November 14, 2012
Thirty-five percent of millennials in the United States reported that their likelihood of purchasing luxury goods has increased over the past year, while 46 percent of baby boomers said that their likelihood has decreased, according to a new survey from Accenture.
The Accenture Luxury Shopping Survey found that half of U.S. consumers are likely to make a small luxury purchase in the next six months and are most likely to purchase high-end food or drinks. Also, 57 percent of consumers who intend to purchase luxury apparel will mix luxury pieces with affordable clothing.
"Consumers have a consistent need for a sense of luxury in their lives, and that need transcends economic cycles,” said Tom Jacobson, managing director of the Accenture pricing and profit optimization practice in Boston. “What can change over time is the scale of luxury they are willing to pay for and, right now, small luxuries are in demand.
“Our study found, for example, that among consumers who are planning to make a luxury purchase, the majority expect to make a small luxury fashion purchase to mix into their wardrobes of more affordable clothing,” he said.
“Similarly, splurging on a small luxury is the No. 1 reason consumers buy specialty food or drinks.”
The Accenture Luxury Shopping Survey polled 2,002 U.S. adult consumers through an online survey. The sample was targeted to reflect census distribution of the country’s adult population.
Food for thought
Of those consumers intending to make a small luxury purchase in the next six months, 53 percent are likely to purchase specialty food or drinks.
Forty-eight percent are likely to purchase luxury clothing and 48 percent are likely to purchase high-end personal care products.
“What stands out is that consumers overall want a taste of luxury in their everyday lives and are willing to spend a little extra on those items,” Mr. Jacobson said.
Millennials have become increasingly interested in purchasing luxury goods over the past year, but almost half of baby boomers reported that their likelihood to purchase luxury goods has decreased in the past year.
These demographics each have their own reasons for not purchasing luxury goods. Most millennials surveyed said that they cannot afford them.
Baby boomers reported that luxury is not important to them or not worth the cost.
“Luxury providers need to play close attention to the differences found among the demographic segments,” Mr. Jacobson said.
Quality over quantity
Meanwhile, 75 percent of consumers value quality when looking to purchase luxury goods.
Sixty-nine percent of consumers said that price is important.
Also, 25 percent of those surveyed said that brand name is important.
Furthermore, 34 percent of respondents said that quality is the reason why they purchase specialty food. Respondents also cited quality as the reason for purchasing luxury personal care products and apparel.
“With consumers showing an increasing willingness to splurge on small luxuries, luxury retailers have the opportunity to build loyalty by offering smaller-ticket luxury items to complement more significant products,” Mr. Jacobson said.
“As consumers begin spending again, luxury brands must also ensure the quality of their products, as consumers in our study indicated quality is more important than brand name,” he said.
The Accenture Luxury Shopping Survey also found that 36 percent of consumers prefer to shop in a physical store and 19 percent prefer to shop online.
Thirty-eight percent of respondents prefer shopping in-store to see all of the choices in-person.
Of those consumers who are looking to purchase luxury apparel, 58 percent chose department stores as their top venue. Of these respondents, 49 percent chose to shop at bricks-and-mortar locations to touch and feel the products.
Twenty-nine percent of the survey respondents prefer a department store’s Web site.
Indeed, 36 percent of the respondents prefer online-only retailers. Thirty-seven percent of these consumers prefer online retailers so that they can find the best price for an item.
In addition, one in five consumers participated in showrooming in the past six months. These consumers visited a store to experience a luxury product, but purchased the item online.
Lastly, 23 percent of those surveyed have purchased luxury items from online group membership sites that offer exclusive discounts.
Fifty-eight percent of these consumers said that these types of sites have increased their luxury spending.
“In addition to the growing appetite for small luxuries, we thought it was interesting to see the strong preference for shopping luxury in bricks-and-mortar stores,” Mr. Jacobson said. “Not surprisingly, the preference for shopping in physical stores is generally because shoppers can touch and feel the products.
“Meantime, those who shop online do so to find the best price,” he said. “Retailers need to marry the best of both worlds.”
Tricia Carr, editorial assistant on Luxury Daily, New York