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The Affluent and High Net Worth Premium Brand and Luxury Consumer - US - December 2016

Published By :

Mintel

Published Date : Dec 2016

Category :

Lifestyle

No. of Pages : N/A

Affluent and High Net Worth Individuals (HNWIs) are key consumers of luxury brands. However, these wealthy individuals are less likely to be swayed by luxury brands’ marketing strategies, as they skew older, male, and retired – demographics that tend to be less engaged with consumption and fashion trends. Younger Affluent and HNWIs – and younger consumers in general – are critical of growth, as they are in prime wealth-building years, are establishing brand loyalties, and are open to media influences of “what’s in” since they are concerned with their appearances and want to portray an image of status and success.

Table of Contents

OVERVIEW
What you need to know
Definitions
Affluent and High Net Worth Individuals
Premium brand and luxury

EXECUTIVE SUMMARY
Figure 1: US sales of luxury goods (% share, $bn), 2015/luxury purchases in the last 18 months, August 2016/June 2016
The issues
American HNWIs are relatively low spenders when compared to other regions
Figure 2: Affluent/HNWIs spending priorities, by age, August 2016
A strong US dollar may be prompting Affluent/HNWIs to purchase overseas
How to strike a balance between accessibility, affordability vs scarcity, exclusivity
Figure 3: Perceptions of luxury brands – Value, by all Affluent/HNWIs and luxury buyers, August 2016
Department stores are struggling to attract shoppers
Figure 4: Retail channels for luxury products, by Affluent/HNWIs vs all, August 2016/June 2016
Can buying online truly be equitable to the in-store luxury buying “experience”?
Figure 5: Perceptions of luxury brands – Buying online, by age, August 2016
The opportunities
Affluent/HNWIs have the means ... so do HENRYs, but they could use some motivation
Figure 6: Definition of “luxury” – Success and perceptions of luxury brands – Image, by age, August 2016
Use the digital channel to create and deepen the connection
Invite-only events can strengthen loyalty, bring new devotees into the fold
Figure 7: Attended theater, performing arts, cultural event, by all vs Affluent/HNWI, September 2014/August 2016
What it means

THE MARKET – WHAT YOU NEED TO KNOW
The US accounts for about one fifth of global luxury goods sales
Fashion/leather accounts for about half of global sales, small handful of key players
$500K+ income-producing asset households on the rise
Affluent and HNWI demographics differ from the national average

THE LUXURY GOODS RETAIL MARKET
Luxury sales in the US estimated to be worth $35.3 billion
Figure 8: US sales of luxury goods, $bn and €bn, 2011-15
Figure 9: US share of global sales of luxury goods, 2011-15

LUXURY GOODS RETAIL MARKET BREAKDOWN
Fashion/leather is the dominant segment
Figure 10: Global luxury goods market, by segment, 2015
Few luxury “giants” leads to fragmented market
Figure 11: Leading luxury companies: % share of all global luxury sales, 2015

THE AFFLUENT AND HNWI MARKET
Households with $500K+ in income-producing assets up 33% from 2011
Figure 12: Number of households with $500K+ in income-producing assets, 2011-16 (forecast)
Figure 13: Disposable personal income change from previous period, January 2010-August 2016

AFFLUENT AND HNWI DEMOGRAPHICS
Affluent and HNWIs – Not just like you and me
What defines them
Who they are
Figure 14: Affluent and HNWIs – Finances, demographics, employment/location, August 2016
Figure 15: Affluent and HNWIs – Key characteristics, index to all, August 2016

AFFLUENT AND HNWI MARKET FACTORS
$500K+ income-producing asset households increasing as share of total
Figure 16: Share of households with $500K+ in income-producing assets, 2011-15
Breaking pattern of stagnation, median household income is up in 2015
Figure 17: Median US household income, 2004-15

AFFLUENT AND HNWI MARKET PERSPECTIVE
Oh HENRYs!
Figure 18: Groupon | Haves vs. Have-dones TV ad, May 2016
Affluence and high net worth ain’t what it used to be

KEY PLAYERS – WHAT YOU NEED TO KNOW
Five companies account for four-in-10 global luxury dollars
Luxury brands harness the power of digital to reach new audiences
Consumers demand personalization, luxury brands answer the call
Affordable luxury brands and department stores struggle
Luxury brands exploring new routes to enhance image, let consumers get to know them

KEY PLAYERS OVERVIEW
Figure 19: Leading luxury companies, by net revenues (€bn and $bn*), 2013-15
European luxury houses content with strong US dollar
Figure 20: US dollar to euro exchange rate, January 2010-October 2016

WHAT’S WORKING?
Integrating digital marketing to increase brand relevancy
Figure 21: Burberry Acoustic presents Will Joseph Cook performing ‘Sweet Dreamer,’ October 2016
Figure 22: CHANEL No5: “The One That I Want – The Film,” October 2014
Personalizing the product – And the experience
Showing off what goes in – Offering a behind-the-scenes look

WHAT’S STRUGGLING?
Department stores in decline, “affordable luxury” to reduce presence
Affordable luxury struggles to boost brand image, sales
Quality perceptions and combating counterfeits

WHAT’S NEXT?
Expanding the brand
Making it an event
Merging online and offline
Providing a temporary fix
Showing who you are – And that you care

