Wealthy Are Driving Force Behind Brick-and-Mortar Survival
Lines literally stretched blocks last week as millions of consumers around the world queued up outside Apple stores eagerly waiting to get their hands on the new iPhone 5S. Many people were willing to dish out up to $800 for the new device, making it safe to say that a large number of these Apple fanatics rolling out their sleeping bags were able to afford it quite comfortably. Yet, here is the question: what is the point of using valuable time to make a purchase at a store when a product, such as the iPhone 5S, can easily be ordered online? This is a particularly perplexing question when considering that the affluent consumer likely has a wide array of devices to access the Internet.
Purchasing decisions of the wealthy rarely have anything to do with cost. If someone has a substantially high income, then what is a couple dollar difference going to make? Probably not much of one at all. It is more about the experience, and the Apple store is a perfect example. As my colleague Bill McKeveny was quick to point out in his last Engage:Gen Y contribution, not only does the Apple store ambiance attract its clientele, but the customer service does as well. There are few efforts that resonate better with consumers than the power of human touch –something that is hard to come by when making a purchase online.
What this all amounts to is the fact that brick-and-mortar is far from dead, with affluent shoppers being one of the major reasons why. According to a recent Google Think Insights report, 74% of affluent consumers (with an annual income of over $100,000) still make their purchases in-store, while only 18% purchase items online. Why is this? For one thing, higher-end stores often offer the aforementioned “experience.” Just as walking into the Apple store offers entertainment, so does walking into high-end luxury retailers such as Tiffany & Co. or Lord & Taylor. Atmosphere is something that cannot be replicated online, and there is a certain panache that comes with actually shopping at a luxury retail location. Each store can go a step beyond online interface, giving customers a chance to try something firsthand (a diamond necklace or leather boots, perhaps?) and offering true human assistance.
This doesn’t mean that digital is absent in the affluent purchasing process. As a matter of fact, 78% of wealthy shoppers research a product online prior to purchasing it in the store. However, as purchases become more expensive, the desire to actually see and touch a product becomes more important.
While many have already started preparing a eulogy for brick-and-mortar retail, they shouldn’t be so fast to declare it obsolete. Brick-and-mortar still offers an experience that cannot be replicated online, and the affluent are one of the biggest factors in this phenomenon.