MILAN — Luxury superbrands still trump niche labels and luxury spending is expected to rise 7 percent in 2015, according to the latest global survey from LuxHub, Havas Media Group’s newly launched luxury consulting specialist.
The study found that 64 percent of luxury consumers are still turning to “luxury superbrands” over lesser-known ones.
The affluent luxury goods customers analyzed by LuxHub are within the top 10 percent of the household income bracket in the U.S., the U.K., China, Russia, France, Italy, Germany, Spain, Saudi Arabia and the United Arab Emirates. Personal spending was reviewed across retail, travel, home furnishings, automotive, jewelry and art, and 40 of the top global brands.
The study highlights geographical differences. For example, in China 83 percent of respondents preferred superbrands, citing Louis Vuitton and Chanel as the most widely recognized labels. The percentage dropped to 73 percent in the U.S., with top brands being Mercedes and Chanel, and to only 43 percent in Spain.
Isabelle Harvie-Watt, global chief executive officer of LuxHub, underscored how the survey “highlights differences between cultures, which show how important it is to personalize the shopping experience for people in their own countries. What is now critical is the ability to implement culturally relevant strategies that also work in the actual locations where customers engage with the brand.”
Different cultural definitions of luxury emerge throughout the study. Quality, for example, is a top priority in the U.K., where luxury shoppers defined luxury in terms of quality (78 percent versus a global average of 63 percent) and personal reward (44 percent compared with a global average of 26 percent). When it comes to luxury products conferring social status, this was important for only 20 percent in the U.K., compared with an average of 37 percent across the markets.
“Germany, Italy and Spain were the only three countries out of the nine to define luxury as exclusivity over quality. Overall luxury perceptions are driven by quality, exclusivity and the desire to express taste and style,” according to the study.
The affluent luxury consumer spent an average of 21,126 British pounds, or $32,182 at current exchange, on luxury in the past year. The highest spend was seen in Russia at 36,078 pounds, or $54,959, followed by the U.K. at 28,243 pounds, or $43,024, and France, with an average yearly spend of 27,402 pounds, or $41,743.
Considering both men and women, clothing and accessories were the most popular category, purchased by 89 percent of luxury shoppers last year, with an average spend of 1,625 pounds, or $2,475. This was followed by travel (87 percent with an average spend of 3,791 pounds, or $5,775). While only 30 percent purchased a car, average spending on this category was 27,630 pounds, or $42,090.
Among the 33 percent who expect to spend more on luxury, 44 percent said this “is largely due to seeing more items that they want — demonstrating that the supply side of luxury is a key driver for the sector’s share of wallet,” noted the study. “The leading driver is an expectation of increased disposable income (49 percent).”
Shopping in brick-and-mortar stores is still favored by 49 percent of luxury goods shoppers. “Statistics show that the move by a quarter of the respondents to shop online is not being matched by competency from the brands. Over half of respondents (57 percent) felt that luxury brands should engage with social media, mainly because they feel that this is how brands in general are communicating nowadays,” underscored the research.
Millennials are more comfortable engaging with and buying luxury goods in the digital sphere.
Tammy Smulders, LuxHub global executive director, said that in light of the current economy and the number of luxury products available, many luxury brands have been introducing accessible diffusion lines and more accessible entry price points for the emerging luxury consumer. “The discounting culture came into common practice, and now the global trend for discounting is here to stay,” said Smulders.
Over half of those surveyed revealed that they purchase luxury goods at a discount rate. A discounting trend was seen as more relevant in the U.S. and Germany, while 55 percent of U.K. and Spain luxury shoppers purchased at full price. U.S. luxury shoppers purchased an average of 67 percent of their luxury goods at a discount.
“It is our view that this discounting culture, coupled with more sophisticated targeting, data management through CRM and storytelling is actually stimulating shopping and there are a wealth of opportunities out there for agile, smart luxury-brand marketers,” Smulders said.