Luxury Institute News

August 24, 2015

Affluent Millennials Setting Their Own Pace

U.S. News and World Report
By: Mallory Hughes
August 20, 2015

Chris Beauregard, 25, recently found himself at a chic rooftop pool party in Washington. With the Capitol dome in the background, young professionals watched an exclusive Dar Be Dar by Tala Raassi summer fashion show while sipping complimentary DeLeón Tequila cocktails.

“I brought seven other friends with me,” says Beauregard. “Everybody had a blast.”

It’s a setting that is becoming common for a subset of the Millennial generation known as the “affluent Millennials.”

The 6.2 million 18- to 34-year-olds who report annual household incomes of more than $100,000 are acting out the aspirational lifestyle of their cohort because they have the financial means to do so, said Leah Swartz, a content specialist at FutureCast, a marketing firm focused on Generation Y.

“It’s not that they’re so different from Millennials,” says Swartz. “It’s that they’re acting on these aspirational trends that we see take shape in the general population.”

Many among the 80 million Millennials say that they eat organically and travel frequently, but a majority still live on a limited budget, hitting up big retailers for bargain prices.

Rather than focusing solely on what they can buy, Millennials create experiences and “shareable moments with friends,” Swartz says.

It’s a generation that was the first to embrace trends like going digital and using social, but it is the affluent among it that have more impact because they’re the ones commenting on review sites and engaging with brands on social media.

“We’re seeing them take on the influential role among the Millennial population,” she says, adding that affluent Millennials are 10 percent more likely to participate in online rating sites than their non-affluent peers.

“It’s likely because they can do more and because their budgets allow for it,” Swartz said.

Business and finance are the most common career paths for these people, but affluent Millennials are shifting post-graduate educational trends.

The research found that 44 percent of the 6.2 million affluent Millennials did not graduate from college. Of those that completed college and went on to graduate school, nearly 4 percent didn’t complete that education. While these numbers are high, affluent Millennials still graduate from college and grad programs at higher rates than their non-affluent counterparts.

“When you think of Boomers or even a little bit Gen-X,” Swartz says, “money was very much linked to degrees and higher education.”

But these Millennials don’t necessarily see the connection. FutureCast researchers in Kansas City found that young adults in the affluent subset are more interested in quickly putting the knowledge gained in their undergraduate programs to use in the workforce.

“They’re seeing more value in entrepreneurialism rather than continuing education,” Swartz says.

Billy McFarland, a 23-year-old tech entrepreneur, began his undergraduate education at Bucknell University planning on studying computer engineering. He dropped out after a year.

“I never really focused on school the way I should,” McFarland said in a phone interview. “But I finally went to college, I was living alone, and realized I could start companies full-time and not worry about school. It was an easy decision.”

Most recently, McFarland founded two companies: Spling, a tech-driven advertising platform, and Magnises, a mobile concierge app geared toward Millennials.

Magnises, McFarland says, has nearly 7,000 members stemming from 25,000 applicants. Approximately 90 percent of members using the app are 21 to 35 years old, with self-reported annual incomes of $50,000 to $250,000.

The $250 per year membership comes with a black metal membership card, a community hangout out and the concierge app with recommendations on what to do with one’s free time and the ability to make a reservation at a suggested place.

This generation travels more and values events, services and experiences over goods, says Milton Pedraza, CEO of the Luxury Institute, a global research firm focusing on luxury goods.

One example is SoulCycle, the trendy New York City-based fitness company hosting 45-minute spin classes that feel more like being on a dance floor than in a cycling studio. Millennials aren’t buying the expensive bike so they can go cycle the hillsides outdoors; they’re buying the experience.

Pedraza says he thinks Millennials are drawn to events they can share with “people who are their peers, who share their values, who share their standards of living and who share their tastes.”

But if Millennials are trendsetters, don’t they want to find the best places to go — and be first ones on the scene? Isn’t an app, such as Magnises, that suggests the hottest hangouts in some of America’s biggest cities and sends 20-somethings flocking in that direction kind of, well, mainstream?

“I think there’s recognition that that’s going to inevitably happen,” Pedraza says. “If something’s really good it’s going to be swarmed—Millennials swarmed.”

