Luxury brands lose half of their top customers every year, according to new research from Epsilon and The Luxury Institute: “The New Face of Luxury: Breaking Down the Myths and Stereotypes of the Luxury Shopper.” Why? Because they routinely misidentify the demographic and economic profile of their customers while also failing to create a personalised sales experience for them.
Luxury brands mistakenly believe their customers are typically female and on average 45-years old with a net-worth over $1 million, the study found. However, 57.5% of luxury spenders are, in fact, male. They are likely to be of Asian and Middle-Eastern descent with a net worth over $500,000. Additionally, nearly 13.8% of shoppers with a net worth over $1 million invest mostly in modern, contemporary décor and gifts as opposed to high-ticket apparel items. It is crucial for luxury brands to understand their customers to effectively market and advertise to them.
What is luxury?
Before effectively marketing and advertising to the luxe shopper, brands need to understand what these consumers are looking for in a luxe shopping experience. According to wealthy consumers, luxury is defined by three elements:
- 73% believe superior quality is the most important attribute
- 54% consider a brand’s design the most important quality
- 47% say it’s customer service
To the consumer, the brand is the luxury experience. According to American Express and The Harrison Group, luxury customers prefer stores that are elegant. They want to feel an experience of purchasing that is as pleasant as owning a luxury item. They tend to value close relationships with select sales associates. These customers believe it is worth it to pay more for items that are the very best quality and they value exclusivity.
The four faces of the luxury shopper
Still, not all luxury buyers are alike. The study found there are four shoppers who buy luxury retail goods:
The Aspirational Shopper desires to own pieces from a brand, but does not have the means to do so on a regular basis. This customer shops mostly from outlets or online members-only discount boutiques such as Rue La La, HauteLook, ideeli etc, or purchases low-ticket, designer brand items such as cosmetics.
Moments of Wealth
The Moments of Wealth shopper may save for a specific piece, like a handbag, from a particular luxury brand, but does not purchase from the brand frequently. This shopper tends to make one-off purchases over a long span of time.
Dressed for the Part
This shopper purchases luxury items to give off the appearance of being someone who lives a luxury lifestyle, however, the Dressed for the Part shopper does not have the financial resources to be a frequent luxury buyer. This fashionista shopper devotes most of their spend to fashion, accessories or a car rather than an expensive home.
The True Luxe shopper has the means to purchase luxury items at will without concern for finances. This shopper purchases from luxury retailers frequently throughout the year.
Luxury brands tend to be plagued by customers who only make one purchase. Therefore, it’s vital for you to arm your brand with valuable insights to understand which type of luxury shopper persona these one-time purchasers belong to. This is the only way for you to know what offer these shoppers are most likely to respond to, focusing on the best opportunities and the customers that are actively spending in the luxury realm.
For more information on how to identify your True Luxe shoppers and tactics you can use to reach these consumers download The New Face of Luxury report today.