Luxury labels should not overlook aspirational consumers

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Luxury labels should not overlook: Long ago, the luxury goods business catered to the aspiring consumers who were drawn to branded products. However, these days, labels seem to be ignoring this segment in favour of targeting the ultra-wealthy. Because of this, high-end brands are ignoring the growing middle class, especially in Asia, which they really ought to be paying attention to. Zalando and the Italian Fashion Chamber (CNMI) presented a recent study by McKinsey at the award ceremony for their ‘Changemakers in Luxury Fashion’ programme in Milan. The study revealed that consumer profiles are more varied and fragmented than they initially appear.

According to a McKinsey study that looked at seven major markets—the US, China, Italy, France, Germany, the UK, and Switzerland—aspirational luxury consumers (ALCs) are worth €273 billion, make up 18% of the fashion industry, and are responsible for half of the value of luxury brands.

According to the research, ALCs are defined as those who spend between €3,000 and €10,000 annually on a single luxury item, such as apparel, cosmetics, leather goods, jewellery, watches, or accessories. According to Lena-Sophie Roeper, managing director of the designer department at Zalando, these consumers represent a “complex but valuable” cluster. Roeper also mentioned that the interest in purchasing high-end products from this demographic is constantly on the rise for the German e-tailer.

Long ago, the luxury goods business catered to the aspiring consumers who were drawn to branded products. However, these days, labels

Incidence of aspirational consumers in the luxury market according to McKinsey – ph DM

According to the results, there are five separate groups of buyers. First, there are the Status Seekers, who make up 39% of all ALCs and are in the market for social status. Consumers under the age of 35 shell out an average of €3,500 year on high-end items, drawn in mostly by the familiarity and acceptance offered by the brand’s name or emblem. A whopping 73% of Status Seekers’ customers are from China, with 32% hailing from Europe, notably the UK and Switzerland.

Quality Seekers is the name of the second cluster that comprises 26% of all ALCs. These shoppers, who are mostly in their forties and fifties, frequent the United States and Europe. They shell out an average of €3,000 year on clothing and accessories, and 85 percent of that amount goes towards supporting eco-friendly companies.

The third group, Socialite Spenders, make up 24% of ALCs and have the highest annual spending average of all aspirational consumers at €5,375. Since they buy up to eight different brands year, they are also the least loyal community. Most of them can be found in Europe and the United States. According to the “aspirational consumer” definition used by high-end brands, the Socialite Spender profile best describes their target demographic.

Lastly, we have the two tiniest groups, which we call Timeless Chic and Mindful Minimalists. Timeless Chic accounts for 6% of ALCs and spends an average of €4,500 per year, while Mindful Minimalists spends an average of €3,000 per year. Both of these groups are primarily found in Western Europe and the United States. Customers of Timeless Chic are extremely loyal and love to shop in person. The typical Mindful Minimalist is an older adult (40 and up), who prefers to shop online and values practicality above all else when it comes to high-end goods.

Breakdown of ALC clusters by country according to McKinsey – ph DM

Luxury brands should target socialite spenders and status seekers, says McKinsey, since these demographics are more likely to develop into devoted customers. If high-end brands don’t use a cookie-cutter approach, they may also be able to entice the other clusters. The study’s author, Gemma d’Auria, stated that labels should implement more sophisticated methods tailored to their target audience’s demographics, spending habits, preferred distribution channels, place of origin, and desired product categories.

After playing a significant role in the luxury sector’s resurgence after the pandemic, ALCs have seen their spending level down due to the challenging economic climate and increasing geopolitical tensions. In markets such as China, India, and other Asian countries like Indonesia, as well as in specific Latin American and African nations where the number of middle class customers is on the rise, these consumers play a significant role for the luxury business, even though they only spend periodically.

Major labels risk falling behind the plethora of new brands that have arisen in the past decade if they stick to their practices of substantial price hikes, which are frequently exorbitant when applied to items with little inventiveness. Companies that focus on selling reasonably priced, high-quality goods made by local craftspeople in an eco-friendly manner. Their items are taking on an air of genuine opulence, which could draw in customers with lofty aspirations.

Ethan Sullivan

Ethan's penchant for the pulse of the fashion world extends to covering lifestyle topics, offering readers a seamless blend of the latest style updates and lifestyle trends.

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