8 Keys to the New Luxury Market
Today the luxury market is undergoing dramatic changes, as a new generation of luxury consumers—the baby boom generation—becomes the “new luxury” generation. Because consumer insight is the ultimate competitive weapon, here are eight essential things that every luxury marketer needs to know about today’s luxury consumer. These are key findings excerpted from “Eight Things Every Marketer Should Know about the New Luxury Marketplace,” a whitepaper based on extensive consumer surveying by Unity Marketing. A complete copy of this valuable report is available upon request.
Every retailer who wants to tap the growing luxury market can benefit from understanding that when it comes to luxury buying in today’s retail environment:
1. New luxury reigns.
“Old luxury” is out; “new luxury” is in. Back in the go-go ’90s, luxury was defined by the attributes, qualities and features of the product itself—like price, materials, brand—and much of a luxury product’s appeal was derived from status and prestige. Shopping was a competitive sport, and the one who acquired the most luxury “toys” was declared the winner. But old luxury doesn’t resonate with the new luxury generation, the baby boomers who have always challenged authority, rejected the status quo and gone their own way.
2. Experiences drive buying.
New luxury is consumer-centric—focused on the experience embodied in the goods and services that consumers buy, not in ownership or possession itself—while old luxury remains focused on the attributes and qualities of the product itself and the traditional status and prestige ideal of luxury. Almost 90 percent of luxury consumers surveyed by Unity Marketing agree with the statement: “Luxury doesn’t have to the most expensive thing or be the most exclusive brand.”
3. Exclusivity means less today.
Although much is made in the luxury-goods industry about maintaining exclusivity of brands—usually through high price and limited distribution—today’s luxury consumers don’t particularly buy into the idea that luxury is better when it’s exclusive to them or those in their social set. Exclusivity for the sake of exclusivity is not what American luxury consumers value. Rather, they value exclusivity derived from their ability to express a personal point of view. The challenge for luxury marketers today is to deliver greater exclusivity by making the luxury consumer feel special and unique, but never let it morph into class snobbishness or arrogance—a delicate balance.
4. Quality counts.
Luxury consumers share a widely held view that items called “luxury” are better. They have an expectation of better quality, finer detail and superior workmanship. It’s the expectation of higher quality that makes luxury consumers willing to dig a little deeper into their pocketbooks or wallets to buy that extra feeling of confidence.
5. Bargains are prized.
Although luxury consumers appreciate superior quality, they also get an experiential thrill out of paying less for the best. More than 80 percent of luxury consumers agree with the statement: “I enjoy the feeling of buying luxuries on sale and usually search out the lowest price or the best value.” The irony of this finding is that these luxury consumers who can afford to pay full price are unwilling to do so. They don’t feel compelled to pay the highest price or shop at the full-price, full-service store, when they know they can get the same thing somewhere else cheaper.
6. Luxury has its limits.
Luxury consumers continue to buy luxury because they can afford to and appreciate the enhanced experience of luxury. But they are not buying luxury to impart status or social advancement, and are unwilling to go out on a limb financially to acquire something they clearly can’t afford.
7. Brands justify purchases.
The brand is not the arbiter of whether or not a specific product is a luxury, and brand names don’t play the deciding role in whether or not to buy. But brand names are big justifiers for a purchase, in that they assure the luxury consumer of the superior quality of the item. Brands can be thought of as the “Good Housekeeping seal of approval” that confirms the product is worth the extra investment.
8. Differences of degree.
Different luxury consumers might buy more or less of a certain type of luxury product based on the amount of disposable income available. But as far as the motivations for buying luxury, across the income spectrum the differences in buying patterns are minor because all luxury consumers up and down the income scale gain their greatest luxury thrills from the experiences the products represent rather than how much money they have to spend.
Luxury is a constantly moving target. Consumers become familiar with a standard of luxury once it is achieved, so what was once extraordinary becomes ordinary and the luxury feeling of specialness is lost. As luxury moves down-market to the masses, luxury marketers must continually reach up and extend the bar of luxury higher and higher to bring freshness, newness and something altogether extraordinary to the ever-aspiring luxury consumer. It’s this trend toward “luxflation”—the need to deliver greater and greater luxury value to the consumers—that is the ultimate marketing challenge for all luxury marketers.