Source: http://www.usnews.com/news/articles/2015/08/20/affluent-millennials-setting-their-own-pace 

August 14, 2015

Millennials’ wealth management preferences differ from boomers: report

Luxury Daily
By: Kay Sorin
August 14, 2015

Millennial investors have different preferences compared to their baby boomer parents when it comes to wealth management, according to a new report by Luxury Institute.

While baby boomers and older generations prefer to work with full-service brokerage firms, wealthy millennials and members of Generation X are showing an increased preference for working with private advisors. Independent financial advisors can offer a more individual approach that is often appealing to younger investors who are accustomed to personalization.

“Independent financial advisors are able to do more things for their clients, because they are not working for a firm that has rules and regulations about what they can or can’t do,” said Milton Pedraza, CEO of Luxury Institute, New York. “The IFA is the fastest growing industry in wealth management.”

Different strokes
Luxury Institute surveyed investors earning at least $150,000 and found that at least 46 percent used some form of advisor to help them manage their finances. Among respondents aged 65 and over, this number rose to 59 percent.

Michael Kors affluent couple car
Wealthy millennials are inclined to prefer independent wealth managers

Respondents varied in their preferences for an independent wealth manager versus a full-service brokerage firm such as Morgan Stanley or Merrill Lynch. Interestingly, this preference strongly correlated with age.

“A full service firm doesn’t have a fiduciary relationship with the client, meaning that they are not legally obliged to serve the client’s interests only,” Mr. Pedraza said. “They can recommend an investment in which they will make a bigger commission.”

Millennials and members of Generation X and Y, defined as those 45 and younger, showed a significant preference for independent wealth managers compared to full-service brokerage firms. Thirty-eight percent chose to work with individual advisors while 27 percent preferred a big brokerage firm.

Michael Kors case
Millennials have access to more information and are well informed

Investors over 65 were much less likely to work with an independent advisor and only 28 percent reported doing so. They strongly preferred to go full-service with 56 percent using large firms to manage their wealth.

This difference between the generations is likely a result of their upbringing. Baby boomers were raised to expect to work with a big brokerage firm, while millennials may be more wary and distrustful after the recession of 2008.

Sotheby's London Property
Financial advisors can assist in major life decisions such as purchasing a home

Additionally, millennials have more information at hand, which allows them to be more selective with their advisors.

“Millennials are so much more informed that they depend less on a brokerage firm providing them with research,” Mr. Pedraza said. “Millennials don’t need as much because they are so informed.

“They know that very few financial advisors can outperform the market in the long term.”

One way in which individual advisors often distinguish themselves is by providing a more personal connection for clients. Luxury Institute found that expertise, trustworthiness and generosity were the most valued traits in financial advisors.

Affluent family
As millennials age they are in greater need of financial advice

More than numbers
Investors looking for both a personal relationship and a full-service brokerage firm may seek other solutions to find the ideal compromise. Ultra-affluent consumers often appreciate the relationship-building culture fostered at boutique wealth management firms, according to a report by the Luxury Institute.

The New York-based Rockefeller Wealth Management firm received the highest score in the report, followed by Atlanta-based Atlantic Trust Private Wealth Management and Convergent Wealth Advisors. As wealth management firms continue to repair their reputations following the financial crisis, prioritizing relationships over transactions will be important (see story).

Regardless of the size of a firm, relationships are often the deciding factor when it comes to choosing a financial advisor. To differentiate themselves from competitors, wealth management companies must make crucial changes that will only work if the alterations are part of the company’s core DNA, according to a speaker from the 2012 Forrester Customer Experience Forum.

It is no longer enough to just return calls and give a great customer experience, since clients at wealth management companies are not even thinking about those that do not require this. Instead, Morgan Stanley Smith Barney was forced to bolster its customer service in terms of technology, getting to know the customer and its consultants (see story).

Looking forward, it is essential for wealth management companies to take personal relationships into account in order to appeal to wealthy millennials.

“Millennials will be keen to stay with those who deliver and will dispense with those who don’t,” Mr. Pedraza said. “They will choose advisors based more on the client’s experience than on the client’s return.

“The baby boomers are kind of exiting the stage. Millennials will demand a far more objective and independent metric.

“Advisors need to be completely trustworthy and very responsive,” he said. “They need to go above and beyond to make the client feel special.”

 Source: http://www.luxurydaily.com/millennials-wealth-management-preferences-differ-from-boomers-report/

October 4, 2014

Williams-Sonoma returns home to celebrate heritage

SFGate
Janet Fletcher
October 4, 2014

The store that introduced America to food processors and copper fish pans has returned to its Wine Country roots.

