Here’s some bad news for fashion houses and luxury brands: Increasingly, even big-spending buyers are balking at paying full price.
That’s just one of the findings of two separate 2018 affluence surveys by online research giant YouGov that were released earlier this month. In a poll of nearly 6,000 “global affluent consumers who regularly purchase luxury products and services,” 50 percent say they would only purchase luxury when it is discounted. And fewer than one-third of consumers surveyed by YouGov say they plan to spend more on luxury this year than last.
The one bright spot for brands targeting the Chinese market is that YouGov research shows mainland China buyers are the exception and do plan to continue spending—at least on discounted splurges.
What’s the demographic difference between the global consumers who will pay full price and those who won’t, according to YouGov. Not much: the big spenders tend to be a little older, and only 28 percent of the discount-oriented group grew up in an affluent household. But both groups have basically the same definition of luxury: High standards of quality, exceptional design, precision in construction, a high level of service and retention of value were the top five differentiators of luxury.
But the discount-oriented group differentiates luxury goods by price and brand name, the non-discount-oriented group is more concerned with innovation and outstanding employees, which according to YouGov, is “a more evolved way to think about luxury.”
The overall mood of the global affluent is not looking great. The global economy, national economic development, and personal expenses including children’s education, healthcare, as well as security of retirement assets, together are driving some of the consumers to cut back their projected budget on conspicuous consumption, or at least to say they plan to.
In terms of luxury shopping, Chinese consumers routinely bring technology into the purchase experience. Among the Chinese consumers surveyed, 60 percent of luxury shopping has been completed online or by mobile devices. In the more interactive in-store experiences, Chinese luxury buyers also like to use technology to make the shopping experience easier. The top three activities where Chinese consumers are using technologies most frequently and considerably more frequently than buyers from the other markets surveyed are namely online payment, use of in-store technology for product experience and online product review search.
Luckily for the luxury business outlook, no matter for what reason people choose to buy luxury, 52 percent of the affluent surveyed agree that “once you experience luxury, it’s hard to scale back”.