Affluency: New Definitions of Luxury
Luxury has been, and continues to be, an integral part of the lives of virtually everyone. According to a new presentation based on Ipsos Mendelsohn survey data from September and October 2011, 94% of affluents (defined as adults living in households with at least $100,000 in annual income) had purchased luxury in at least one of the 15 categories we measured, and 70% intend to buy luxury in at least one category in the coming year. Even among those making less than $100K in annual household income (whose points of view we also measured for this presentation), the pull of luxury is widespread: 92% had made a luxury purchase, and 59% plan to do so in the coming year. Only 15% of Affluents and 8% of non-Affluents tell us they simply aren't interested in luxury.
But there's no denying the changes wrought by the economic downturn: 65% of Affluents, for example, agree that "the definition of luxury today is not the same as it was five years ago." The desire for luxury experiences has not disappeared but has been redefined for a new era. The bar has been lowered in terms of what constitutes a luxury, and expressions of luxury have become smaller, more personal and intimate. Fully 92% of Affluents agree with the statement, "To me, small indulgences can be just as meaningful as purchasing a high-end luxury product." "Treats" are a growing subcategory -- more frequent, lower priced, less dramatic, but in many ways just as satisfying. Value continues to play a crucial role in today's conception of luxury, with 89% of Affluents saying that "when I decide to purchase a luxury item, I go out of my way to find the best price possible." In contrast, less than one in four say that "if a luxury product goes on sale, it lessens the perception of luxury."
The definition as luxury has always subjective -- 89% of Affluents agree that "luxury is in the eye of the beholder." When we asked respondents to describe their most recent luxury purchase, we were struck by the tremendous range and revealing nature of responses.
Looking ahead, luxury purveyors have reason to be optimistic. Across a variety of categories, we asked Affluents if their interest in luxury, high-end, premium brands would increase or decrease over the next six months. For every category we measured, "increasers" outnumbered "decreasers," by an average of nearly 6 percentage points, suggesting a net increase. Among those with $250,000 or more in annual household income -- that point on the household income curve where luxury interest and spending really begin to accelerate -- luxury spending "increasers" outnumber "decreasers" by an average of more than 17 percentage points. For example, 30% of those with annual household income of $250K+ will become more interested in luxury autos in the next six months, compared with 6% who will become less interested. Similar figures are found in categories as diverse as travel, dining and electronics.