For many decades, Williams-Sonoma thrived by being one step ahead of its customers, selling them housewares they didn’t yet know they needed. But with this weekend’s opening of its newest venue, in Sonoma, the trendsetting company is looking back to celebrate its 99-year-old founder and recall its humble debut.

The project also reflects the Boomer-fueled brand’s efforts to woo a younger generation — Millennials, who aren’t exactly rushing to buy homes and stock kitchens.

This retro Williams-Sonoma, at the site of the original store, re-creates the look of the shop that Chuck Williams opened in 1956, down to the black-and-white checkerboard floor. “It’s going to be a total doppelganger,” said Wade Bentson, one of Williams’ first employees, who helped with its design.

With a 12-seat cooking school showcasing local talent, an edible garden, vintage merchandise and museum-style kitchenware exhibit, the store is opening in a town famously hostile to chains. But the billion-dollar retailer, for the most part, is being welcomed like a hometown hero.

“I’m totally excited about it,” said Sheana Davis, a community activist and proprietor of Epicurean Connection, a nearby cafe and cheese shop. “If you’re looking for opposition, I’m not it.”

Williams, who celebrated his 99th birthday this week, operated his store near the historic plaza for only two years before decamping to San Francisco. But his later success made Sonoma itself an international brand.

Visitors still inquire about the chain’s birthplace. “I’ve been introduced as his son several times,” said Steven Havlek, who owns Sign of the Bear, an independent kitchenware store on the plaza.

Re-creating the original

When the site at 605 Broadway became available in 2012, the retailer swooped in. The property included both Williams’ original 570-square-foot shop and an attached home and garden that he had shared with his mother.

“We found enough pictures and enough from (Williams) to rebuild the store exactly as it was,” said Janet Hayes, president of the Williams-Sonoma brand. The restoration includes original signage and the clean-lined open white shelving that became the stores’ trademark.

The new Sonoma store includes an exhibit of ingredients and tools that Williams popularized, such as Fini balsamic vinegar, Maldon sea salt, Le Creuset cookware and French mandolines. Williams’ restored home, attached to the store, has been repurposed as a design studio and showcase for Williams-Sonoma Home furnishings. The store is not all retro; the made-over garden boasts an outdoor kitchen with pizza oven and lots of merchandise from the company’s new Agrarian line, launched in 2012 in keeping with a younger generation’s fascination with urban farming.

The DIY cheese-making kits and high-end chicken coops that Williams-Sonoma is betting on today were definitely not in the mix when Williams began his retailing career. The society matrons who patronized Williams-Sonoma in the late 1950s were lured by the gleaming copper saucepans, Pillivuyt porcelain and fluted tart tins that Williams discovered in France. Jackie Kennedy and Julia Child were about to make French cuisine the epitome of chic, and Williams was poised to profit.

Cooking to entertaining

Urged by his affluent customers to move the shop to San Francisco, Williams listened when one of them suggested a spot near Elizabeth Arden, the high-end salon on Sutter Street. “In those days, women had beehive hair that required a lot of attention,” recalled Bentson, who began working for the store in 1961. “It wasn’t unusual for them to go to Arden’s two or three times a week, and they went right by our store.”

Women from Hillsborough, Piedmont and Marin would have their ball gowns shipped to Williams-Sonoma, drop their dogs off at the store, and then go and have their hair done, recalled Mary Risley, who founded Tante Marie’s Cooking School in San Francisco and is a longtime friend of Williams’. They bought Christmas presents and wedding gifts at Williams-Sonoma, especially after the merchant — again nudged by a customer — created a bridal registry to compete withGumps and Tiffany.

Child’s popular television show, which debuted in 1963, also fueled Williams-Sonoma’s sales. If Julia used it, “people beat the way to our store to get it,” Bentson said. San Francisco cooking teachers like Risley andJoyce Goldstein sent their students to the store for quiche pans, flan rings and souffle dishes — equipment that department stores of the day did not stock.

“Everybody was either taking cooking lessons or giving cooking lessons,” recalledJacqueline Mallorca, an early customer and ad agency employee who persuaded Williams that the store needed a mail-order catalog. Begun in 1972 and, for years, written by Mallorca, the innovative full-color mailer put Williams’ finds and favorite recipes within reach of all Americans.

