Half of global luxury shoppers are partial to a bargain. According to the YouGov Affluent Perspective’s Global Luxury Retail Report 2018, half of all global luxury shoppers state they “only buy luxury when it is discounted.”
The report, which focuses on the 56 percent of global affluents shoppers who purchase luxury products and services across multiple categories, says between discount oriented and non-discount oriented shoppers, there aren’t any great demographic differences, except the discount-oriented group was slightly older.
The report notes 28 percent of the luxury discount oriented group grew up in an affluent household and their own journey with wealth is just beginning. Their affluent lifestyle is new to them, and they’re not at the point in life where they feel secure with the money they have accumulated. When asked, “What do you wish you have more of?” this group says “money”, while the other group says “time”.
What defines luxury?
When asked how luxury is different than non-luxury, both groups site high standards of quality, exceptional design, precision in construction, a high level of service and retention of value as the top five differentiators. However, the lack of experience with luxury among the discount oriented group is revealed through the other factors they choose as differentiators – price and logo/brand name. In comparison, the non-discount group choose innovation/cutting edge and outstanding employees – a more evolved way to think about luxury.
Many of these newly affluent luxury purchasers will grow more secure in their financial footing and feel more at ease in their discretionary spending. As they do, luxury brands have a wonderful opportunity to orient them away from discount luxury shopping by communicating the true value of owning and experiencing the luxury lifestyle.
Consumer aspirations are disrupting luxury
The Boston Consulting Group (BCG) earlier this year released the key trends for the luxury industry in 2018, noting the differences in buying habits between those who value absolute luxury and millennials. "Unlike 'absolute luxurers,' who buy luxury items exclusively, millennials do not hesitate to mix and match. About 55 percent of this group trades down to buy handbags or T-shirts from cheaper brands, or mixes their style by buying sneakers and luxury shoes from luxury niche brands (including luxury sports). This trend appears to fulfill consumers’ need to create their own style. When they do look for different brands, it’s because luxury brands don’t have offerings in certain categories or because of the millennials’ desire to have a unique style, express themselves, and seek out niche brands.”
Luxury brands should devote particular attention to millennials and Chinese consumers in the coming years, according to True-Luxury Global Consumer Insight, the fifth edition of an annual study by BCG and Altagamma. Millennials are the generation that will contribute the most to the market’s growth: some 130 percent, to account for 50 percent of the market in 2024.
Chinese consumers represent the nationality driving the most growth: about 70 percent, to account for 40 percent of the 2024 market. The overall luxury goods industry, including products and services, is worth approximately 915 billion euros today and will reach about 1,260 billion euros in 2024.
Article sources: BCG press release "The Key Trends for the Luxury Goods Industry in 2018;” YouGov Affluent Perspective’s Global Luxury Retail Report 2018. Photo by Pexels