A new study is out measuring the attitudes and behaviors of affluent consumers across the globe. The results are sobering.
Despite having more money to spend, luxury consumers have maxed out on their need for more luxury. They’ve been over marketed to and are saying “enough, already!”
The survey was conducted by YouGov’s Affluent Perspective among 8,200+ affluent consumers globally, with APAC, North America and European markets representing nearly 90% of the survey sample. The survey goes into great depth with 1,800 data points covering consumer purchase behavior, attitudes and brand preferences across 12 lifestyle categories.
Respondents were qualified by high-levels of income, for example Americans with incomes over $200,000. Given their high levels of income relative to their countrymen, these are consumers with great confidence in the strength of their personal economic status.
Luxury consumers are reaching the breaking point
The most important finding from this in-depth survey is that affluent consumers have reached the breaking point when it comes to more luxury purchases. They have maxed out.
“These consumers have been consuming luxury for a long time and are seriously questioning how much more luxury they need in their lives,” Cara David, managing partner at YouGov, told me. “They are suffering from burnout.”
While this burnout is particularly noticeable among the older generation, she says signs are that the younger generation is experiencing it, too.
“The Millennials are burning out earlier,” she says. “So while you have the older generation saying, ‘I just want to spend on experiences. I don’t need more things and I’m trying to simplify,’ many of the younger generation have grown up with access to these things throughout their lives. For them, luxury doesn’t hold the excitement it once had.”
Digging into the data further, David says the number of people with affluence who can afford luxury is growing steadily, but luxury sales are not keeping pace. “The luxury market is suffering from a malaise.”
Affluent consumers are shoring up their wealth and conserving their resources. What extra money they have, they are saving, rather than spending, with 83% of those surveyed saying at the end of the month what’s left over goes into their savings. This is buying them freedom and confidence to take on whatever life throws at them.
“There is a limit to how much luxury they need in their life,” David says. “And they’ve pretty well reached it.” To wit, nearly 80% of those surveyed said they are making fewer, but more meaningful purchases today.
Given the political and cultural turmoil in the world and the growing gap between the haves and the have-nots, affluent consumers are signaling that it just doesn’t feel right to indulge in luxury right now.
“The world is changing and people have a growing sense that it’s just not appropriate now,” she shares.
Luxury has lost its luxe
As luxury is losing its relevance within the culture at large, one of the challenges facing luxury brands is that consumers find it hard to justify the high prices they charge.
“Luxury was once about something that was rare, unique and luxurious to the human touch. Yes, it was expensive, but it was very personal. You were treated like a VIP,” she says. “But people are saying that luxury is not as distinct as it used to be.”
Consumers feel that luxury brands have not upheld their end of the bargain to justify their premium price with clearly superior quality goods. Over two-thirds of those surveyed (67%) say that many mass brands offer a level of quality comparable to luxury brands.
“There used to be a huge gap between mass brands and luxury brands, and even between premium brands and luxury. Now that gap has narrowed,” David believes. “There are more people who have money and can afford more expensive things. They are gravitating away from what we might call ‘mass luxury’ brands to more discreet luxury.”
In order to return “mass luxury” brands—and we all know which ones are the chief offenders—to discreet luxury status, they need to get back to what made them great in the first place.
“The difference is going to be brands that produce the highest quality goods, using the rarest materials, have the best craftsmanship and that are produced in limited quantities,” David believes.
It is ironic that France is moving to prohibit the destruction of unsold apparel and luxury goods merchandise. If luxury brands returned to producing only what, or better, slightly less than the market will bear, there would be little left over to throw on the garbage heap.
Luxury brand marketing’s lost its edge
Adding to the problem of too much luxury product competing with better quality goods from mass, premium and emerging brands, affluent consumers are turning off to the ubiquitous marketing messages that legacy luxury brands are throwing at them as well.
“Luxury consumers are absolutely telling us that luxury brands are not doing a good job marketing to them,” David shares. “These are the most valuable consumers in the world, but they are busy and want to remove stress from their lives.”
The heavy-handed marketing put out by many luxury brands to grab attention and more money from luxury consumers is resulting in more stress, not less.
“People are deliberately consuming media in a way that diminishes their exposure to advertising,” she says. She goes on to say a follow-up survey later this year will delve into how and why luxury consumers are disconnecting from luxury brand marketing.
Search for meaning, not more things
In closing, David shares that luxury brands need to get out in front of the changes that are taking place in the luxury consumers’ mindset and playing out in their behavior as consumers. For example, a majority of those surveyed (53%) say they only buy luxury when it is at a discount.
Further, for the 27% of consumers who purchased high-end jewelry or watches priced at $2,500 or more, a growing number reported purchasing it on consignment, i.e. second-hand.
“The RealReal is ‘real,’” she says. “Buying there is a vote for sustainability and another indicator that luxury isn’t necessarily worth the price.”
Freedom is what affluent consumers worldwide want most from their wealth and being tied down by more stuff isn’t necessarily part of the equation.
“People are looking for meaning in their lives, beyond accumulating and buying things,” she concludes. “We’ve been talking about this for a long time, but it is becoming much, much more of a factor. Substance is the new status.”