America’s most affluent — the 1% — are entering the holiday season feeling pretty good about themselves. According to the Time Inc./YouGov Survey of Affluence and Wealth, they are awash in cash and have little, if any, debt. Compared to the other 99% of American income earners, they are mostly immune to the effects of higher taxes and fees for services such as healthcare.
But this doesn’t mean their loved ones will find gifts boxes stacked up above the top of the tree. Their days of material excess have long been over. Rather, as noted in an article in Psychological Science, “Experiential purchases (money spent on doing) tend to provide more enduring happiness than material purchases (money spent on having),” and “consumers derive value from anticipation, and that value tends to be greater for experiential than for material purchases.” The 1% couldn’t agree more – 55% say they “prefer to give ‘experiences’ rather than physical items” as holiday gifts.
Fear not, marketers of consumer goods. While the 1% are showing their affection by bestowing gifts of spa weekends, live music and fly fishing lessons, they haven’t abandoned the exquisitely wrapped box beneath the tree. The Survey of Affluence and Wealth 2015 Holiday Forecast reveals that 95% of those one-percenters who will give experiences this holiday also plan on giving physical gifts. Even better, a majority of one-percenters will be putting a luxury gift under the tree — 72% of one-percenters buying watches or jewelry and 42% of those buying fashion will be selecting luxury brands.
Let’s not forget that these would-be luxury seekers have become very savvy consumers, and winning their hearts and wallets is anything but easy. Although emotional appeals are important through the path to purchase, today’s luxury consumer is more brand agnostic than they are brand loyal. Even then, brand loyalty only guarantees that a consumer will consider your brand, not that they’ll end up purchasing your brand. They’ll be consulting multiple sources for information — and giving fair consideration to the secondary market — before they narrow down their list of potential brands from which to purchase. This holiday season, the affluent consumer will be entering your store well-schooled about what your brand has to offer, determined to discover that deeply personal gift that reflects their love and affection.
That said, the key question brands and retailers must ask themselves is: will your staff be ready to exceed their expectations?
Luxury brands and retailers should take cues from the tangible benefits experiences offer the affluent consumer, as they may provide the formula for success this holiday season:
Needless to say, this holiday season marks a unique opportunity for luxury brands and retailers to forge a lifelong relationship with first-time customers. By focusing their energy on the exquisiteness of the experience, brands and retailers can go a long way toward turning that first-time customer into a life-long brand advocate.