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The Premium Brand and Luxury Consumer - US - December 2014

SCOPE AND THEMES
What you need to know
Definition
Data sources
Sales data
Consumer survey data
Consumer qualitative research
Direct marketing creative
Abbreviations and terms
Abbreviations
Terms
EXECUTIVE SUMMARY
The market
Figure 1: Luxury goods revenue, global and US, 2009-13
Figure 2: US luxury revenue, by category, 2013
Market drivers
Leading companies
Figure 3: Luxury sales by top luxury houses (in USD billions), FY2013
Figure 4: Luxury sales by top luxury houses (in USD billions), FY2013
The consumer
Craftsmanship is the number one defining characteristic of luxury
Figure 5: Top five defining attributes of luxury, by all and luxury goods buyers, September 2014
Majority of luxury buyers only purchase discounted luxury
Figure 6: Luxury purchasing habits, September 2014
Accessible American brands popular among luxury consumers
Figure 7: Premium brands owned and purchased in the last three years, September 2014
Luxury consumers purchase across channels and across countries
Figure 8: Where respondents bought luxury goods in the last 18 months, May 2014
Luxury buyers over index in upscale activities
Figure 9: Premium services/activities of the last 12 months, luxury goods buyers index to total, September 2014
Consumers more likely to avoid visible trademarks than to enjoy owning them
Figure 10: Attitudes toward logo visibility, by all and by luxury goods buyers, September 2014
One third of luxury goods buyers say luxury makes them feel good, very few interested in knockoffs
Figure 11: Attitudes toward quality, authenticity, and hedonistic thrill of buying luxury, September 2014
What we think
ISSUES AND INSIGHTS
How can luxury companies leverage social media without losing the appearance of exclusivity?
The issues
The implications
Should luxury brands operate e-commerce sites?
The issues
The implications
Do luxury rental sites pose a threat to luxury companies?
The issues
The implications
TREND APPLICATION
Trend: Fauxthenticity
Trend: Make it Mine
Trend: Let’s Make a Deal
MARKET SIZE
Key points
The market size
US luxury revenue reaches nearly $36 billion, a 60% increase over 2009
Figure 12: Luxury goods revenue, global and US, 2009-13
US growth in luxury revenue outpaces all but Japan, China, Australia
Figure 13: Top 10 countries in the luxury market, by revenue, 2009-13 
Figure 14: Top 10 countries in the luxury market, by revenue, 2013 
Fashion/leather is top category, perfume/cosmetics follows
Figure 15: Luxury goods revenue, by category in selected luxury markets, 2013
Figure 16: Luxury goods revenue share, by category in selected luxury markets, 2013
MARKET DRIVERS
Key points
International tourism
Figure 17: International inbound tourism, 2000-13
Figure 18: Overseas leisure visitors to the US, 2006-13
US economic growth
Figure 19: GDP change from previous period, Q1 2007-Q3 2014
Figure 20: Consumer confidence and unemployment, by month*, January 2007-October 2014
E-commerce
Growing Asian and Hispanic populations
Figure 21: Population, by race and Hispanic origin, 1970-2020
LEADING COMPANIES
Key points
Financial performance of leading companies
Figure 22: Luxury sales by select companies, FY2012-FY2014*
Company profiles
Christian Dior
LVMH Moët Hennessy – Louis Vuitton
Richemont
Kering
PVH (Phillips-Van Heusen)
Ralph Lauren
Coach
Other leading companies
INNOVATIONS AND INNOVATORS
Overview
Theme: Appeal to multicultural audiences
Armani launches luxury chocolates for Ramadan
Bloomingdale’s celebrates the Year of the Horse
Theme: Launch relevant, but unexpected products
Christian Louboutin launches nail polish that is applied to the underside of nails
Louis Vuitton’s ‘Iconoclast’ partnership with Karl Lagerfeld offers monogrammed punching bag
Theme: Let consumers customize their products
Stuart Weitzman, Prada launch customizable shoe collections
Burberry launches monogrammed blankets
Theme: Can’t beat technology companies? Then join them.
