Being a 23 year old male, less than two years removed from undergrad, I’m still getting used to this whole “adulting” thing. My spending habits to start my professional career were sub-par at best – luckily I had the ability to live with my parents for a while. Now being off on my own, wanting nicer things can really challenge my wallet. Yet I still find my peers and I can find ways to indulge on the finer things in life whether it be travel, fashion, or daily aspects of our lives like personal grooming and coffee breaks.
Putting luxury within consumers’ reach
As we’ve recently noticed, consumer confidence is up, employment is up, and median household incomes have reached pre-recession levels. This gives us a little more room to be a bit more liberal with our spending, making what’s typically considered a “luxury” closer to our reach. GfK Consumer Life's research shows that one in three Americans believe “now is a good time to buy.” This sentiment is up 14 points from 2011, and continues to trend upwards.
Here’s a question for you readers: how many 22-23 year old men does it take to plan a New Year’s trip to New Orleans?
Planning this adventure was no small feat, as limited disposable income put us at a crossroads. We had our location, but even the cheapest hotel near the French Quarter was going to run us each at least an arm, a leg, and doubling our student loans.
We had heard about AirBnB from friends, but never really looked into it before – yet it turned out to be the perfect fit. Staying in a New Orleans home gave us the ability to experience the city, rather than just visit. It comes as no surprise that our research increasingly shows that experiences are more important than possessions for Americans – especially among millennials. We valued this alternative option, and saw this as a luxury accommodation for our New Year’s voyage.
Making luxury accessible across industries
This taste for luxury is seen in more ways than just travel. Recent research from GfK Consumer Life shows that half of Americans daydream about being rich (the #2 thing Americans daydream about, #1 among <$50k HHI). Many of us aspire for luxuries before our incomes can sustain it – so we have to get creative. I see many of my peers using services like Rent the Runway to get at least a taste of this luxurious feeling. Paying student loans while saving money doesn’t give a recent college grad much disposable income to work with, but renting a designer dress is both sensible and a way to treat oneself.
Brands offering products that connote premium or luxury can learn from this when seeking loyalty in their future customers. The sharing economy gives us a feeling of being wealthy before our income catches up to our dreams, which aligns with GfK Consumer Life insights that 21 percent of Millennials associate the sharing economy with ‘giving you access to luxury goods that you normally could not afford’ (+4 pts from total Americans).
Finding other opportunities that allow consumers to indulge
Men’s grooming is another hot luxury opportunity. Growing up I never imagined spending as much time as I do grooming, but for the past ten months I’ve committed to growing a beard for the first time ever. I’ve even going as far as purchasing beard oils and creams to soften the hairs and make it look neater. Through beard blogs (yes, they exist!) and how-to videos, I successfully grew a full beard, and continue to browse different products and reviews to keep it around.
When looking at the hard data, I find that I’m not alone! GfK Consumer Life’s research shows that men ages 18-34 are most likely to prefer to buy luxury brands of beauty/grooming products, at 57% (+17 pts from total US consumers, +8 pts from 18-34 women). Hordes of men are dishing out extra money for grooming to fit the mold; the opportunity to capture these men cannot be ignored.
What about the consumer that doesn’t travel, shop, or meticulously groom each day? Well sometimes, we all just need to indulge in something for ourselves.
More than one in three Americans strongly agree that it is important to indulge or pamper themselves on a regular basis (+6 pts from 2011). This trend is being capitalized on by people like ex-Starbucks CEO Howard Schultz, who has shifted his focus on building his Roastery & Reserve premium portfolio with $12 cups of coffee. This turns a consumer’s typical coffee break into “a multisensory coffee experience” while enjoying a unique food menu and coffee brewed in different ways.
Americans have more money and confidence than they’ve had in years, and are willing to spend on luxury, even if the investment is minimal. Younger generations want this premiumization too – but in different ways. The sharing economy and smaller yet premium indulgences offer brands across industries to offer products and services in new, exciting ways.