Wealthy Expect Luxe Treatment Online, Too
As I am constantly reminded through our work with J.P. Morgan and its luxury co-brand partners, the wealthy are a distinct segment that should be marketed to with special care and attention. We know that these affluent consumers seek value, convenience, exclusivity, and unique experiences and products. We know they are willing to pay a premium for lasting value and that they expect a high-involvement sale with an elevated level of personalized service. And while affluents account for only 20% of U.S. households, they spend more than 40% of the $4 trillion spent at retail establishments every year, making them an undeniably important segment for the retail industry.
While many high-end retailers have perfected the luxurious in-store shopping experience, a recent eMarketer report states that while wealthy consumers are of growing importance to online retail sales (accounting for more than two thirds of e-commerce growth in Q2 2010), the online offerings of luxury retailers are lagging behind, with some lacking fully transactional websites.
The time has come for those businesses that sell high-end goods to gain an understanding of the changing attitudes and shopping behaviors of the affluent.
According to the eMarketer report, “[wealthy consumers] feel empowered by the internet and diligently research online to find good deals and assess product quality. The recession has made this behavior even more necessary. Since luxury shoppers often pay premium prices, they feel entitled to a superior online shopping experience consisting of exciting product selection, rich visual content and white-glove treatment.” In short, and according to Jeffery Grau, a senior analyst at eMarketer, “affluent consumers expect luxury retailers’ websites to replicate the same shopping experience they offer in their stores.”
According to the report, these slow-to-adapt retailers should revise their strategy to incorporate a more serious e-commerce platform or risk alienating their customer base.
Adding to the evolution of this segment, the Luxury Institute reports that 7 of 10 wealthy consumers are now on social networks. Also, “ratings and reviews from a trusted source” recently surpassed “friends and family” as the most influential factor in purchasing luxury goods and services.
While these attitudinal and behavioral shifts will no doubt serve up a challenge for retailers who have stood on their established reputation for decades or even centuries, it’s become important and expected that luxury retailers engage their customers on a consistently high level at all times, no matter the setting – whether in-store, on the company’s website or on third-party social networking sites.
Given the facts, luxury retailers would benefit from engaging in the online conversation, especially if they are interested in the younger, well-heeled consumer who could define their brand in the future. Luxury is in the midst of a renaissance – adapt or risk losing market share to those who do.
