Fashion & Finance: The new economic realities of luxury consumers
More than 1,000 luxury fashion consumers in the US were surveyed to find out how they are responding to new economic realities.
Rakuten and Vogue Business investigate how luxury shoppers are responding to economic uncertainty.
More than 1,000 luxury fashion consumers in the US were surveyed to find out how they are responding to new economic realities. This research investigates how shoppers are funding luxury purchases; the brands they are prioritizing; and the impact of macroeconomic trends on both budgets and loyalty.
This just released customer research reveals two mindsets that luxury brands must consider as they formulate growth plans in this uncertain economic climate. The study, shows that large numbers of luxury buyers shifted their shopping strategies to reflect changing economic times. According to the survey, two fast-growing behavior segments are reshaping the dynamics of the luxury market
- Brand Switching: 37% of shoppers reported changing brands in their favorite categories – a high figure in a retail segment where quality and brand image are primary purchase drivers.
- Waiting for the sale: 39% of shoppers reported that they were now waiting for sales or discounts before opening their wallet for luxury purchases. About one in four shoppers said they were cutting their total expenditures on luxury items since the advent of difficult economic times.
These shoppers represent a significant portion of the luxury buying audience. Proactive marketing efforts are essential to both build loyalty and benefit from their willingness to try new brands
Loyalty extends beyond conventional deals and points
Consumers are moving across price segments and macroeconomic realities are forcing brands to rethink customer loyalty. Conquering loyalty presents a unique set of challenges. The loyalty landscape is densely saturated and engagement levels continue to plummet. An average customer in the US is registered with 17 loyalty programs, according to McKinsey and Co. Less that 50% constitute active memberships.
Investing in discounts and coupons to aid in discovery is one side of the equation but it’s not enough. Retailers need to invest in rewards strategies that provide the value consumers are looking for in the short term, while pulling those shoppers into the brand’s ecosystem where they can cultivate a longer-term relationship.
Luxury consumers are likely to expect higher returns for their loyalty to retailers, demanding a mix of conventional rewards and experiential loyalty. The sky’s the limit when it comes to delighting high-value clientele — whether its tiered loyalty programs offering free delivery to lower spend customers and concierge services for affluent shoppers, or hyper-personalized e-commerce solutions providing a human touch such as the Net-a-Porter EIP (Extremely Important Person) loyalty program (which includes perks such as a personal shopper and early access
With saving and switching mindsets slowly on the rise, alternative discovery platforms such as cashback sites can aid brands to not only attract shoppers willing to trade on designer deals, but also establish long-term loyalty by learning from their buying behavior and compensating them accordingly.
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