As we pass the mid-year point, there’s ample evidence that the recession is coming to an end. In fact, the whole “Recessionista” trend seems as passé as white shoes after Labor Day. The reality is, it’s okay to be wealthy again – and it’s okay to flaunt it, too.
If the popularity of Gwyneth Paltrow’s GOOP is any indication, it’s perfectly acceptable to spend $750 on a pair of metallic brogues, take a private yacht around Indonesia with your kids and hire a French nanny. Given her million+ subscribers – and the fact that a limited edition gold wetsuit designed by Cynthia Rowley sold out on her site in a single day - it’s more than okay. It’s actually relatable, and more than just aspirational.
Outside of Paltrow’s world, this trend of ostentatious behavior is evidenced very clearly in the automotive space. While Detroit is definitely seeing improvements, sales of luxury foreign cars, specifically Maseratis and Porsches, are at all-time highs. As in, higher than pre-2008 levels.
Other verticals are also thriving, thanks to the uninhibited wealthy: Forbes reports that sales of watches with prices in the six- and seven-figure-range are on the rise, as is the demand for the highest-priced hotel suites in Paris. But even “regular” affluent Americans are feeling the ease of the economy, with 88% planning vacations this year.
All of this is obviously good news for luxury retailers. Wealthy consumers are shopping, proudly and with gusto. We’re seeing it in the offline world, but we’re also seeing this reflected in online shopping behaviors. We recently partnered with Moat to observe how our wealthier audiences engaged with online display advertising, and the results were quite telling. Together, we measured Universal Interaction Time, which is the amount of time an audience spends voluntarily engaging with an ad. According to MOAT, the average interaction time is 4.1%, but the affluent audiences we measured engaged at a rate of:
None of this is terribly surprising, given affluent audiences’ well-known propensity to carefully research items prior to purchase. While many high-earners may research products online, they may not always make their purchases online. As researcher Michele Madansky noted in February of this year, “Search and site visitation for luxury goods is much higher than online purchases, indicating they are also purchasing offline after discovering products online and researching them on retailers’ and manufacturers’ sites.”
But while many wealthier consumers may prefer the experience of a luxury retailer (sales staff who know their names and tastes, for example), online purchases actually have gone up over the last quarter. Our Affluent Shopper Index, powered by ComScore, revealed that affluent consumers were 47% more likely than those earning under $100k to make an online purchase in the first quarter of the year, spending 41% more on those purchases. These consumers were also 74% more likely to purchase on luxury retail sites and spent an average of $184 per purchase – 51% more than those earning under $100k.
It may not seem like an earth-shattering revelation – we expect consumers who have more money to spend more money. But what is telling (and to the point of this column) is that affluent shoppers are increasing their shopping. In fact, the gap between affluent and non-affluent spending grew in Q1 compared to the December holiday period, when affluent consumers were 31% more likely to buy and spent 15% more. (These gaps were smaller during the holidays, when affluent users were 47% more likely to buy and spent 25% more).
So, see you in the Hamptons and be sure to wear your best pair of Tod’s loafers: Luxury is back in style, and it’s time to hit the mall.