Our June and July columns, "Luxury Purchasers: Who Are They and What Are Their Interests?" parts 1 and 2, focused on our finding that luxury purchasing goes much deeper than the affluent market segments with household incomes of $75,000 or more (the top 41% of adults) and the very affluent with household incomes of $250,000 or more (the top 3% of adults).
Luxury purchasers also include many mass-market adults — those with household incomes of less than $75,000 (the remaining 59% of adults, numbering 140 million in total). As has been the case before, some readers came back and wanted to know more about luxury purchasers and have asked about the purchasing metrics of the top 1% of adults (about 1 million in number) by household income ($500,000 or more) as well as the wealthy, using two different wealth measures — personal net worth of $1 million or more (11% of adults or 25 million) and liquid assets of $1 million or more (6% of adults or 15 million). These three target segments are not mutually exclusive, as income and wealth overlap. In this column, however, we are reporting them as separate target markets, which is how many luxury marketers view them.
As might be expected, a large proportion — four in ten (40% to 44% of these extremely upscale adults) — bought luxuries six or more times in the past 12 months, with the $500, 000+ household-income target’s spending level qualifying them as the most frequent luxury purchaser. In contrast, only about one quarter (24%) of "average" luxury purchasers bought luxuries six or more times.
Concerning what consumers spent on their most recent luxury purchase, the median dollar amount reported ranges from $620 for "average" luxury purchasers to $2,900 among those in the $1 million or more liquid asset target segment. Notably, more than a third of each of these three extremely upscale target segments spent $10,000 or more on their most recent luxury purchase. Looking at luxury purchasing by the median amount spent, the liquid assets target segment is the top spender.
While a slight majority (51%) of "average" purchasers paid for their most recent luxury with available cash, the three extremely upscale target segments reviewed in this column bought their most recent luxury purchases in materially different ways, as indicated in the following exhibit.
While it is likely that many luxury marketers wish that all luxury purchasers would behave in the same way as the three extremely upscale target groups addressed in this column, we all know that’s not going to happen, as these three target segments have a greater ability to spend — and to spend more frequently. To the extent that you are a luxury marketer targeting the top of the household income and wealth pyramids, you will appreciate that these three segments are very valuable but do not purchase their luxuries in exactly the same ways.