Extravagance and unabashed indulgence in luxury have long been regarded as the fruits of great wealth. For many of today’s rich, that no longer holds true.
Although spending on luxury products has rebounded, consumer behavior among the affluent is changing. They are less interested in flaunting their wealth and more concerned about enhancing quality of life for themselves and their loved ones.
How affluent consumers think about quality-of-life issues varies depending on their level of age, gender and life stage. Affluent baby boomers (ages 50 to 69), who include nearly half of all millionaires in the U.S. (around 10 million), value security. Boomers who responded to the most recent Shullman Luxury, Affluence and Wealth Pulse survey said one of their primary financial goals is ensuring they have enough money for retirement.
In contrast, millennials — the largest cohort (ages 19 to 34), which includes 5 million millionaires —expressed concern about remaining financially independent and saving for future expenses, such as starting a family and purchasing their first home.
Gen-Xers (ages 35 to 49), with 4 million millionaires, were heavily focused on three issues: providing for their children’s college expenses, having enough money for unexpected emergency expenses and having control over their assets.
Cohort differences emerge in consumer behavior as well. Studies conducted by the Luxury Institute found similar attitudes across all three cohorts regarding the characteristics of a luxury brand, such as impeccable quality, craftsmanship, customer service and design — again, speaking to quality rather than exclusivity or status.
Millennials, however, placed a higher value on one-of-a-kind items that reflected their individuality and on personalized communication and services. Millennials also were more likely to seek the opinions of others, such as social media contacts and online experts, than were boomers, who relied more on their previous experience with a product or brand.
Along with managing their finances to maintain their desired quality of life in the future, today’s affluent consumers show less interest in material consumption and more in subjective values, like enhanced well-being, spending more time with family and having new experiences.
Results of the American Affluence Research Center’s Spring 2014 Affluent Market Tracking reveals that affluent consumers have or are planning to reduce expenditures for luxury goods such as jewelry, watches, automobiles and high fashion. Instead, they prefer to invest in home remodeling, new furniture, new appliances and new home technology.
While they may carry some brand status, these are purchases that will contribute to consumers’ sense of well-being and quality of life. In the Shullman survey, the top planned expense across all cohorts was taking a luxury vacation.
Among the wealthy, women — who make up about half the nation’s millionaires — are more likely to be concerned about quality of life than are men. In the Shullman study, women were more likely to place taking a luxury vacation at the top of the list of personal plans and less likely than men to be planning to make one or more luxury item purchases. Women also were more likely than men to be saving for retirement, education or unexpected expenses as well as to be planning to donate to charity.
That affluent consumers currently are thinking about remodeling should be good news for designers. Even more so is the shift toward valuing quality of life, as enhancing quality of life is something at which designers excel.
Bear in mind, however, that priorities change depending on the client’s generational cohort and life stage (e.g., partnered or not, children or not.) You need to target your marketing to the different ways in which each group or subgroup defines well-being and quality of life.
Michael J. Berens is a freelance researcher and writer with more than 30 years of experience in association communication and management. He can be reached at email@example.com.