Image courtesy of Rolls-Royce
More than a third of luxury buyers plan to spend a higher amount on holiday gifts this year than in 2014, but brands are already too late, according to a new report from Shullman Research Center. Over half of such consumers plan to start their shopping before Thanksgiving or have started already, and nearly a quarter hope to be done before the calendar changes to November. Early holiday shopping means brands need to reach out to lure consumers into their stores and onto their Web sites before the opportunity vanishes.
"In the luxury markets, luxury products are supposed to be in limited supply," said Bob Shullman, CEO/founder of Shullman Research Center. "So why not advertise something like the following during October: 'For those who want to have the largest/greatest selection to choose among for their upcoming holiday gifts, consider shopping now as our collections are limited in sizes and numbers."
“What Are Luxury Buyers Planning to Buy This Holiday Season?” compiles survey data from 1,690 U.S. consumers with household incomes of at least $75,000, of which nearly 500 are millionaires, to determine what consumers will buy, when they will buy it and through what outlets they will make purchases. Extrapolated to the population at large, 208 million individuals plan to partake in holiday shopping, with 52 million being “luxury buyers,” those with luxury items on their list. The early bird In addition to being especially early shoppers, luxury buyers separate themselves from other holiday shoppers by skewing disproportionately young, with 57 percent being millennials, and male, with only two-fifths being female. Age and gender data may help brands determine advertising campaigns and promotions, but reports on gendered response to holiday-themed marketing are hard to come by.
Saks 2013 holiday boxes
Regardless, only 12 percent of luxury buyers will begin holiday shopping in December, meaning that holiday windows and similar promotions are catering to a small group of consumers. Brands may consider selling holiday-themed or targeted merchandise in October and November to take advantage of early shoppers.
If such a mood in-store would detract from autumnal offerings, selling holiday products online-only may be a solution. Luxury buyers will spend an average of 41 percent of their holiday shopping budget online, although the data does not show which products are most likely to be bought online.
Either way, brands must take advantage of large percentage of consumers who have already begun holiday shopping and who look to do so at least partially online.
Gucci holiday email 2014
Among luxury buyers, personal electronics are the most popular item besides gift cards, appearing on 41 percent of shopping lists, but jewelry and designer clothing, accessories, fragrances and beauty products are also in the plans of one-third of such consumers. Such brands that reach out to the tens of millions of early shoppers could find themselves with a big boost in market share and revenue.
The morning worm
The report indicates that the most popular gift will again be a gift card. One potential way to cash-in on the item’s popularity is to give away gift cards for online purchases worth a certain amount of money.
Other reports have also shown the popularity of the gift card and revealed ways its popularity can be used to increase revenue.
The 27th Millionaire Monitor, conducted by the American Affluence Research Center, shows that on average the top 10 percent of households will spend $470 on gift cards, but one-third said they would buy more if they received a personal $10 gift card for every $50 spent on gift cards.
Similar offers are sometimes made by retailers, which offer consumers a form of store currency as a percentage of purchases made during a specified timeframe; extending such promotions to the holiday season may cause a similar bump to the bottom-line (see story).
Luxury consumers are also more likely to use smart phones and tablets to assist with holiday shopping, showing once again the importance of omnichannel marketing to reach consumers.
In today’s retail environment, digital touchpoints serve as the “connective tissue” between Web sites, bricks-and-mortar storefronts, inventory and the consumer, according to a September report by L2.
The “L2 Intelligence Report: Omnichannel Retail 2015,” developed in partnership with RichRelevance, provides insights into how digital alone does not offer marketers substantial ROI. But, an omnichannel approach, offering consumers a number of “fluid” touchpoints, leads to higher consumer spend (see story).
What it all comes down to this year, however, is that spending will likely be up, so brands must capitalize while they can.
"Thirty-four percent of luxury buyers are spending more while only 10 percent are spending less," Mr. Shullman said. "This positive ratio suggests to me that luxury buyers are feeling really good this year compared to last year."
Final Take Forrest Cardamenis, editorial assistant on Luxury Daily