According to a report from Klarna, a leading global retail bank and payments company, says luxury is getting younger with 60% of Gen Z and 63% of Millennials say they have purchased a luxury good within the last 12 months, compared to 46% of Gen Xers and 18% of Baby Boomers.
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The report also found 84 percent of luxury shoppers would find it helpful to pay for high-end items over time, without interest or extra cost. This means investing in technologies that create an elevated, higher-touch omnichannel shopping experience--from interest-free alternative payment solutions at checkout to the integration of virtual shopping and buy online, pick up in store services.
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"A new generation of younger, digitally-savvy luxury shoppers is emerging, with new preferences towards how they shop and pay," said David Sykes, Head of North America, Klarna. "While the allure of brand names (52%) and exclusivity (39%) still drive luxury purchases, today's high-end shoppers are looking for greater flexibility and innovation throughout their shopping experiences.
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Klarna's Luxury Survey was sent out online in collaboration with research agency Dynata to a representative sample of more than 4,000 consumers aged 18-65+ across 5 countries in October 2021, with 1,051 respondents in the US. Klarna also analyzed shopping data from 58,000,000 online purchases with Klarna in the US from January-December 2021. Klarna serves more than 13,000 US retailers and 24 million US consumers.
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Key Report Findings:
- Luxury is getting younger. Gen Z and Millennials are more likely than older generations to purchase luxury items. Of all respondents, 60% of Gen Z and 63% of Millennials purchased a luxury item within the last 12 months, compared with 46% of Gen Xers and 18% of Baby Boomers.
- Innovation and new technologies – from shopping in the Metaverse to engaging with AR/VR experiences – are critical. 70% of consumers who have heard about the Metaverse would be interested in shopping for luxury products there. Millennials (76%), Gen Z (69%) and Gen X (67%) are particularly keen to engage with new technologies such as virtual dressing rooms (22%) and AR/VR experiences (18%).
- Luxury shoppers look for smarter payment options. 4 out of 5 84% of luxury shoppers would find paying over time for luxury products helpful, while 87% and 89% of Generation Z and Millennial luxury shoppers respectively value the availability of flexible, interest-free payment options.
- Brick-and-mortar retail and physical touch are critical to the luxury experience. 84% of luxury shoppers consider touching and seeing a product as essential to the purchasing experience. In most product categories, this is likely why traditional brick-and-mortar remains the channel of choice among luxury shoppers (Watches and Jewelry: 45%, Food & Beverage: 45%, Beauty: 37%, Home & Interiors: 37%, Health & Fitness: 36%).
- …while "elevated" online shopping continues to take off. Meanwhile, 2 in 5 shoppers who bought luxury products last year did so online. But luxury shoppers don't just want your average online shopping experience– nearly 1 in 3 shoppers want to speak with sales associates before making a purchase. For Gen X (49%) and Baby Boomers (54%), being able to pay securely also matters when shopping online; while Gen Z (57%) and Millennials (54%) care most about being able to buy online and pick up in-store.
- Luxury shoppers care more about fast delivery than the average shopper. Consumers shopping for luxury items are over 2x more likely than non-luxury shoppers to expect delivery within 24 hours or less. Most luxury shoppers say the longest they're willing to wait for delivery is one week (46%), with 26% saying only 2-days (48 hours).
- Social media drives discovery and purchasing decisions – particularly among younger generations. 3 in 4 of US luxury shoppers (73%) purchased a product after discovering it on social media, a number that is much higher in younger age groups (Gen Z: 84%, Millennials: 78%). Instagram is the most popular social channel driving luxury purchases among Gen Z (77%) and Millennials (63%, while the majority of Baby Boomers (77%) and Gen Xers (63%) have purchased a high-end product after discovering it on Facebook.
- Well-made products, brand recognition and longevity drive sales. The top drivers of purchases among luxury shoppers are higher quality materials (64%), brand name (52%), and longevity and built to last (50%). Authenticity (48%) and exclusivity (39%) are also important to luxury shoppers.
