Wednesday, March 9, 2011

Feature Economical Justified Luxuries

Late last year, Estee Lauder reported a 14% jump in sales of organic beauty products quarter-to-quarter. By comparison, mass market beauty products from Procter & Gamble Co. and Unilever came in with a 6% climb. A 6% climb in sales was fine news—indicating consumers were feeling more optimistic and spending beyond bare necessities. Still 14% is substantially higher than 6%—indicating luxury had a special appeal.
     Now, survey research reported by the National Retail Federation documents that this same trend toward luxury continues. The research indicates it comes with a twist, though: In my opinion, your shoppers are likely to be looking to purchase luxuries they feel they’ve earned.
     The NRF-sponsored survey of more than 5,000 consumers was conducted last December by BIGresearch, so in the fast-changing world of retailing, the findings might be considered a bit old. Still, the implications are consistent with other data, so are worth your attention.
  • Product and service categories such as hair coloring and a daily dose of gourmet coffee are considered justified luxuries more often than was the case a year ago.
  • People want to eat out, but find it easier to justify going to casual sit-down restaurants than to white-tablecloth fine-dining locations.
  • Categories such as magazine subscriptions, satellite radio, and maid service are considered unjustified luxuries.
  • There are gender differences. Men are more likely than women to consider cable/satellite TV subscriptions and social memberships justified.
     Throughout this deep recession, the successful retailers have empowered shoppers to enjoy relatively inexpensive indulgences. Panera Bread offered specialty sandwiches and salads at a manageable price. Early on, Tiffany developed lower priced items to carry the luxury name, but for sale in mall stores that aren’t Tiffany’s.
     Some years ago, SRI Consulting Business Intelligence identified three major motivations for luxury quests:
  • Luxury as functional. Pay more for products which are well-made, designed by craftsmen, or with features customized to the customer.
  • Luxury as reward and show. Let others know that you are special.
  • Luxury as indulgence. Pamper yourself with the best available comfort, even if the item isn’t built to last. Get the most powerful, the most roomy, and the most capable, even if it looks absolutely clunky.
     Offer to your target markets product and services which fit the shoppers’ definition of justified luxuries. Then in your advertising and personal selling, up the emphasis on “You’ve earned it.”

Click below for more:
Offer Fundamental Indulgences
Satisfy Desires for Luxury
Stay Ready to Sell Luxury

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