Half of U.S. consumers are likely to make a small luxury purchase in the next six months, including 53 percent who are likely to purchase specialty food or drinks, 48 percent to purchase luxury clothing and 48 percent to purchase luxury personal care products, according to new research from Accenture (NYSE: ACN).
The Accenture Luxury Shopping Survey polled more than 2,000 U.S. adult consumers and found that splurging on a small luxury is the number one reason consumers buy specialty food or drinks, selected by 53 percent of those who expect to make these purchases in the coming months. Similarly, high-low fashion is the top reason shoppers shop luxury apparel. More than half (57 percent) of those who intend to purchase luxury apparel will mix a few luxury items into a wardrobe of more affordable clothing.
“As consumers show an increasing willingness to splurge on luxury, retailers and brands can build loyalty by offering a strategic selection of smaller-ticket luxury items to complement their more significant products,” said Tom Jacobson, managing director of the Accenture Pricing & Profit Optimization practice. “Consumers want a taste of luxury in their everyday lives, and are willing to spend a little extra for the experience, but the emphasis is on small items. They may think twice about purchasing a new handbag, but shop for a wallet as an alternative.”
Online Luxury Shopping Down, But Not Out
In each of the three small-product categories polled, consumers indicated a strong preference for brick-and-mortar stores when shopping for luxury goods:
The study also found that showrooming, or viewing a product in a store and then going online to make the purchase, plays an important role in luxury purchases. In the past six months, one in five consumers visited a store to experience a luxury product in person and then purchased the product online.
Additionally, the study found that having access to special deals and bargains through group membership shopping sites has invited more luxury purchases. Among the 23 percent of consumers who have bought luxury goods and services from an online group that offers exclusive discounts to members, 58 percent say these sites have increased their luxury spending.
“The new consumer is online savvy and always on the hunt for a discount, which is pushing brands to get very smart about leveraging the growing number of channels consumers use to make luxury purchases,” said Jacobson. “Traditional retailers, online stores and even designers need to have a very compelling answer to the question: what is the advantage of buying from me? Without that answer, online price comparison engines, barcode scanners and shopping apps will win consumers over,” said Jacobson.
Younger Generation Most Optimistic About Buying Luxury
The Accenture survey identified a number of differences between Millennials and Baby Boomers when it comes to luxury shopping. More than a third (35 percent) of Millennials indicated their likelihood to purchase luxury goods is up over the past year, while nearly half (46 percent) of Baby Boomers indicated their likelihood to purchase luxury goods has decreased in the past year.
Among those consumers who said they are not likely to purchase luxury goods, the majority of Millennials indicated they cannot afford the prices, while the majority of Baby Boomers indicated that luxury is not important to them or not worth the cost.
Quality Trumps Brand Name
The survey found quality is ranked the most important factor by 75 percent of consumers when buying luxury, followed by price at 69 percent. Only a quarter (25 percent) ranked brand name as most important. Looking at specific product categories, more than a third (34 percent) of consumers surveyed cite quality as the reason for purchasing specialty food and 26 percent cite quality as the reason for purchasing luxury personal care products and the same number cite quality as the reason for purchasing luxury apparel.
“Luxury brands cannot rest of on strength of their names alone,” said Jacobson. “As consumers begin spending again, luxury brands must ensure that the quality and features of their products exceed the expectations set by their price tags, or they risk losing consumers to another luxury brand, or even to a non-luxury one.”
About the Research
Accenture surveyed 2002 U.S. adult consumers via online survey to understand their luxury purchasing intentions and preferences. The overall sample was targeted to reflect census distribution of the adult US population. The overall margin of error is +/- 2.2 percent.
Accenture is a global management consulting, technology services and outsourcing company, with 257,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, 2012. Its home page is www.accenture.com.