"By 2025, Millennials and Generation Z will account for 45 of the global personal luxury goods market. "
Bain Company
For some of us, money is no object at Christmas time – especially when it comes to splashing the cash on a loved one. For those with a lot of extra cash, spending £600,000 on a diamond encrusted Christmas tree is thought of as acceptable. And it doesn’t stop there — there are pens available for just short of £1 million and Rolex watches fitted with diamonds for close to £45,000.
Together with Angelic Diamonds, retailers of bespoke diamond rings, we take a look at the market of expensive goods and investigate how some items earned their price tags.
How to you grab the publics attention?
There are a variety of factors behind the consumer behaviour of luxury customers – but what exactly will make people want to spend an extortionate amount of money on your product?
One factor that has a large impact on purchase behaviour is age. Bain & Company predicts that by 2025, Millennials and Generation Z will account for 45% of the global personal luxury goods market. And miner De Beers attributed a surge in the popularity of diamonds to millennial consumers. So, what can you do to become more appealing to this market?
Millennials are more about experiences than the generation before them. In fact, 78% prefer to spend their money on experiences rather than possessions, according to one 2017 survey by the Harris Group. This is why it’s so important to give your customers an experience when they walk through the door — allow them to have fun trying on different jewellery, bring out complimentary drinks and give them something to shout about.
This generation is also interested in jewellery that has a story to tell, instead of pieces that are mass produced. Introduce exclusive collections into your store and tell customers about the origin of the gemstones, diamonds and designs. This audience also enjoys things to be personalised to them — consider offering a bespoke service where one-off pieces can be created with meaning such as stunning engagement rings and wedding jewellery.
As we know, Generation Z are the consumers of the Digital Age. Ecommerce leads to 14% of buyers aged 18-24 making their first luxury purchase over the internet. But, there are ways that you can encourage in-store footfall with online advertising. Use online-to-store incentives such as the promotion of store-only deals on social. This can encourage the consumer to visit, then you can build a stronger relationship — essential for a luxury, high-involvement transaction.
Many buyers of luxury goods buy expensive things so that they can let everyone know they have a lot of money — it’s a way of making their status known. Pierre Bourdieu was a French philosopher, who discussed ‘symbolic hierarchy’ — he said that the purchases a consumer makes is one way of telling others where they are in the society chain. These types of consumers don’t look for delicate pieces of jewellery. Instead, these buyers want large, statement pieces that look expensive to others. Having a limited selection of ‘bling’ items in store can attract this demographic and meet their luxe shopping requirements.
As a jewellery store operating in the luxury market, you not only need to consider UK buyers, but tourists too. The number of Chinese tourists visiting the UK in particular doubled from 2016 to 2017. Renowned for their love of luxury, what drives these customers to buy? Studies have discovered that Chinese consumers have become more impulsive when shopping and a huge 30% of their purchases are influenced by word-of-mouth (up from 14% in 2010). These buyers require reassurance before a purchase — they like to know that what they’re buying is authentic and high-quality.
Make sure that you have a lot of information about your pieces available in a range of languages — especially if you’re located in a city. This could be through a multi-lingual magazine that allows people to find proof of the product’s authenticity. How about teaching your staff greetings in different languages too? This can make visitors welcome, and more likely to spread a positive word about your company.
The luxury market within the UK – How is it looking?
When it comes to the UK jewellery market, we can expect to see growth of £687 million over the next five years as people still head to jewellery stores. In fact, one study showed that almost one third of all customers in the UK purchased fine jewellery or a watch in the first nine months of 2017.
Although there was doubts over the luxury market due to external factors such as Brexit, the luxury goods market recorded healthy growth in 2017 — hinting that it’s gone unaffected by the current political situation.
So, with more consumers spending their money on expensive things, what persuades them to part with their cash? And, how can your jewellery store capture their business?
Unique, one-off items
Popular ways to add value to products is with the addition of two very attractive materials in the jewellery world — diamond and gold. They’ve been known to increase the value of normal products hundreds of times over, take a look at the following examples:
· Possibly the most expensive pair of sunglasses in the world are those by Dolce and Gabbana. Their DG2027B glasses are crafted with a solid gold frame and encrusted with diamonds. These were on the market for an astounding $383, 609 (£271,472).
· Named the ‘Bugatti of dog collars’ by Forbes magazine, one dog collar was valued at $3.2 million (£2.26 million)! It was studded with 1,600 diamonds and a seven-carat, D-IF (faultless) colour=graded centre piece.
· 24 carat shoelaces were also on the market. To buy these would set someone back $19,000 (£13,448)! Or, for a cheaper version, the silver shoelaces cost $3,000 (£2,123).
· Another standard product that received a price boost was the GoVacuum GV62711. Costing an eye-watering $999,999 (£707,799) it features; a 14-inch cleaning nozzle, a weight of 16 pounds and gold plating. There were only 100 of these limited-edition products created.
Being the company behind one-off, exceptional pieces can also boost your brand awareness and become attractive to a particular buyer. Of course, it can be a risk to carry out a large investment into one product, but it could be worth it.
There are a range of ways to meet the needs of the ever-growing luxury and jewellery market. Think; statement pieces, a tailored service, working on your online awareness and welcoming foreign custom. For a big risk, it’s all about taking a normal item and adding value with diamonds and precious metals.
