When you think of ‘luxury’, what comes to your mind? Is it a Porsche? A piece of art? Louis Vuitton? Chanel? Chippendale furniture? Or paper clips from Prada? The term luxury is an evolving term just like the luxury market and the luxury consumer. Today’s luxury consumers are different from the traditional wealthy classes of the past. To top it, the pandemic has also altered the shopping behavior of individuals.
How Do We Define a Luxury Consumer?
Today’s luxury consumer is the aspirational youth: GenZ and Millennials as compared to the traditional wealthy consumers of the last century - the landed gentry and the businessmen. Today’s luxury consumers are the HENRYs - a term coined by Investopedia - an acronym for High Earners Not Rich Yet. They are the millennials who earn handsomely but are not rich yet. They are the ones driving luxury growth in the world.
According to reports, Chinese luxury consumers will be accounting for 50 percent of global luxury spending by 2025. Luxury spending has also picked up considerably in the US, Japan, France, and Italy.
Among the women, Chanel, Louis Vuitton, Dior, Gucci, and Hermes are the top favorites while the men go for Louis Vuitton, Rolex, Chanel, Armani, and Gucci. There is an equal mix of men and women among the luxury online shoppers. They are highly educated and earn between US$ 100K-250K. They usually have high debt, limited savings, and have a full-time job.
Modern luxury shoppers are discerning. They like buying luxury goods and spending big on premium brands. Luxury shopping is therapeutic for them. They buy luxury goods for the feel-good effect. They may buy it on impulse or for gifting purposes. They feel fulfilled when they buy a rare, exclusive quality product. They also expect that luxury brands are environmentally conscious and take a stance on sustainability, race, and gender. The modern luxury shopper prefers understated elegance, not in-your-face opulence. They have a need for uniqueness, for their purchases to stand out and make a statement about their personality.
Every luxury brand caters to a target audience. One size cannot fit all while dealing with luxury consumers. In fact, it is reverse psychology that works - it is the need for uniqueness and stand apart from others. When dealing with luxury consumers, brands need to focus on innovation, unique offerings, and tailored experiences.
For the typical luxury consumer, price is not an issue. It is the uniqueness of the experience that he/ she pays for. Luxury consumers like to see exclusivity in the product display and expect a royal customer experience even while shopping online. Brands that provide a bespoke shopping experience make the customer feel special. Be it helping the customer make the right choice by using a video call option and helping them select or packaging it exclusively and delivering it safely, the luxury consumer would expect a great experience. A handwritten thank you note or any other personalized gesture makes the luxury consumer feel special.
Luxury brands have an excellent opportunity to grow in the coming decade if they can understand their consumers and their changing needs. Consumer behavior is evolving whether it is about purchasing behavior, what triggers decisions, or the shift to the digital channel for purchases. Brands would do well to have a deep insight into their consumers so that they can create value and curate enhanced customer experiences. Millennials are more likely to be driven by the current trend than older consumers.
Another point to be noted is that luxury consumers do not have uniform preferences. They vary across countries, cultures, and age groups. Brands need to be mindful of the differences in markets and consumers by region and cater to them individually. Luxury consumers of today have become very demanding and they need more engagement with the brand. They need information on the latest trends and the flexibility of an omnichannel experience. Digital marketing has redefined the way brands interact with their customers and the space is only heating up. Luxury brands can use their social channels to continue to build the aura of luxury lifestyle and build two-way dialogues with their consumers.
Luxury consumers need a differentiated experience and brands that enter this category would do well to focus on offering a bespoke experience to their customers. Building loyalty takes time but is most rewarding. With advanced technologies, brands of today are able to offer their discerning customers a special experience. Catering to a niche segment that has discerning tastes and preferences needs brands to be exclusive in their offerings and experience to have them coming back for more.