THE CONSUMER – WHAT YOU NEED TO KNOW
Quality defines “luxury” – But not all “luxury brands” meet expectations
Image is important, too
Affluent/HNWIs more likely to purchase luxury and like to get good deals
Jewelry, apparel, handbags, fragrances, watches are top purchases
Department stores dominant, online purchasing becoming more common
Rolex, Gucci, Chanel are most desired brands

HOW AFFLUENT AND HNWI DEFINE “LUXURY”
Quality is the hallmark of luxury; Affluents seem interested in image
Figure 23: Definitions of “luxury,” by Affluent and HNWIs, August 2016
Gender has little impact on perceptions of luxury
Frame of reference (age) impacts how “luxury” is defined
Figure 24: Correspondence map – Definitions of “luxury,” by age, August 2016
Correspondence analysis methodology
Figure 25: Frequency table for correspondence map – Definitions of “luxury,” by age, August 2016
Definitions of “luxury” can guide marketers’ messaging strategies
Figure 26: Definitions of “luxury” – Select items (younger higher than older), by age, August 2016
Figure 27: Definitions of “luxury” – Select items (older higher than younger), by age, August 2016

AFFLUENT AND HNWI LUXURY PURCHASES IN THE LAST 18 MONTHS
Nearly half of Affluents purchased luxury goods in the past 18 months
Figure 28: Luxury purchases in the last 18 months, by Affluent/HNWIs, household net worth vs all, August 2016/June 2016
Under-45s are top purchasers of premium, luxury brands
Figure 29: Luxury purchases in the last 18 months, by gender and age, August 2016

AFFLUENT AND HNWI LUXURY PURCHASING HABITS
Buying on sale or discount more common than paying full price
Figure 30: Luxury purchasing habits, August 2016
Figure 31: Century 21 online store – Email advertisement, October 2016
Luxury brands looking to increase sales need to focus on a select few
Figure 32: Luxury purchasing habits, by luxury purchasing habits, August 2016
Higher incomes allow greater ability to afford buying designer
Figure 33: Budget for designer clothes, by household income, April 2015-June 2016

TYPES OF LUXURY PRODUCTS AFFLUENT AND HNWI PURCHASED
Affluent and HNWIs luxury purchases trend similarly to all consumers
Watches and jewelry
Clothing and footwear
Handbags and accessories
Figure 34: Types of luxury products purchased, by Affluent/HNWIs vs all, August 2016/May 2014
Discounting leads to more purchases ... but is it worth the cost?
Figure 35: Types of luxury products purchased, by luxury purchasing habits, August 2016
Men buying gifts for others – And for themselves
Figure 36: Types of luxury products purchased – Males more likely, by gender, August 2016
Women are pampering themselves – Handbags are the top purchase
Figure 37: Types of luxury products purchased – Females more likely, by gender, August 2016
Younger Affluent/HNWI luxury buyers purchase more product types
Figure 38: Number of types of luxury products purchased, by age, August 2016

WHERE AFFLUENT AND HNWI PURCHASE LUXURY GOODS
Department stores are top retailers, but half of Affluent/HNWIs buy online
Figure 39: Retail channels for luxury products, by Affluent/HNWIs vs all August 2016/June 2016
Figure 40: Retail channels for luxury products, crossed by types of luxury products purchased, August 2016
Luxury buyers who pay full price spread the wealth
Figure 41: Retail channels for luxury products, by luxury purchasing habits, August 2016
Younger Affluent/HNWIs moving toward buying luxury online
Figure 42: Retail channels for luxury products, by age, August 2016

LUXURY BRANDS AFFLUENT AND HNWI DESIRE MOST
The most valuable luxury brands are not necessarily the most desired
Figure 43: Luxury brands most desired, August 2016
Men drive desire for Rolex, Gucci; women for Chanel, Tiffany, Louis Vuitton
Figure 44: Luxury brands most desired, by gender, August 2016
Brands that appeal to older crowd may need to reconsider strategy
Figure 45: Luxury brands most desired, by age, August 2016

AFFLUENT AND HNWI PERCEPTIONS OF LUXURY BRANDS
Not all luxury brands are considered higher quality
Figure 46: Perceptions of luxury brands – Value, by affluent and HNWIs, August 2016
Figure 47: Perceptions of luxury brands – Image, by affluent and HNWIs, August 2016
And while higher-income individuals have more positive views, many are unconvinced
Figure 48: Attitudes toward top designers and quality, by household income, April 2015 - June 2016
Buying online is growing – But HNWIs are more concerned with the risk
Figure 49: Perceptions of luxury brands – Buying online, by Affluent and HNWIs, August 2016
Age drives perceptions of luxury brands – And the overall experience
Figure 50: Perceptions of luxury brands – Value, image, online, by age, August 2016
Affluent/HNWIs not sacrificing in order to buy luxury goods
Figure 51: Perceptions of luxury brands – Priorities, by Affluent/HNWIs vs all, August 2016/September 2014

APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Sales data
Consumer survey data
Direct marketing creative
Abbreviations and terms
Abbreviations
Terms

APPENDIX – MARKET
Methodology
Figure 52: Top 10 countries in the luxury market, by sales (€bn), 2011-15
Figure 53: Top 10 countries in the luxury market, by sales ($bn), 2011-15
Figure 54: US dollar to euro annual average exchange rates, 2010-15
Figure 55: Country shares of the global luxury market, 2011-15

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