What trends exist in the consumer behavior of luxury good products?
A shift to digital and experiential, expectations of personalisation, on-demand access, data privacy and preference for brands that make the world better, are some key trends in the consumer behavior of luxury goods. The purchase cycle for luxury goods lasts up to a week, with brand reputation, price and stock availability being key considerations. The trends are described in detail below. There is also a section on digital trends and data.
1. A shift to digital
According to a study by Deloitte, 48% of consumers feel that e-commerce and m-commerce will be rapidly expanding. The Hermes strap designed especially for the Apple watch and Grisogono collaborating with Samsung are examples of partnerships between luxury and technology.
Another report by Mckinsey had findings on why consumers prefer to make luxury purchases online. 80% like that they can shop at a time convenient to them. 76% liked the ease of comparing prices easily on other stores and 63% choose the internet to avoid pesky sales staff in stores.
As globalisation has led to a generic approach, the luxury shopper expects a customised experience, compelling luxury brands to adopt a very personalised approach in their experience, content, and service.
39% of consumers expect home delivery. 44% want rewards through gifts, and 45% of consumers want more personalised products and services.
3. Brands backed by philanthropy
The most sought-after luxury brands are the ones that contribute towards making the world better, through charity or eco-friendly choices. This allows for consumers to indulge, without much of the guilt. Fog point is a luxury Vodka made from fog harvested in California. Another company in San Francisco called Diamond Foundry creates lab made diamonds to match specifications of high-quality stones, thus offering an ethical alternative to excessive mining. 89% of luxury consumers do not buy goods that don't support ecological sustainability.
4. Privacy of data
39% of UHNI claim that online privacy and security is an area of concern for them. It is common knowledge that brands have access to personal data like past purchases, location, etc. Companies who understand this need are already creating products tailored to these needs like the Bvlgari vault app and smartphones by Sirin labs with military-grade data security.
5. On-demand access
Another trend seen in the industry is on-demand access to luxury goods and services like taxis, parties, fashion shows, etc. US-based start-up Jetsmarter lets users book a single seat on the jet via their app. Tmall, an online retailer, based in China, set up a luxury fashion show at their launch where the 42 outfits on the runway were immediately available via their app.
6. Word-of-mouth still an influencer
When asked to choose the biggest influencer between a friend, a brand or a celebrity, 39% of American millennials said that their friends play the major role in influencing their luxury purchase decision.
DEEP DIVE INTO DIGITAL MARKETING
Currently only 4% of luxury sales come through digital. The experience during digital purchase is likely to influence additional 40% buying.
According to IAB, 1 in 4 US adults claim that their apparel shopping is influenced by email ads. 9% are impacted by Mobile ads and mobile videos influence another 9%. Millennials will comprise 45% of luxury consumers by 2025 increasing the relevance of digital mediums.
Mobile and social media are the leading mediums. Customers prefer using their mobile screens over desktops and find it easy to shift from everyday retail online stores to luxury retailers online. Luxury brands need to focus on telling compelling brand stories through apps, videos and other touchpoints to delight millennials, who are a large segment of luxury consumers. Worldwide Business Research found through their survey that 90% of retailers using consumer-focused content in their advertising are experiencing “measurably positive results.”
In conclusion, the luxury consumer behavior is shifting towards a more personalised experience. Brands need to understand their audiences and adapt their products, services and communication approach to match their requirements.