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52pc of wealthy individuals purchase luxury for personal use: report

Posted By Tricia Carr On November 30, 2012 @ 4:45 am In Featured,Industry sectors,News,Research,Retail | No Comments

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More than half of wealthy consumers purchase luxury for personal use

The majority of U.S. adults with a household income of more than $500,000 purchase luxury products for themselves versus a family member or as a gift, according to a new report by Shullman Research Center.

The Shullman Luxury and Affluence Monthly Pulse uncovered U.S. consumers’ intentions when spending with results separated by household incomes of more than $75,000, more than $250,000 and more than $500,000. One key finding from the report is that the most popular shopping outlet for wealthy consumers is Amazon.com and marketers wishing to lure similar transactions to their own ecommerce sites may want to examine the traits of the shopping outlet’s purchase journey.

“When you look at some of the plan-to’s in the Monthly Pulse, clearly a lot of affluent consumers are planning to buy,” said Bob Shullman, founder/CEO of the Shullman Research Center [2], New York. “Their plans are equal to or greater than this year.

“As of today, the outlook for luxury is as positive as it has been,” he said. “One thing that did surprise me is that a lot of people are buying luxuries for themselves.

“A lot of luxury is about buying gifts, but now it seems to be about them gifting themselves.”

The Shullman Research Center was established this year. The Shullman Luxury and Affluence Monthly Pulse [3] is a new monthly report that provides insights on purchasing intentions of the luxury and affluent marketplaces in the United States, perspective on current events and affluent shopping, buying and spending patterns.

Data for the new report was gathered Oct. 30-Nov. 9 from a sampling of more than 1,500 U.S. adults.

Staying positive
U.S. consumers are generally positive about their status.

For instance, the study found that 46 percent of adults with a household income of more than 500,000 consider themselves to be the upper-middle class and 36 percent consider themselves to be in the upper class.

Fifty-eight percent of adults with a household income of more than $250,000 consider themselves to be in the upper-middle class.

Shullman Research Center also polled consumers on how their status has improved since their childhood.

Sixty-six percent of adults with a household income of more than $500,000 said that their social status has gone up since their childhood.

“If you are looking at the United States today, among many of the adults, the American Dream seems to have been achieved by those in the upper incomes, in terms of how they describe themselves today versus how they describe their family upbringing,” Mr. Shullman said.

Bricks not required
The survey also found that 59 percent of adults with a household income of more than $250,000 and 56 of adults with a household income of more than $500,000 made a purchase from Amazon.com in the last 12 months.

This is the highest response of any of the 113 retailers measured. The closest behind Amazon for the $500,000 household income group is Target with 37 percent of those adults reporting a purchase from the retailer in the last 12 months.

This could be a predictor that affluent consumers are no longer requiring a bricks-and-mortar location, per Mr. Shullman.

Three key benefits of the Amazon shopping experience are convenience, lower price and easy returns. Despite the fact that affluent consumers are not always attracted to the lowest prices, they can be impressed by getting value for the amount that they pay.

In fact, survey respondents were asked to describe “luxury” and “luxurious.” Some of the most-used words were expensive, quality, best, money and nice.

“Marketers need to look at what benefits the consumer sees Amazon fulfilling,” Mr. Shullman said. “We asked consumers secondary questions such as if they are Amazon Prime members.

“Of those higher-income groups that have shopped at Amazon, about half are Prime members,” he said. “It just makes it incredibly easy to buy from them.

“Marketers should ask themselves, why are people shopping at Amazon and what does it offer as far as a consumer benefit that they do not offer?”

Store vs. site
Other shopping behavior examined in the Shullman Luxury and Affluence Monthly Pulse include where wealthy consumers are most apt to shop.

Twenty-seven percent of adults with a household income of more than $250,000 make purchases in-person at a retail store. Thirty-nine percent of adults with a household income of more than $500,000 do the same.

Close behind, 21 percent of consumers in the $250,000 group and 30 percent in the $500,000 group complete transactions online from a computer.

Also of note, 14 percent of adults with a household income of more than $250,000 and 19 percent of adults with a household income of more than $500,000 make purchases in-person at an outlet store.

Mobile and tablet transactions were also examined.

“We asked people to tell us where they shopped – brick-and-mortar, mail, online or phone,” Mr. Shullman said. “In the world of luxury I was surprised when I looked at the number of people who are buying luxury on a smartphones and online on a computer or tablet.

“What also amazed me is the number of people who purchase in-person at an outlet store,” he said. “One out of seven people in the higher income groups said that they went to purchase luxury at an outlet.”

Final Take
Tricia Carr, editorial assistant on Luxury Daily, New York

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