Ralph Lauren moves wearable technology from hardlines to softlines
Diane Von Furstenberg launches line of eyewear for Google Glass
TAG Heuer announces plans to launch smartwatch
Theme: Create elite spaces for luxury consumers online
Auctionata brings verified luxury goods to auction online
Composer launches social networking site for affluent consumers
James Edition serves as Craigslist for the wealthy
MARKETING STRATEGIES
Overview
Strategy: Highlighting history
Case study: The late Coco Chanel stars in “Inside CHANEL” campaign
Figure 23: Chanel, “Paris by Chanel – Inside CHANEL,” chapter 12, Sept. 17, 2014
Figure 24: Chanel, “The Colors – Inside CHANEL,” chapter 11, May 23, 2014
Case study: DKNY’s Donna Karan iconizes her Cashmere Mist fragrance
Figure 25: Donna Karan, “Cashmere Mist: THE MAKING OF AN ICON Chapter 2 –The Scent,” July 15, 2014
Strategy: Celebrity endorsement
Case study: Dior brings back Charlize Theron for new J’adore campaign
Figure 26: Christian Dior, J’adore, “The Future is Gold,” Sept. 2, 2014
Case study: Nicholas Hoult stars in “British Intelligence” campaign for Jaguar
Figure 27: Jaguar USA, “British Intel,” Oct. 6, 2014
Strategy: Involve consumers
Case study: Burberry uses customizable ad campaign to support launch of fragrance
Figure 28: Burberry, “Introducing My Burberry – The New Fragrance for Women,” Sept. 1, 2014
Case study: Saks Fifth Avenue launches #SaksStyle content hub
Strategy: Create art instead of ads
Case study: Giorgio Armani collaborates with world-class film schools
Figure 29: Giorgio Armani, “Ella,” Sept. 9, 2014
Strategy: Mobilizing marketing
Case study: Hermès breaks the mold with Tie Break app
Figure 30: Hermès, “Tie Break App – A random dose of Hermès,” Aug. 7, 2014
WHAT DEFINES LUXURY
Key points
Quality, legacy, labels, high prices are hallmarks of luxury
Figure 31: How luxury purchases are defined, by all and by luxury goods buyers, September 2014
Women care more about quality, visibility, and uniqueness
Figure 32: How luxury purchases are defined, by gender, September 2014
Regardless of income, luxury should be visible
Figure 33: How luxury purchases are defined, by household income, September 2014
Key luxury qualities consistent across age groups
Figure 34: How luxury purchases are defined, by age, September 2014
LUXURY PURCHASING HABITS AND SHOPPING BEHAVIORS
Key points
Majority of luxury buyers purchase luxury items at a discount
Figure 35: Neiman Marcus, email advertisement, October 2014
Figure 36: Luxury purchasing habits, September 2014
Figure 37: Luxury purchasing habits of luxury goods buyers, September 2014
Women more likely to be deal seekers
Figure 38: Luxury purchasing habits, by gender, September 2014
Luxury buyers are savvy shoppers regardless of income
Figure 39: Luxury purchasing habits, by household income, September 2014
Young affluents more willing to splurge
Figure 40: Luxury purchasing habits, by age and household income, September 2014
PREMIUM BRANDS – OWNERSHIP AND ACQUISITION
Key points
Popular premium brands are accessible, established
Consumers drawn to accessible luxury
Consumers purchase established premium brands
Figure 41: Premium brands owned and purchased in the last three years, September 2014
More men than women have purchased premium brands in recent years
Figure 42: Premium brands owned and purchased in the last three years, by gender, September 2014
Consumers from $150K+ households more likely to own premium brands
Figure 43: Premium brands ownership, by household income, August 2014
High net worth women report greater incidences of premium brand ownership
Figure 44: Premium brands purchased in the last three years, by all and high net worth women, September 2014
Qualitative brand personification
Introduction
Figure 45: Commonly owned premium brands
Brand personification
LUXURY GOODS RETAILING
Key points
Plurality of luxury purchases made in department stores and online
Figure 46: Where respondents bought luxury goods in the last 18 months, May 2014
Figure 47: Retailers shopped at in the last three months, April 2013-June 2014
Online shoppers tend to be younger, slightly less affluent
Figure 48: Where they shop for luxury, by age and household income, May 2014
Figure 49: Most popular locations where luxury branded items were bought, by age and household income, May 2014
Male luxury buyers significantly more likely than women to buy premium brands online
Figure 50: Most popular locations where luxury branded items were bought, by gender, May 2014
Majority of recent luxury buyers purchased apparel, fashion accessories
Figure 51: Luxury branded items bought in the past 18 months, by category, May 2014
Figure 52: Luxury branded items bought in the past 18 months, May 2014
PARTICIPATION IN UPSCALE ACTIVITIES
Key points
More than three quarters of luxury buyers participate in “upscale” activities
Figure 53: Premium services/activities of the last 12 months, by all and luxury goods buyers, September 2014
Luxury brand ownership goes hand in hand with upscale services
Figure 54: Premium services/activities of the last 12 months, by count of luxury brands owned, September 2014
Male and female luxury buyers both participate in upscale activities, but specific activities vary by gender
