The Power of the Luxury Shopper

Reading Time: 5 mins
By Published On: October 24, 20190 Comments

From Gucci to Louis Vuitton, luxury brands and shopping have remained one of the most sought-after commodities in the retail industry. Besides brand names, what actually defines a luxury brand, and what does the average luxury fashion shopper look like?

In October 2019 Gucci became the fastest-growing luxury brand, with a growth of 23 per cent in value since last year’s report. Unsurprisingly, it’s rated one of the most popular luxury brands for Next-Gen shoppers. Louis Vuitton and Chanel sat in the ranking with Gucci, and Google, Amazon and Apple were also listed in the ranks.

In the latest Power Retail Shopper Profile report on Luxury Fashion and Accessories, this expensive market accounts for two per cent of all online sales – quite a contrast to the fast fashion industry, which makes up nine per cent of the industry.

What Defines a Luxury Brand?

Luxury and prestigious brands are often associated with high-end designers and brands that have been established within a particular price point. Brands that sit within the category of ‘luxury’ include classic designers such as Chanel (est. 1910), Louis Vuitton (est. 1854) and Fendi (1925). Although, it’s not just established brands that can sit within the field of ‘luxury’, with brands such as Off-White (est. 2012) and Yeezy (est. 2015) dominating the fashion industry.

On average, luxury brands hold an expensive price tag, with the average lowest price sitting at $300 and hitting values up to $200,000. In 2019 alone, the value of aggregate luxury sales worldwide is USD247 billion. According to Deloitte, there is a 10.8 per cent YoY sales growth and a 7.6 per cent composite return on assets.

Who is the Average Luxury Shopper?

While Millennials are dubbed as wanting an ‘experience’ more than a product, when it comes to luxury products, that statement flies out the window. On average 22 per cent of luxury shoppers are aged between 30-34, with 12 per cent aged from 25-29. This doesn’t mean that the only luxury shoppers are in the Millennial age demographic – 12 per cent of luxury fashion and accessory shoppers are aged from 50-54.

The Luxury Shopper’s Behaviour

  1. Luxury shoppers don’t think that the value of products are set to rise

    Those who make a purchase of a luxury product, whether it be a T-shirt or a handbag, know that they’re making an expensive decision. For example, someone who is ready to buy a Fendi Baguette bag in 209 is willing to fork out $4,500 – in 1997 when the Fendi Baguette bag was released, customers were paying the same price. Despite price values changing over the past 20 years, there has been little inflation within the luxury market. In fact, affordable luxury has become far more popular. Not every product within a luxury brand’s catalogue has to align with the glitz, precious, out-of-reach and ‘high-touch’ concept they once had.

    A dress from Alexander McQueen will set you back $3,500 but a T-shirt can cost $150 – it’s now possible for those who wish to purchase a luxury item but don’t have the means now can. According to the Shopper Profile report, 66 per cent of online shoppers believe that the price value of these luxury items will not increase or decrease in the next six months, but 24 per cent of consumers think that the items will increase in value. It’s possible that lowering prices on ‘affordable’ luxury items such as T-shirts and socks to younger customers with a lower income may be the way for brands to capture a new target market without devaluing their brand.

  2. Women’s fashion is the biggest selling point

    Luxury brands and women’s apparel go somewhat hand-in-hand. Since the inception of luxury brands like Dior, Chanel and Balenciaga, the target audience was women. Chanel re-imagined what the women’s silhouette was with the LBD (little black dress) in the 1920s, and Dior reinvented that silhouette again in 1948 with the ‘New Look’. Women have remained the target audience for luxury brands in the apparel category, and not much has changed since. Eighty per cent of the online shopper audience for luxury products are women, and women’s clothing makes up 52 per cent of all online transactions.

    Of course, this doesn’t mean that men are left out in the dark. In fact, the interest in menswear has risen in the last decade, with men’s clothing accounting for 14 per cent of the luxury sales. Menswear is in no way an untapped market – Gucci, Off-White and Ralph Lauren keep a heavy focus on menswear and are reaping in the rewards. Other brands that maintain an emphasis on womenswear, however, may try to pull in the attention of another demographic to achieve further cut through.

  3. Purchases via laptop rule supreme … for now

    Online luxury shoppers are split pretty evenly between mobile and desktop purchases. The majority of customers (46 per cent) make their purchases when they’re scrolling on a laptop, while 44 per cent choose to buy via mobile. This could be for multiple reasons: a better-optimised site, it’s easier to switch between tabs for price comparison and easier checkout methods.

    In the age of social media and ‘affordable’ luxury products, the use of mobile shopping is certainly on the rise – customers can be scrolling through Instagram and see an influencer wearing a designer bag. They ‘swipe up’ to shop and they instantly have the chance to purchase that exact item. With an increased interest in M-Commerce, luxury brands are better understanding their customer’s shopping habits and using influencers to capture their target audience.

  4. Influencers play a huge role in encouraging luxury purchases

    Although influences may not have the same level of persuasion as they did two years ago, they certainly inspire shoppers to purchase luxury goods. Thirty-four per cent of online shoppers follow influencers that promote women’s fashion, and 34 per cent centre around makeup and beauty. For those who follow influencers on social media, 60 per cent prefer to see authentic content, and 23 per cent opt for those who post visually engaging images. The promotion of a lifestyle that comes along with luxury products plays a huge role for customers – attending fashion shows and wearing prestigious labels can inspire others to follow suit.

  5. Luxury shopping is no longer indicative of salary

    Up until ten years ago, those who shopped in luxury stores like Gucci, Fendi or Marc Jacobs were considered ‘well-off’. While this is often still the case, it’s becoming increasingly common to see those without a high tax bracket making a splurge on a designer product. Eighteen per cent of online luxury fashion and accessory shoppers have a salary below $75,000, and 17.7 per cent have an income between $150,000 and $199,990. With the increase of fast-fashion online, and the constant threat of bogus pieces becoming cheaper and more appealing to customers, designer labels have had to adjust their sales prices to accommodate to those who want to wear designer items without the hefty price tag.

Luxury fashion remains one of the core categories within the online retail industry – prices may remain somewhat the same, but with the threat of fast fashion and counterfeit items on the horizon, luxury brands have to adjust their affordability and accessibility to its customers.

About the Author: Power Retail

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