Today, the recipes have migrated to the company’s website, and the catalog copy is far more clipped and concise. The September issue still includes Le Creuset and All-Cladcookware but also features packaged mixes for Bundt cakes, quick breads, waffles and breakfast bars — a shift noted unhappily by the culinary doyennes of San Francisco.

“There’s an awful lot of tableware,” sniffed Mallorca, an Englishwoman whose polished manners don’t conceal her dismay. “People today are not so interested in cooking as much as entertaining.”

Positioning for future

Goldstein, who later collaborated with Williams on several cookbooks, concurred. “At some point, Williams-Sonoma made the shift from being an educating store to being a lifestyle store, with tablecloths, napkins and pottery,” she said.

The publicly traded company’s other concepts — among them, Pottery Barn, Pottery Barn Kids and West Elm — are thriving, but the net revenue of the Williams-Sonoma brand has been stagnant in recent years and the store count is down. Branding experts and trend forecasters see both opportunities and challenges for the chain as it positions itself for the future.

Many affluent young consumers aren’t hurrying to buy homes, they say, and are more inclined to spend on experiences than on stuff.

“I’ve been invited to buy wedding gifts at experiential websites,” said Kara Nielsen, culinary director for Sterling-Rice Group, an advertising and branding agency in Boulder, Colo. Nielsen and others also point to a minimalist trend, a preference for smaller, less cluttered homes and simpler lives.

“A lot of Millennials believe in access but not ownership,” Nielsen said, pointing to the success of businesses that enable consumers to share cars or rent special-occasion clothes.

Building in diversity

Like other retailers, Williams-Sonoma needs to respond to changing demographics, marketing experts say. “Diversity has to be built into their product range and into their staff,” said Milton Pedraza, CEO of the Luxury Institute, a consultant to high-end brands. Pedraza points to his own multicultural family, which includes Colombians, a Jewish lawyer from Long Island and a Hindu doctor.

“We make samosas for Thanksgiving with turducken and Spanish rice,” he said. “And we’re not atypical.”

Marc Halperin, a food and beverage consultant with San Francisco’s Center for Culinary Development, believes the chain is still a tastemaker and sharp observer of trends. The Agrarian line dovetails neatly with the urban homesteading wave, Halperin said. And the shift toward offering tableware, juicers and other appliances that have little to do with cooking may also be wise.

“There’s clearly a huge understanding of the consumer,” Halperin said. “The number and variety of espresso machines they’re selling is mind-boggling.”

Janet Fletcher is a food writer and cookbook author in Napa. E-mail:home@sfchronicle.com

Company milestones

1956: First Williams-Sonoma store opens on Broadway in Sonoma.

1958: Chuck Williams moves his thriving cookware store to Sutter Street in San Francisco.

1972: Williams-Sonoma mails its first cookware catalog, with a print run of 10,000.

1973: Williams-Sonoma opens its second store, in Beverly Hills. Chuck Williams introduces the Cuisinart food processor, a revolutionary French appliance.

1978: Chuck Williams encounters balsamic vinegar in Italy and begins to import it.

1983: With its initial public offering, Williams-Sonoma becomes a publicly traded company to raise money for expansion.

1986: Williams-Sonoma releases its first cookbook, starting a hugely successful publishing program.

1999: Williams-Sonoma starts its e-commerce site.

2006: Debut of Williams-Sonoma Home, a furniture and home decor collection

2012: Williams-Sonoma starts Agrarian, a line of products designed for urban homesteaders.

2014: Williams-Sonoma opens its240th store in Sonoma, at the site of the original store.

Source: http://www.sfgate.com/homeandgarden/article/Williams-Sonoma-returns-home-to-celebrate-heritage-5800000.php

October 1, 2014

Exclusive: Wealthy Consumer Survey 2014

Previews Inside Out
Coldwell Banker
October 1, 2014

You may picture wealthy Gen Y and Millenials as iPad-toting jetsetters who aren’t anxious to tie up their cash in a home. But they are among the most active players in luxury real estate, according to a new survey of ultra-wealthy consumers by Coldwell Banker Previews International® and the Luxury Institute.

