Luxury shoppers are highly coveted customers for brands and retailers. The top 10% of US household earners (those taking home $120,000 or more annually) account for approximately half of all consumer expenditures.
This demographic’s growing preference for online shopping is changing the face of luxury retail, and it has significant implications for how brands target luxury consumers.
In a new report from BI Intelligence, we profile the luxury shopper and take a close look at the spending habits and preferences of high-income earners — including how and where they shop.
Here are some of the key takeaways:
- Discretionary spending among the wealthy is growing faster than for the average US consumer. Discretionary spending among those earning $120,000 a year or more is expected to increase 6.6% in 2016, reaching $406 billion, according to YouGov. Among the top 1%, it's expected to rise 10%. By contrast, discretionary spending for the average US consumer dropped 1% between 2014 and 2015.
- Wealthy consumers are expected to spend the most next year on fashion, travel, and dining. Among these categories, spending on fashion (specifically, apparel, accessories, and handbags) will grow the most, increasing 6.9% to $37.4 billion (roughly 9% of total discretionary spending).
- Luxury brands are over-allocating ad spend to print media. The seven largest US luxury brands collectively spent $133 million last year on holiday ad spending, 57% of which was allocated to magazine ads, according to the Shullman Research Center. But among luxury shoppers, recall rates are higher for digital ads.
- There are signs that luxury shopping is less brand- and status-oriented than it once was.Luxury shoppers, like the average consumer, enjoy the convenience and low prices of online retailers like Amazon vs. shopping via official brand sites. Luxury shopping may become even more price-sensitive as millennials age.
In full, the report:
- Sizes the market for personal luxury goods, by country.
- Measures the effectiveness of luxury marketing channels.
- Breaks down ad spend among luxury brands.
- Identifies where luxury consumers shop online and in-store.
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