The most important insight a brand or luxury service provider can obtain is understanding how its target market learns about new things and decides how and where to shop. In the Decorative Furnishing Association’s (DFA) latest monthly webinar, Through the Looking Glass: Current Trends in the Luxury, Affluent and Wealthy Markets, expert insights consultant and CEO of the Shullman Research Center Bob Shullman breaks down how the affluent consumers research, access and purchase new products. By analyzing his breakdown and identifying target demographics, brands and luxury service providers can better reach prospective clients.
The presentation focused on the affluent market, defined as individuals with an annual income greater than $75,000 or net worth of $1 million or above, and then broke down that economic group generationally: Baby Boomers, Gen X-ers and Millennials. Shullman particularly focused on the ways in which Millennials’ habits differed from Gen X-ers and Boomers, as it’s the market that has the greatest longevity and most potential for future growth.
In comparison to the Boomers and Gen X-ers, fewer than half of the Millennials are married or partnered and present as three types of singles: those living with parents, those living in a group setting such as a dorm at university or other roommate set up, and those who can afford to live on their own. The distinctions are important, as cohabitation patterns alter the marketplace. Millennials are also less likely to own their own residence, but more likely to pursue luxury and designer brands as well as exclusive products and services. They’re also most likely to be influenced by celebrities.
Shullman also noted that the ways in which people are shopping for remodeling products and services have changed remarkably over the last 30 years. Online research is the primary method of researching new products and services, used by 84 percent of all affluent adults across the three generations.
When it comes to what Shullman referred to as the “buying phase,” however, 55 percent of all affluent adults did further research in person, while 76 percent of affluent adults purchased products in person. While online buying was at times preferred because of convenience, a perception of better prices, free shipping, better selection and increased accessibility, those who bought in person did so because they wanted a tactile experience, wanted sales help, enjoyed shopping and wanted their products immediately.
With reference to online buying, Shullman highlighted what he referred to as “The Amazon Phenomenon.” Basically 67 percent of affluent adults use Amazon and its services, and as the online retailer expands, it is possible that they will begin to infringe upon and compete with the luxury market. Currently, of those affluent adults who use Amazon, there is a perception that Amazon is better than or the same as other stores. Notably, no one thinks that Amazon is worse than other stores.
Brands and luxury service providers need to identify the ways in which affluent adults are best engaged through either media touchpoints or friends and family, (also conceptualized as word-of-mouth). Digitally speaking, 75 percent of affluent adults have a digital device (smartphone, tablet or other way of connecting to the internet) and use apps.
Television advertising and social media are the most visible mediums, followed by mail, radio, magazines, billboards and newspapers. However, when it comes to engaging with brands and advertising, both digital and printed magazines are the most engaging, most memorable advertising touchpoints. These are followed by brand engagement with the consumer in shopping malls, and on social media and television.
When it comes to direct engagement through friends and family, social media sites, telephone conversations, in-person conversations and texting were the most effective ways of engaging attention about a brand.
The key points: there is no one size fits all solution to approaching the luxury market as Baby Boomers, Gen X-ers and Millenials have distinct preferences in how they like to shop. Traditional advertising reaches all, but social media is a powerful tool and influencer. That being said,two-thirds of the upscale market across the three generational groups are in the market for home, kitchen and bath related products and services. Everybody wants to shop when and how they want, digitally or in person. Additionally, Amazon is a force to watch out for as it continues to market broadly to all adults across all demographics and is constantly varying its marketing approach and services.
Images courtesy of The DFA and Bob Shullman.