“Young affluents recognize the value of real estate,” said Ginette Wright, vice president of marketing for Previews®/ NRT.  “And they are often bullish when it comes to real estate—they own more properties and tend to spend more on average. Their outlook on long-term appreciation is also more positive.”

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The survey found that 73% of wealthy consumers under the age of 35—the most out of any age group—are considering a purchase of additional residential real estate in the next 12 months for personal use. These buyers also expect their home to appreciate by an average of 16% in the next five years, compared to 13% for buyers ages 45-64 and 11% for buyers 65 and older. Additionally, they are among the biggest spenders, as they paid $7.8 million on average for their last home, compared to $6.8 million for buyers between 35 and 44 years of age, $2.7 million for those between 45 and 64, and $1 million for buyers 65 and older. One reason for the price difference could be due to the kinds of homes they desire. Nearly three-fourths (72%) of respondents younger than 35 said that buying a move-in-ready home is important.

“Our agents in cities like Los Angeles and Miami tell us the same thing: new construction is king right now,” added Wright. “Younger luxury buyers are not looking for a project—they want everything turn-key, right down to the décor and furnishings. All of which, of course, adds to the home’s overall price tag.”

While location and price remain the most important elements in the decision making process for the majority of ultra-wealthy buyers, younger affluents are less inclined to choose a property based on geography. Thanks to convenient travel options and the ability to work from anywhere becoming more widespread, just 25% of the under-35 group reports that location dominates their search criteria, but 75% say that lifestyle considerations drive their choice of which home to buy. At the other extreme, 88% of buyers 65 and older say that location is the most potent driver of their next property search.

Younger affluents are also interested in different home amenities than their seasoned counterparts. Safe rooms (37%), home theaters (36%), pool (34%), outdoor kitchens (33%) and “green” or “eco-friendly” amenities (29%) remain at the top of the wish list for buyers under the age of 35. Compared to the 65+ demographic, those same features ranked far lower: 7% wanted safe rooms, 12% wanted home theaters, 16% wanted a pool, 17% wanted a pool and 10% wanted a “green” home.

To find more interesting comparisons between the age groups, download the complete Wealthy Consumer Survey: http://www.previewsinsideout.com/2014/10/exclusive-wealthy-consumer-survey-2014/

July 7, 2014

Used Chanel bags are worth a lot, but Marc Jacobs? Not so much

By: Erin Griffith
Fortune
July 7, 2014

They’re all considered investments, but which luxury brands hold their value the best may surprise you.

There’s a reason they call them “investment pieces.” At $22,000 for a Proenza Schouler tote or $9,000 for a Ralph Lauren dress, luxury goods are meant to last a lifetime and hold their value. That’s why the market for used designer goods is the most attractive category for online consignment.

One such marketplace, a website called The RealReal, is on track to do $100 million in sales this year. (The company takes a cut of each sale.) The RealReal recently tapped its database of 500,000 luxury goods from 500 designer brands to find which brands have the highest resale value, and which ones hold their value the longest. The startup found that Chanel, Christian Louboutin, and Hermès hold their value the longest. Tod’s and Versace lose their value the fastest.

Perhaps more surprising is which brands carry the highest and lowest resale value. Items from Givenchy, Victoria Beckham, Charlotte Olympia and Alexander McQueen all sell for much closer to their original price than goods from Marni, Alexander Wang, 3.1 Philip Lim, and Marc Jacobs.

Resale values of fashion or luxury goods can fluctuate depending on buzz around a certain designer, particularly if a fashion houses hires a a new creative director or chief executive, according to Rati Levesque, Chief Merchant at The RealReal. “When Phoebe Philo joined Céline as the creative director, it added more resale value to the brand,” she says.

But more important than buzz is availability and discounting. If a luxury brand frequently discounts its goods at outlet stores or online via flash sales, consumers will perceive that they don’t have to pay full price for that brand, says Milton Pedraza, CEO of Luxury Institute, a luxury industry research group. While baby boomer shoppers tend to research something online and then buy it in the store, millennials do it the other way around. They “showroom,” the term for checking out an item in the store before finding the best deal for it online.

“These days you can find ways to arbitrage the brands, because you have so much information and the market is inefficient,” Pedraza says. “Brands have to be careful where they allow their product to be sold.”

For example: Chanel and Hermès do not hold sales in their stores and they have a limited number of outlet stores. Chanel doesn’t even sell its goods online, with the exception of beauty products. “In that sense, it creates a perception of purity,” Pedraza says.” The brands then “back it up with design quality and heritage,” he says. “If I buy something, I will think, ‘Wow it has long term investment value.’”