Figure 55: Premium services/activities of the last 12 months, by gender, September 2014
Involvement in luxury activities increases with income
Figure 56: Premium services/activities of the last 12 months, by household income, September 2014
Figure 57: Premium services/activities of the last 12 months, by age and household income, September 2014
CONSUMER ATTITUDES ABOUT LUXURY
Key points
Attitudes toward luxury goods and spending
For most consumers, participation in activities does not occur at the expense of luxury purchases
Figure 58: Attitudes toward spending, by all and luxury goods buyers, September 2014
Attitudes toward luxury goods and spending by gender, age, and household income
Figure 59: Attitudes toward luxury purchases – Spending, by gender, age, and household income, September 2014
Attitudes toward logo visibility
About one in four avoid obvious designer logos
Figure 60: Attitudes toward logo visibility, September 2014
Attitudes toward logo visibility by gender, age, and household income
Figure 61: Attitudes toward luxury purchases – Logo visibility, by gender, age, and household income, September 2014
Attitudes toward exclusivity
More than one in 10 do not think luxury and attainability can coincide
Figure 62: Attitudes toward exclusivity, September 2014
Attitudes toward exclusivity by gender, age, and household income
Figure 63: Attitudes toward luxury purchases – Exclusivity, by gender, age, and household income, September 2014
Attitudes toward quality, authenticity, and the hedonistic thrill of buying luxury
Roughly one quarter of luxury buyers say luxury is better quality and makes them feel good; most are not interested in knockoffs
Figure 64: Attitudes toward quality, authenticity, and hedonistic thrill of buying luxury, September 2014
Qualitative findings: Knockoffs viewed as both fun and guilt inducing
Attitudes about quality, authenticity, and the hedonistic thrill of buying luxury by gender, age, and household income
Figure 65: Attitudes toward luxury purchases – Quality, authenticity, and hedonistic thrill of buying luxury, by gender, age, and household income, September 2014
IMPACT OF RACE AND HISPANIC ORIGIN
Key points
The core defining traits of luxury are the same regardless of race, Hispanic origin
Figure 66: How luxury purchases are defined, by race/Hispanic origin, September 2014
“Other races,” including Asians, more likely than average to pay full price for luxury
Figure 67: Luxury purchasing habits, by race/Hispanic origin, September 2014
Asians, Hispanics most likely to own a premium brand
Figure 68: Premium brands owned, by race/Hispanic origin, September 2014
Nearly half of Blacks have not participated in an upscale activity
Figure 69: Premium services/activities of the last 12 months, by race/Hispanic origin, September 2014
Hispanics, Asians most likely to say that purchasing luxury makes them feel good
Figure 70: Attitudes toward luxury purchases, by race/Hispanic origin, September 2014
APPENDIX – OTHER USEFUL MARKET TABLES
Market drivers
Figure 71: International inbound tourism, 2000-13
Figure 72: Overseas leisure visitors to the US, 2006-13
APPENDIX – OTHER USEFUL CONSUMER TABLES
What defines luxury
Figure 73: How luxury purchases are defined, by attitudes toward luxury purchase – Spending, September 2014
Figure 74: How luxury purchases are defined, by attitudes toward luxury purchase – Logo visibility, September 2014
Figure 75: How luxury purchases are defined, by attitudes toward luxury purchase – Quality and authenticity, September 2014
Figure 76: How luxury purchases are defined, by attitudes toward luxury purchase – Exclusivity, September 2014
Luxury purchasing habits and shopping behaviors
Figure 77: Luxury purchasing habits, September 2014
Figure 78: Luxury purchasing habits, by age, September 2014
Figure 79: Luxury purchasing habits, by race/Hispanic origin, September 2014
Figure 80: Luxury purchasing habits, by attitudes toward luxury purchase, September 2014
Premium brands: Ownership and acquisition – brands owned
Figure 81: Luxury brands owned, September 2014
Figure 82: Luxury brands owned by luxury goods buyers, by gender, September 2014
Figure 83: Luxury brands ownership, by age, August 2014
Figure 84: Luxury brands owned, by household income, September 2014
Figure 85: Luxury brands owned, by race/Hispanic origin, September 2014
Figure 86: Luxury brands owned, by age and household income, September 2014
Figure 87: Luxury brands owned, by luxury purchasing habits, September 2014
Figure 88: Luxury brands owned, by repertoire of luxury brands owned, September 2014
Figure 89: Luxury brands owned, by luxury brands owned, part I, September 2014
Figure 90: Luxury brands owned, by luxury brands owned, part II, September 2014
Figure 91: Luxury brands owned, by luxury brands owned, part III, September 2014
Figure 92: Luxury brands owned, by luxury brands owned, part IV, September 2014
Figure 93: Luxury brands owned, by luxury brands owned, Part V, September 2014
Figure 94: Last watch brand purchased, by race/Hispanic origin, April 2013-June 2014
Figure 95: Last watch brand purchased, by household income, April 2013-June 2014
Figure 96: Brand of nail polish/nail care products used by women, by age, April 2013-June 2014
Figure 97: Brand of perfume, toilet water, or cologne used most often, by gender, April 2013-June 2014
