “This is critical in creating a personalized experience for the customer that drives engagement, retention and satisfaction.”

It’s not just existing customers who are at stake. Pam Danziger, president of Unity Marketing, said luxury brands’ failure to identify potential customers could also discourage consumers who have the money to spend from visiting certain stores, because they feel as if they don’t belong.

She said the reason many luxury brands aren’t well-tuned into their customers is because the industry prides itself on dictating trends, instead of listening to what people want. But communicating with consumers could have some serious benefits.

A recent study by Unity Marketing—which surveyed more than 300 consumers with a minimum net worth of $800,000—found that many wealthy shoppers consider certain luxury brands “overrated.” Luxe mainstays Louis VuittonGucciHermèsPrada and Rolex were at the top of the list.

While some of that could be attributed to each label’s designs, Danziger said the more consumers knew about a brand, the less likely they were to view it as “overrated.”

“The takeaway very simply is that marketing communication aimed at educating the affluent about the luxury brand is very likely to create a positive feeling or halo around the brand, which may well lead to … buying,” according to Unity Marketing.

Source: http://www.cnbc.com/id/102299035#

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