Looking Towards 2017: A Reality Check Regarding the Luxury Marketplace
As 2016 draws to a close and 2017 begins, we believe it’s a very good time to take a deep dive into which American consumers are actually buying luxuries. Listening to luxury brand marketers as we do, we find that many of them focus their attention and marketing efforts on high-income and wealthy consumers. These very high-income and wealthy consumers do buy luxuries, as is highlighted in this Insights brief, Looking Towards 2017: A Reality Check Regarding the Luxury Marketplace. However, when luxury marketers, their agencies, and their consultants dig a little deeper and take a multi-dimensional look at America’s luxury buyers simultaneously by their household incomes and the generations to which they belong, a good number of them may be surprised by the findings in this brief.
When such upscale retailers as Nordstrom, Neiman Marcus, and Saks recently reported lower revenues, the holiday season lost some of its gloss, and luxury marketers began to fret. However, heading into next year, such concerns may be allayed by the findings in this Insights brief, which shows that about a quarter of American adults (18 and older) made one or more luxury purchases. Even better, more than half of them were in the under $100,000 household-income bracket, constituting a very large target group and indicating that Main Street should be considered every bit as important as posh Zip codes for marketing outreach.
This portends positive times for the luxury world in 2017, as the less-than-wealthy are joining their richer counterparts as potential purchasers. The well-heeled may be more frequent buyers and spend more on the luxuries they buy, but mainstream folks are also willing to pay for certain luxury products and services within their reach.
Another good sign is that, among consumers with under $100,000 in household income, Millennials were by far the most active group, and getting them into the mix is a solid opportunity for marketers to turn them from that initial participation into regular customers as their financial profiles improve. Indeed, in the valuable demographic of consumers with household incomes of $250,000 or more, most of those American adults are Gen-Xers or Boomers.
Beyond that, this election season proved that prognosticating is a fool’s game, so we are reluctant to make any bold predictions for next year’s luxury marketplace. However, it is safe to say that it’s a broadening landscape, not exclusively confined to the high-income and wealthy set, and that, in itself, is cause for cautious optimism.
The following seven topics about the American luxury consumer are highlighted in this iInsights brief, which includes more details than this summary:
- Number of adults by generation and household income in millions
- Percent of adults by generation and household income
- Number of luxury buyers by generation and household income in millions
- Percent of luxury buyers by generation and household income
- Penetration levels of luxury buying in each of twenty-four market segments
- Number of non-buyers of luxury by generation and household income in millions
- Percent of non-buyers of luxury in each of twenty-four market segments