Who Are Today's Luxury Consumers?

Surprise!  The majority of luxury product sales are made by those with household incomes less than $100,000, according to Shullman research.  Americans with higher incomes certainly spend larger amounts more frequently on luxury goods, but the average consumer of luxury products are mainstream Americans, claimed founder and CEO of The Shullman Research Center, Bob Shullman.  In 2016, more than 67 million consumers in the U.S. bought luxury items, however, 37 million of those buyers made less than $100,000.

Ken Nisch, chairman of the retail store design firm, JGA, claims there are major changes coming to luxury, and new markets and business models are likely to emerge that include clients following products through their life cycles instead of cutting ties after a sale.  Speaking at Luxury FirstLook 2017 in January, Nisch noted that Gen Z (those born after 1995) might have more equity than Millennials because Millennials started their jobs and wealth acquisition during the great recession. Plus, Nisch said, Genzers are much smarter consumers.

Nisch also believes that a paradigm shift has occurred in consumer thinking.  Today's luxury buyers are more interested in the "how" of the life of their product and where it comes from instead of what it is.  "They want experience over product and are willing to pay more for it."

Shullman Research Center also found that currently the biggest spenders in the luxury market comprise Gen-Xers and Baby Boomers with incomes of more than $250,000 per year.  Luxury consumers also continue to trade up and down, picking and choosing products and experiences that deliver the most value to their individual lifestyle.  Someone may spend $5 on a cup of coffee and then go to Chipotle for lunch and spend $6.75 on a burrito. 

Providing compelling customer experiences will continue to gain importance in decorative plumbing and hardware showrooms in order to attract the hearts and wallets of the next generations of luxury consumers.  Sales approaches need to focus on the "why" and "how" instead of the "what".