Gen Y-ers Showing an Increasing Appetite for Luxury
The latest research from American Express Business Insights in the US reveals an interesting phenomenon - the fastest growth in spending on full price luxury goods in 2011 came from the 18-34 age group, commonly know as Generation Y.Their spend on full priced luxury goods increased by 31% in 2011 over the previous year. Generation X's (c35-48) full price luxury good spend increased too, but less sharply (23%). The spend of Baby Boomers (c48-65) increased by 19% but that of Seniors (65+) by only 6%.So what was behind this marked increase in spend from the youngest of the 4 generations?Well, the first simple explanation is that they have a year's more seniority in their careers and a year's more buying power in their wallets - although this factor alone wouldn't explain such a marked rise.It's also true that luxury brands, and luxury fashion brands in particular, are increasingly getting their 'act together' online. Digital savvy Gen Y-ers are more likely to be checking out brand websites (rather than bricks and mortar stores), product reviews, social media and mobile sites - and luxury brands are clearly rising to the challenge.But the most interesting explanation is the rise of flash sales sites in the US. Gen Y-ers were early adopters of these high discount, time-limited offer sites and their spend in this channel continues to increase markedly - up by 19% in 2011 when compared to 2010.Now flash sales sites represent heavily discounted luxury goods sales but the belief of researchers at American Express Business Insights is that they're creating a taste for luxury goods amongst younger consumers - hence discounted sales via flash sales sites are leading to full price sales direct from brands.It's an interesting insight which has ramifications for luxury brands in the UK. If the trend were followed it would make sense for them to partner with sites such as Vente-Privee, ACHICA and Secret Sales because participation seems to act as a particularly effective form of sampling for younger consumers in particular.One note of caution, however. In the US in particular, flash sale sites are becoming increasingly popular with seniors - spend between 2010 and 2011 by this group grew by 28%. Considering full price luxury sales for this group in the same period grew by only 6%, the suggestion might be that private sale sites are cannibalising full price sales to a degree. Luxury brands with older followings might be well advised to steer clear.