Wealthy consumers in the US are increasingly demanding when it comes to craftsmanship and quality, but less impressed by basic luxury branding, explains Amrita Banta, Managing Director at Agility Research & Strategy.
In America, luxury shopping’s opportunity lies in reaching the affluent via the internet.
Fifty percent of this market already purchases luxury goods online, which is supported by the fact that 70% prefer to purchase at the best possible price. Preference to purchase in-store (50%) is much lower than other markets like China (67%) where there is more appeal in experiencing the process of purchasing luxury goods.
These are recent research findings extracted from the Agility Affluent Insights study conducted by Agility Research & Strategy in June 2015, administered online among 1200 (equally distributed) affluent respondents in 5 countries – China, Hong Kong, Singapore, and the US.
“ Affluent Americans view luxury goods almost synonymously with quality. ”
Who are America’s affluent luxury shoppers?
Affluent Americans view luxury goods almost synonymously with quality. For them, these brands must be expensive for a reason.
When asked what “luxury” meant to them, most of the consumers we interviewed mentioned the word “quality” in their description, as demonstrated by the Word Cloud below.
Expect spending amongst the affluent in America to be guarded, compared to their counterparts in Asia where disposable income is more likely to rise. A possible outcome in the US will be some shift in spending towards online sources where prices may be slightly lower (figure 2).
For Americans, motivations in buying luxury goods tend to skew towards the more practical reasons of owning a product with exceptional craftsmanship, design, and styling. Exclusivity and in-store experience take a backseat and fall way behind the top two (see figure 2).
• Online is shaping up to be a key battleground for luxury shopping as majority of affluent Americans are influenced by online sources when they research luxury brands. Moreover, as many purchase online as those who prefer to purchase in-store. Merging the luxury in-store experience with digital interactions will help brands keep up with the changing needs of consumers.
• Moreover, online purchasing of luxury goods has not deteriorated the perceptions affluent Americans have a about the brands they purchased (figure 5).
• Affluent consumers are loyal to American brands, with local luxury marques taking the top spots in Fashion, Jewellery, Skin Care, Makeup, Finance, and Hotels (figure 5).
In fashion, Coach, Ralph Lauren, Calvin Klein, and Michael Kors were the most preferred, while Tiffany, Cartier, Gucci, Ralph Lauren and Chanel won out in the Jewellery stakes.
In luxury travel options, US brands again regained their dominance, with Marriott, Hilton, Hyatt, Holiday Inn and Sheraton voted top.
Watches saw Rolex, Movado, Tag Heuer, Cartier and Omega as favorites.
Preferred alcohol brands were Grey Goose, Bacardi, Absolut, Bailey’s, and Johnnie Walker; while cars were dominated by: Toyota, Ford, Honda, BMW, and Chevrolet.
“ It will be critical to ensure that online sources are aligned with brand objectives ”
Top 3 Recommendations for Luxury Brands in America
1. Engage Your Market Digitally: As a touchpoint, digital sources have evolved over the past few years, most especially within the mobile space. With affluent Americans perhaps becoming more careful in their luxury spending due to a less optimistic outlook on disposable income, expect them to fully research their purchases online, and considering purchasing online rather than in-store. It will be critical to ensure that online sources influencing the affluent market are aligned with brand objectives. Moreover, striving to achieve a seamless in-store to online experience will ensure that brand views are aligned no matter where a luxury product is purchased.
“ American affluent consumers seem to be practical purchasers, who do their research ”
2. Harp On Craftsmanship & Style: Unlike their Asian counterparts, Americans value the product itself more than the status it brings them. Using your brand’s artisans in marketing assets and bringing them to the forefront in the company website will help shape the brand’s image into one suited to the American market.
3. Attract The Practical Purchasers: American affluent consumers seem to be practical purchasers. They do their research, they purchase according to craftsmanship and quality, and they are open to buying online, and do not mind passing over the luxury purchase experience. Luxury brands may consider attracting more of this type of luxury shopper by being present in key online retailers like Amazon.com where brands like Omega, Tag Heuer, Coach, and Clinique can easily be purchased.
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