Luxury is no longer exclusive to the super-rich, as the luxury retail market moves into the U.S. mainstream. And as this democratization happens, the underlying meaning of “luxury” is changing, for different consumer segments.
Luxury is often a way for consumers to signal that they’ve “made it,” and there’s a myriad of ways for different segments to express that. For example, some consumers express status subtly through the scarcity and heritage of the products they purchase. Others express it by purchasing eye-catching products that they want to showcase to friends, family and admiring audiences. Many upscale brands are no longer exclusive to the excessively wealthy, and management consulting firm Bain and Co. estimates that spending on personal luxury goods in the U.S. rose a steady 5% last year to about $73 billion. And when we look at global spending on luxury goods, the U.S. is at top the list. In fact, Americans spent more on luxury goods than consumers in Japan, Italy, France and China combined.
So who are today’s luxury retail shoppers and what are they looking for? Nielsen has identified five distinct segments of consumers who associate different meaning and value around the term “luxury,” and their purchasing behavior within the luxury market differs as well.
Across the U.S., 33% of households currently shop for luxury goods. While a little more than one-fourth of households are non-luxury buying consumers, a large portion aspire to be.