April 10, 2014
The top 10 percent of affluent consumers have adopted a sense of invulnerability following the 2008 recession that has affected how they approach the purchase of luxury goods and services, according to a new survey conducted by YouGov.
Presented to attendees of the Luxury Summit in Naples, FL, April 8, the “2014 Survey of Affluence and Wealth” found that although luxury goods and services have seen sales growth, marketers have encountered troubles when targeting a more confident consumer. In the wake of the Great Recession, the affluent have become more secure and confident in their “shopping prowess” to ensure they remain at the top of economy.
“The world is populated by a volume of wealth that we never contemplated,” said Dr. Jim Taylor, vice-chairman of YouGov, New York.
“Most of us struggled through [the recession] and changed the way we viewed the world of spending,” he said. “[Consumers] became resourceful, self-reliant and financially-responsible.
“People have reorganized their finances and that has altered how they go to the market.”
Produced by YouGov and Time Inc. Affluent Media Group, the 2014 Survey of Affluence and Wealth surveyed 1,7000 individuals with a minimum of $100,000 discretionary household income in the United States. The respondents represent 12.1 million households at the top 10 percent of the U.S. economy.
For the survey’s ninth year, the sample size was expanded to include 2,500 non-U.S. consumers from the United Kingdom, France, Germany, Italy, Spain, China, Indonesia, Japan, South Korea, Singapore and the United Arab Emirates. These individuals make up the top 10 percent of their respective country’s economy.
The survey found that following the recession 67 percent of affluent U.S. individuals feel more confident in their ability to financially protect their families and the standard of living they have become accustomed to.
Interestingly, this confidence of the “me” behavior is not isolated to the U.S. Rather, it is a global trend. Seventy-seven percent of Chinese and 63 percent of Spanish consumers, for instance, feel that they are able to see their family through tough financial times. However, a country like Japan has only 25 percent of consumers who feel that they are in control of their financial destiny.
To achieve this idea of invulnerability the affluent have adapted financially-responsible behaviors to protect themselves from economic downturns that are out of their control. For example, the survey showed that on average the top ten percent in Indonesia saves 34 percent of their income as means of protection.
The idea of maintaining a status of invulnerability among the top 10 percenters around the world also translates to the desire to secure a fulfilling life. Among survey respondents, 69 percent feel passionate about spending quality time with family, 51 percent want to travel more and 45 percent wish to simplify their life.
Also, the survey shows that quality of life is supported by luxury products with experiences also playing a role. Seventy percent of respondents are willing to pay more for luxury lodgings, 73 percent enjoy VIP treatment and 77 percent will pay for quality and/or service.
New wave thinking
These confident consumers also have an altered perception of the market. By focusing on quality of life and upholding a sense of self-reliance, consumers are becoming more “confident in their own ability to research, investigate and negotiate.”
Eighty percent of U.S. respondents answered that they know what they want when purchasing a luxury product or service before interacting with a sales associate. Of the 12 countries surveyed, respondents agreed with this notion between 64 percent and 91 percent.
A large percentage of respondents also claim to use their smartphones and mobile devices when making purchases. This response was highest in Asian countries where 88 percent of Chinese consumers, for instance, use their devices in-stores to research prices and products.
A consumer using mobile device while shopping
This finding is also supported by Forrester Research’s “A New Generation of Clienteling” that indicated that 66 percent of luxury consumers are more willing to interact with a sales associate equipped with a mobile device.
The “A New Generation of Clienteling” report discovered that some consumers do not feel that sales associates are the best source of product information. With the role of sales associates changing, bringing mobile technology into stores may help re-establish trust while creating an enhanced experience for consumers (see story).
Breaking it down
The survey results broke down consumers into four segments. Research Masters are the most confident in pursuing the best deal, Brand Agnostics rely on their own opinions to determine what is of good quality, Brand Pragmatists place emphasis on brand name in response to previous quality experiences and Taste Masters are highly-involved with brands and shop brands that speak to the “me.”
Here, curated storytelling comes in to play. Storytelling helps to sell goods, but brands must learn the story of the collective “me,” according to a panel discussion at the Luxury Summit 2014.
The “Art of storytelling” panel brought together the bespoke travel and design sectors to share with summit attendees how they look to consumer motivators when marketing. Channeling personal experience into narratives allows for a broader, yet familiarizing approach that will be appreciated by affluent individuals (see story).
Dr. Taylor assured the attendees during his presentation of the survey that brands are not dead, but that they are not meeting the standards of its consumers.
For example, to appeal to Research Masters, brands must keep in touch because they respond and make decisions based on research, while marketers must respect the smarts of Brand Agnostics who are likely comforted by a reassuring, relationship-based approach. For Brand Pragmatists, marketers can benefit from deferring to the consumer’s experiences and as for the Taste Masters, brands should inspire self-discovery in-store.
Although 40 percent of respondents feel that brands live up to the promise of quality, craftsmanship, design and artistry always or often, marketers can improve their relationship with the invulnerable affluent consumer by focusing on proper communication.
“To win the hearts of invulnerable consumers,” Dr. Taylor said. “[Marketers] need a new theory of brand to capture the reality of the era of enlightened consumption.
“[Brands] must offer a vision of the ‘me’ and mold to what the ‘me’ is looking for,” he said.
Jen King, editorial assistant on Luxury Daily, New York