Luxury Retail in the Digital Age: The Generational Gap
In a recent post
, I examined luxury retail in the digital age. Specifically, I discussed strategies for luxury retailers to differentiate themselves as the segment moves from brick-and-mortar to e-commerce. What’s clear is that though luxury retail tends to be viewed as a more traditional segment of the industry, e-commerce is what’s keeping it alive. As the consumer trends digitally, so do retailers.
Where Do Baby Boomers Fit In?
Second to seniors, baby boomers have the highest median net-worth of $80,000. Unsurprisingly, boomers still hold a majority of purchasing power over millennials. By 2017, half of the U.S. adult population will fit into the 50-year and older category, controlling 70 percent of the country’s disposable income. In addition, while the parents of boomers were frugal, this generation likes to spend, demonstrated by the fact that over 40 percent
of Apple products are bought by boomers.
Making Room For Millennials
Though boomers may not be considered cheap, their share of the luxury market is declining—making room for millennials. Surveys
show that while millennials are more likely to save for a luxury purchase, they tend to make luxury purchases more frequently. In fact, 43 percent of millennials said they made a luxury purchase in the last 12 months compared to nine percent of seniors surveyed, demonstrating that the likelihood to buy luxury items decreases with age.
Not only do millennials tend to spend more on luxury goods than their older counterparts, but they prioritize it. According to Evidence Lab
, millennials prioritize discretionary spending for entertainment first, travel and holidays second and luxury purchasing and home ownership third. Generation X on the other hand prioritizes entertainment, foreign travel and financial investments above luxury spending.
The Digital Tie
While retail moves online, consumers and brands will have to adapt or be left behind. Because of this, retail purchasing power has a natural progression toward the younger demographic. It’s no secret that millennials are savvy on the internet and in many cases, value deals over brand loyalty. So what does this mean for luxury brands that tend not discount goods at all? The numbers don’t lie when they show millennials are moving up on luxury retail’s list of consumer priorities.
For insights into how you can consider setting your luxury brand apart in the e-commerce market, check out the first part of this blog series: Luxury Retail in the Digital Age
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