Figure 98: Brand of perfume, toilet water, or cologne used most often, by age, April 2013-June 2014
Figure 99: Brand of perfume, toilet water, or cologne used most often, by household income, April 2013-June 2014
Premium brands: Ownership and acquisition – brands purchased in last three years
Figure 100: Luxury brands purchased in the last three years, September 2014
Figure 101: Luxury brands purchased in the last three years, by age, September 2014
Figure 102: Luxury brands purchased in the last three years, by household income, September 2014
Figure 103: Luxury brands purchased in the last three years, by age and household income, September 2014
Figure 104: Luxury brands purchased in the last three years, by spending, September 2014
Figure 105: Luxury brands purchased in the last three years, by logo visibility, September 2014
Figure 106: Luxury brands purchased in the last three years, by quality and authenticity, September 2014
Figure 107: Luxury brands purchased in the last three years, by exclusivity, September 2014
Luxury goods retailing
Figure 108: Most popular locations where luxury branded items were bought in the last 18 months, by gender, May 2014
Figure 109: Retailers purchased from online in past three months, by gender, April 2013-June 2014
Participation in upscale activities
Figure 110: Premium services/activities of the last 12 months, by gender, September 2014
Figure 111: Premium services/activities of the last 12 months, by age, September 2014
Figure 112: Premium services/activities of the last 12 months, by race/Hispanic origin, September 2014
Figure 113: Premium services/activities of the last 12 months, by age and household income, September 2014
Figure 114: Premium services/activities of the last 12 months, by spending, September 2014
Figure 115: Premium services/activities of the last 12 months, by logo visibility, September 2014
Figure 116: Premium services/activities of the last 12 months, by quality and authenticity, September 2014
Figure 117: Premium services/activities of the last 12 months, by exclusivity, September 2014
Attitudes toward luxury goods and spending
Figure 118: Attitudes toward luxury purchases, September 2014
Figure 119: Attitudes toward luxury purchase – Spending, by race/Hispanic origin, September 2014
Figure 120: Attitudes toward luxury purchase – Spending, by demographics, September 2014
Figure 121: Attitudes toward luxury purchase – Logo visibility, by race/Hispanic origin, September 2014
Figure 122: Attitudes toward luxury purchase – Logo visibility, by demographics, September 2014
Figure 123: Attitudes toward luxury purchase – Quality and authenticity, by race/Hispanic origin, September 2014
Figure 124: Attitudes toward luxury purchase – Quality and authenticity, by demographics, September 2014
Figure 125: Attitudes toward luxury purchase – Exclusivity, by race/Hispanic origin, September 2014
Figure 126: Attitudes toward luxury purchase – Exclusivity, by demographics, September 2014
Figure 127: Attitudes toward luxury purchase, by spending, September 2014
Figure 128: Attitudes toward luxury purchase, by logo visibility, September 2014
Figure 129: Attitudes toward luxury purchase, by quality and authenticity, September 2014
Figure 130: Attitudes toward luxury purchase, by exclusivity, September 2014
Figure 131: Attitudes about apparel (any agree), by gender, April 2013-June 2014
Figure 132: Attitudes about apparel (any agree), by age, April 2013-June 2014
Figure 133: Attitudes about apparel (any agree), by race and Hispanic origin, April 2013-June 2014
Figure 134: Attitudes about apparel (any agree), by household income, April 2013-June 2014
Figure 135: Attitudes about apparel (any agree), by race and age groups, April 2013-June 2014
Figure 136: Attitudes about apparel (any agree), by Hispanic origin and age groups, April 2013-June 2014
Figure 137: Attitudes about apparel (any agree), by region, April 2013-June 2014
Figure 138: Agreement that “A designer label improves a person’s image,” by gender, age, and household income, April 2013-June 2014
Figure 139: Attitudes toward designer quality, by gender, age, and household income, April 2013-June 2014
Figure 140: Attitudes/opinions about money, quality, and status (any agree), by gender, April 2013-June 2014
Figure 141: Attitudes/opinions about money, quality, and status (any agree), by age, April 2013-June 2014
Figure 142: Attitudes/opinions about money, quality, and status (any agree), by race/Hispanic origin, April 2013-June 2014
Figure 143: Attitudes/opinions about money, quality, and status (any agree), by household income, April 2013-June 2014
Teens and luxury
Figure 144: Retailers shopped at in past three months, by gender and by age, April 2013-June 2014
Figure 145: Retailers shopped at in past three months, by gender by age, April 2013-June 2014
Figure 146: Brand of nail polish/nail care products used by teen girls, by age, April 2013-June 2014
Figure 147: Brand of perfume, toilet water, or cologne used most often, by gender and by age, April 2013-June 2014
Figure 148: Brand of perfume, toilet water, or cologne used most often, by gender and age, April 2013-June 2014
APPENDIX – TRADE ASSOCIATIONS

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