Time Is Money: Wealthy Drop Dollars Online

Google Study Finds Millionaires Prefer Efficiency of Web Shopping to Bricks-and-Mortar Stores for Luxury Purchases

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NEW YORK (AdAge.com) -- The internet is a shopping destination of choice for the rich -- and the one most preferred by the very rich, according to a study from Google.

The study, which looked at wealthy shoppers ages 25 to 64, bucks the conventional wisdom that luxury shoppers prefer the in-store experience. It finds that while both segments shop online, millionaires vastly prefer online shopping to in-store and are much more likely to use the internet than their not-quite-as-wealthy brethren.
Man with boxes
Photo: George Doyle
In all, 95% of the 263 millionaires surveyed made their last luxury purchase online.

Ultra-affluents, as defined by Google, have net worths of $1 million or more and household incomes of at least $250,000 a year for married couples and at least $175,000 for singles. Millionaires are defined as those with an income of more than $1 million. And while millionaires are a dwindling group after the recent financial turmoil, they spend a lot on luxury goods: $211,267 annually.

Google said it looked at the 25-to-64 age bracket because that is the group most luxury marketers are interested in reaching. However, Peter Francese, demographic-trends analyst for Ogilvy & Mather, said leaving out people older than 64 makes millionaires as a group appear younger than they really are. He cites Census Bureau data that show the most affluent 5% of U.S. households make $177,000 a year or more -- and their average age is 50. That's significantly older than 37, the age the Google study suggests for the average ultra-affluent American.

Even a few years ago, many luxury brands professed the online marketplace was not appropriate for them. "The world has changed," said Pam Danziger, president of Unity Marketing, and a researcher on the Google study. "Companies have got to step up to the plate and adapt."

John McAteer, industry director-retail at Google, added that many chief marketers have misconceptions of their customers as "ladies who lunch." In fact, he said, they are strapped for time and looking to the internet not only to shop but to find product reviews and information.

"All the people we're talking about have far more money than time. The internet provides that time efficiency," said Ms. Danziger. "Customer experience, by definition, doesn't mean in-store experience. It means how people want to be served. ... Sometimes it's so much more convenient to sit down at a computer and not have to set foot in the store."

Here's what Google's study, conducted among 993 people via a qualitative focus group and quantitative online survey, found.

Following the cash

Here's what Google's study, conducted among 993 people via a qualitative focus group and quantitative online survey, found:


Household size

Millionaire households are larger than their slightly less rich counterparts, the ultra-affluents, with an average of 4.1 members vs. an ultra-affluent household's average of 3.4 members. A big reason for this is their likelihood of having children: 81% of millionaires have kids, compared to 56% of ultra-affluent households.

Opinion seekers

Despite their wealth, millionaires are smart shoppers. They are more likely to seek advice before making purchases, with 91% saying they always or often look at reviews before buying luxury goods. Sixty-eight percent of ultra-affluent shoppers use consumer reviews.

Internet goes luxe

A full 94% of millionaires said making a high-end or luxury brand available online doesn't cheapen their opinion of the product or brand. And 91% said that they would like to see their preferred luxury brands online.

Shopping style

Did all these millionaires make their fortunes in tech? They do seem to be more comfortable with online shopping than the ultra-affluent pack. Of the respondents who last bought a luxury item online, millionaires were more likely to use the web than their lesser-earning counterparts. And generally, all the wealthy consumers in the survey who shop online spend more: $114,632 a year vs. $22,813 a year for those who shop in-store.

Working situation

Millionaires work for their money -- 89% of them report working full time, compared to 58% of ultra-affluents. Education also plays a role in their prosperity, with 78% claiming a post-graduate education vs. 58% of ultra-affluents.

Material millionaires

Ninety percent of the millionaires surveyed said that purchasing luxury or high-end products made them feel accomplished, and 92% equated luxury with high quality.

Diversity

More millionaires (32%) identify themselves as non-Caucasian, compared with 16% of ultra-affluents.
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