Study Finds Luxury Consumers Use Social Networking Sites

Furniture World Magazine

Think social networking sites are just for teens and tweens who post party photos and lists of favorite bands? Think again. A new generation is flocking to Internet-based social networking sites – and they may well be the adult consumers most likely to make a luxury purchase. Over 40 percent of luxury consumers visited a social networking site, such as Facebook, YouTube, MySpace, etc. in the past three months. This is the most surprising finding of a new survey by Unity Marketing about how luxury consumers are using the Internet. It is based upon a survey conducted in October among 1,074 affluent consumers who made at least one luxury purchase in the past three months (average income $150,200 and age 43.6 years). "This study shows the method behind Microsoft's 'madness' in paying $240 million for only 1.6 percent of Facebook. It isn't just kids visiting the social networking sites like Facebook anymore. Even middle-aged affluent consumers are networking online," says Pam Danziger, president of Unity Marketing and author of Shopping: Why We Love It and How Retailers Can Create the Ultimate Customer Experience. "Young affluents, those 40 years and under, were the most active social networkers, but even one-third of the over 40 year old consumers reported visiting a social networking site." Internet exerts a powerful influence on luxury consumers' purchases The research study also found that over half (52 percent) of the luxury consumers of home luxury products and 46 percent of buyers of luxury fashion, fashion accessories, cosmetics, jewelry and watches used the Internet in support of their recent luxury purchases. "The Internet has a powerful influence on luxury consumers in terms of their spending. For example, those customers who used the Internet for home luxury purchases spent 11 percent more on their homes, while those who used the Internet for their personal luxury purchases spent 12.5 percent more on average buying fashion, jewelry, watches and cosmetic products. "They used the Internet both to research purchases, especially to compare prices and read other customers' reviews, as well as to make purchases. The research also shows that they will visit a retailers' website to 'browse' before they head out to the store. The lesson is that luxury marketers and retailers which offer their customers a website get a significant return on investment in terms of more spending," Danziger says. Many websites give luxury consumers what they are hankering for When it comes to the features that luxury consumers value most in the Internet, the convenience of shopping at home is right at the top of the list, along with having a wide selection of merchandise available online. They also are passionate about the tools that the Internet gives them to compare prices and evaluate product features. It saves them time and makes shopping less of a chore. The many pluses of Internet shopping make up for any minor inconveniences, such as shipping and handling charges and delays in receiving the merchandise. Other issues, however, are more of a hindrance to luxury shoppers. Some 35 percent of luxury consumers are very discouraged from using the Internet because of difficulties in returns and exchanges. And 21 percent are uneasy about making big ticket purchases, for example kitchen appliances and jewelry, online. "When asked what features were most important for a luxury shopping site to offer these luxury consumers, they were adamant about three features – in depth product information and specifications, detailed product pictures and a flexible return policy. They were far less concerned with company or brand news, lifestyle content or a store locator," Danziger says. Luxury travelers make the absolute most of the Internet Luxury travel is the one category where the Internet has most penetrated the luxury market. Commenting on the research, Danziger says, "Luxury consumers are maxing out the capabilities of the Internet in terms of their luxury travel. Over 90 percent of luxury consumers used the Internet in support of their travel planning in the third quarter. Over 80 percent made travel reservations online and researched travel destinations. More than half (56 percent) visited a website to see what other travelers have to say about their destination." Danziger concludes, "This study shows just how important the Internet is as a resource in support of the luxury consumers' lifestyle. Its value as a shopping venue is without question, but for marketers and retailers its role in influencing and informing the shopper can not be ignored. So when making investment decisions pertaining to the Internet, marketers need to carefully measure its power in advertising, promoting and building the company's brand and not just take into account the cash flow resulting directly from Internet purchases." About Unity Marketing's Luxury Consumer Tracking Study These findings are based upon Unity Marketing's quarterly luxury tracking study which surveyed about 1,000 luxury consumers (average income $150,200 and age 43.6 years). Every quarter Unity Marketing conducts a Luxury Consumer Tracking Study among 1,000+ luxury consumers. Year-end 2006 statistics compiled from the four 2006 tracking studies will be published in Unity Marketing's Luxury Report 2007 - Who Buys Luxury, What They Buy, Why They Buy. Visit ww.unitymarketingonline.com to learn more about the study of the Luxury Consumers and Their Use of the Internet.