Below are some luxury brands that fall on both sides of the spectrum.

Click the link to read the entire article which includes quotes from Milton Pedraza, CEO of Luxury Institute:http://fortune.com/2014/07/07/which-luxury-brands-have-highest-resale-value/

May 30, 2014

Affluents Don’t Want Texts from Luxury Brands

Far more affluents would opt in to luxury brand emails
E Marketer
May 30, 2014

Targeting affluents? Don’t expect to reach them through texts. In Q1 2014, Luxury Institute found that just 17% of US affluent internet users, those with an income of $150,000 or more, had signed up or were somewhat/very likely to opt in to messages from a luxury brand.

Even tech-savvy affluent millennials weren’t interested in luxury brand messages popping up on their phones: Just around one-quarter said they had or would be interested in receiving such communications, a percentage similar to Generation Xers.

Instead, emails may be the way into affluents’ digital inboxes, with 49% of respondents saying they had or were somewhat/very likely to opt in to receiving emails from a luxury brand.

While this wasn’t a majority activity among the entire group, the total percentage was skewed lower by boomers, as over half of millennials and Gen Xers were interested in receiving messages this way.

Either way, digital didn’t appear to play a major role in US affluent internet users’ research or purchase processes when buying luxury items.

Just 22% of respondents said they researched online and then purchased in-store, indicating they may not get inspiration for luxury purchases during digital browsing. Meanwhile, only 15% of respondents researched in-store and then bought online, possibly because they didn’t feel comfortable making expensive purchases digitally—or maybe they just wanted their luxury items instantly.

August 2013 research by Shullman Research Center found that online channels were where US affluent internet users—those with a household income of at least $250,000—felt least comfortable making purchases, with half saying they did not feel OK buying something via a smartphone, tablet or computer. Meanwhile, just 7% said the same about making a purchase in-store.

See article at: http://www.emarketer.com/Article/Affluents-Dont-Want-Texts-Luxury-Brands/1010867/1

 

May 23, 2014

60pc of affluent Baby Boomers inclined to use social media: report

By: Joe McCarthy
Luxury Daily
May 23, 2014

Generational distances regarding social media use are not as wide as commonly thought, according to a report from the Luxury Institute.

Eighty-five percent of millennials surveyed for the report said they were inclined to use social media, compared to 73 percent of Generation X’ers and 60 percent of Baby Boomers. As luddites become further marginalized, brands must adopt a marketing approach that prioritizes individuals over segments and personas.

“The surprising part for me is that Boomers, Gen X’ers and millennials are all consuming all of these media at some level,” said Milton Pedraza, CEO of The Luxury Institute, New York. “It’s not as if they’re getting left behind. These are all affluent people, and tech savvy.

“Life stage matters tremendously but because of the new age of data, analytics and one to one marketing, we can look beyond the segments to the individuals and market to them,” he said.

The Luxury Institute surveyed 1,200 consumers 21 and older with an annual household income of at least $150,000.

Less boundaries
The report aims to get marketers to reconsider media consumption in general. The dynamic of how consumers “consume” is messier than the laser-drawn segments of millennials, Gen X’ers and Baby Boomers suggests.

Age provides broad indications of consumer behavior, but individual behavior is more granular, rife with the unexpected.

Baby Boomers do watch more television, with respondents averaging seven hours per week, but millennials are also flipping through channels, with these respondents averaging four hours per week. About 70 percent of all segments surveyed watch previously recorded programs on DVR.

“Marketers need to go beyond stereotypes and propensities, and start doing real one-to-one marketing now,” Mr. Pedraza said in a press release. “The data and analytical firepower are there to build relationships, and wealthy consumers, especially millennials, demand it.”

“We have to look at individual needs, lifestyles and life stages and combine something that’s optimal for each person,” Mr. Pedraza said.

See full article with quotes from Milton Pedraza, CEO of Luxury Institute: http://www.luxurydaily.com/60pc-of-affluent-baby-boomers-inclined-to-use-social-media-report/

May 2, 2014

Consumer Spending Trends: What Drives Luxury Purchases

New survey finds generational differences in how wealthy shoppers make luxury purchases.

