What does the next wave of aspirational consumers want? How will they buy it? Where will their purveyors of luxury come from?
If the principal of retail design firm JGA is correct, a continental shift is ahead.
Ken Nisch is a retail design strategist whose client list includes Chrysler, Converse, Diesel, Disney, Foot Locker, GNC Live Well, H&M, Harris Bank, Hart Scaffner Marx, J. Jill, Macy’s, NBC, Princeton University, Tommy Hilfiger, Verizon and Whole Foods.
Speaking during a CEO luncheon hosted by the New York branch of the Luxury Marketing Council, Nisch claimed the 21-century will be the American Century when it comes to luxury brands. He also said renting will replace buying as the preferred consumption method of the ever financially challenged mass affluent consumer.
Nisch says the new gen mass affluent luxury consumer already believes “I have too much stuff.” One answer, he says, is renting pointing to the proliferation of the concept.
It’s not your mother’s tag sale. Pre-owned luxury, he adds, will become the other acceptable way that the ‘trading up’ consumer outfits themselves with the logos they desire “at 90 percent off.” This segment “wants craftsmanship but can’t afford it.”
Providing more competition for European brands, the U.S. is now an acceptable place to make luxury products for aspirational consumers, Nisch says. American consumers want to support luxury brands they can relate to. Watchmaker Shinola settled on Detroit because Americans identify the city with quality engineering. He noted that traditional European brands want to make sure they connect. Alex & Ani is another U.S. example.
When it comes to retail, Nisch says aspirational luxury consumers are looking for “a casualized experience. Look at how fine dining has changed.”
While Nisch’s viewpoint was greeted with a healthy dose of skepticism, a clear message I took away is that true luxury brands selling at higher price points are going to have to more than ever develop deep and focused marketing strategies to target the 1 percent, particularly the upper levels where there is huge untapped spending potential.
One attendee painted a scary picture for luxury brands that have so brilliantly tapped into the aspirational consumer market, getting target consumers to run up credit card bills for a new watch or pair of shoes.
He said, in the past, infrequently used designer handbags, shoes and dresses went into the closet or storage, or perhaps a garage sale. The Internet and EBay means “today every woman is their own Neiman Marcus Last Call or Sak’s Off Fifth.” This person noted, “Luxury has always been about exclusivity and limited supply, but for the price sensitive consumer there has never been as much discounted inventory available as today, and tomorrow this will increase exponentially.”