By: Donald Liebenson
Millionaire Corner
May 2, 2014

What becomes a luxury brand most? A new consumer spending trends survey finds that regardless of age, superior quality and craftsmanship are the two most essential elements of a luxury brand that wealthy shoppers consider.

The Luxury Institute surveyed U.S. consumers ages 21 and up with a minimum annual income of $150,000 about what they consider to be important in luxury brand purchases and the specific triggers that motivate their spending decisions.

Six-in-ten wealthy respondents also said they consider superior customer service and design as vital attributes to a luxury purchase.

The consumer spending trends survey found generational differences in what influences luxury purchase. Millennials put a high premium on the opinions of others. Nearly seven-in-ten (68 percent) of wealthy shoppers born after 1980 ask someone they know about their experiences with a luxury purchase before buying it. The becomes less important among Gen Xers (64 percent) and Baby Boomers (58 percent).

Millennials, who came of age during the recession, are more likely than previous generations to give greater consideration to a brand’s history, a product’s uniqueness, and investment value when it comes to evaluating luxury brands. They also grew up in the digital age of online discounts. Playing into the stereotype of their generation as entitled, the survey also found the wealthy Millennials “have developed expectations that luxury brands should show their appreciation for any purchases made by providing complimentary shipping and rewards programs.”

In addition to free shipping, wealthy shoppers of all ages agree that user-friendly return policies and lifetime guarantees are the two most potent features of luxury brands that enhance the luxury shopping experience and compel them to buy from a particular merchant.

There is little generational difference in how the wealthy make their high-end purchases, according to the consumer spending trends survey. Online shopping is no pervasive enough that Baby Boomers, Gen Xers and Millennials are all nearly equally as likely to have made their last luxury purchase online as in-store.

Brand websites are universally the most popular sources of information wealthy consumers use when preparing to make a luxury purchase. Three-in-ten most rely on online consumer reviews and friends and family, while 27 percent most rely on sales associates. More than three-fourths of wealthy Millennials (vs. 70 percent of Gen Xers and 67 percent of baby Boomers) say they are susceptible to being swayed by advertising. They are also much more open to receiving emails or text messages from luxury brands and sales representatives as well as using social media, mobile applications or other digital platforms to further engage with luxury brands.

Click the link to read the entire article: http://millionairecorner.com/Content_Free/Consumer-Spending-Trends-Luxury-Purchases.aspx

April 30, 2014

Millennials value heritage more than Gen X’ers: study

By: Joe McCarthy
Luxury Daily
April 29, 2014

A new report by the Luxury Institute found that millennials scrutinize investment value and heritage of purchases more than Generation X’ers and Baby Boomers.

The study also found that millennials regularly search for one-of-a-kind items as a way to signal status. While brands often treat “showrooming” as a threat to brand integrity, the research that accompanies the trend indicates that improved customer service and responsive multichannel efforts can turn the phenomenon into a benefit and a source for more revenue.

Millennials want the heritage of the brand, they respect history, and they see it as a validation of investment value,” said Milton Pedraza, CEO of The Luxury Institute, New York.

“They don’t have all the money in the world, they’re just starting out, so they want to make sure they’re buying appropriately,” he said.

“But they do have much higher expectations, so that’s a little bit of a paradox. They care far more deeply about certain aspects of a luxury brands.”

This study is the first in a series of three comparatives studies of millennials, Gen X’ers and Baby Boomers by The Luxury Institute.

Click the link to read the entire article: https://www.luxurydaily.com/millennials-value-heritage-more-than-gen-xers-study/

April 12, 2013

Auto consumer mindset changing dramatically

Ford exec says buyers want cheaper, well-equipped mobile technology platforms that sip fuel

By Keith Morgan
Vancouver Sun
April 11, 2013

Ford and Lincoln global marketing executive vice-president Jim Farley  recently delivered the keynote address to the 2013 New York International Auto  Show. Today, we publish extracts from his speech which offered a view on the  role the recession has played in shaping a new consumer outlook.

While the recent recession has fundamentally reshaped the automotive industry  over the past few years, the real game changer may come from a new  post-recession consumer mindset, demographic shifts and how automakers respond,  says Farley.

Click the link to read the entire article which includes findings from a recent Luxury Institute survey: http://www.vancouversun.com/cars/Auto+consumer+mindset+changing+dramatically/8230977/story.html

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