May, 2011 – This Luxury Daily article discusses the affluent clicking through to retailers’ websites from Twitter and Facebook (http://www.luxurydaily.com/67pc-twitter-users-click-through-tweets-to-branded-web-sites-study/).

By Rachel Lamb

Approximately 67 percent of Twitter users click through a Tweet that leads to a branded Web site, while 56 percent of Facebook users go on to a branded Web site because of a Facebook post, according to a study from comScore, Shop.org and Social Shopping Labs that measured shopping habits influenced by social media.

Shop.org, a division of the National Retail Federation, polled approximately 1,787 adult online shoppers in April 2011 on shopping directly influenced by social media. The research showed that shoppers are willing to interact with retailers through a myriad of social networks, leaving it up to retailers to use this to their advantage.

NRF was not available to comment for this story.

Social shopping
Many luxury brands have Facebook and Twitter sites that are used to foster CRM and help to push promotions and products.

Approximately 42 percent of online consumers “follow” retailers via Facebook, Twitter or a blog. The average person follows six retailers, per the study.

Additionally, 58 percent follow companies to find deals, 49 percent want to keep up-to-date on products and 39 percent follow retailers for information on contests and events.

Indeed, brands such as Marc Jacobs, Bergdorf Goodman, Saks Fifth Avenue, Bloomingdale’s and Diane von Furstenberg often use Twitter to push products, post information and promote contests and events (see story).

More than half of Facebook users click through to a retailer’s Web site because of a Facebook post and even more Twitter users attribute a branded Tweet to the reason to click through to a Web site.

Furthermore, a little more than one-third of shoppers say that they are likely to directly purchase from Facebook, while 32 percent of Twitter users agree.

Social through mobile
The amount of shoppers using mobile commerce through social media is also growing.

For instance, 42 percent of Twitter users access the site on their mobile phone at least once a day, as do 34 percent of Facebook users.

This could probably lead to transactions via mobile.

The study also found that approximately 32 percent of people view YouTube clips from their smartphones.

Nearly half of the consumers surveyed have accessed customer reviews via mobile when deciding whether to make a purchase in-store.

Fifty-five percent of men are more likely to access reviews via mobile, compared to only 39 percent of women.

Group-buying sites such as Gilt City, Groupon and LivingSocial are known to approximately 82 percent of online consumers, and 57 percent have spent over $100 through these sites.

Social media is proving to be one of the most beneficial ways for luxury brands to become noticed and to move product.

Although the majority of a luxury brand’s target audience may not be on social media, the channel still serves to connect younger consumers with the brands as well as build brand awareness.

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This is an article from JustLuxe Affluent Lifestyle Guide by Susan Kime (http://www.justluxe.com/luxe-insider/trends/feature-1583284.php). The article references our Spring 2011 survey.

May 16, 2011
By Susan Kime

Last year I wrote two articles about the Fall 2010 Survey research results and interpretation provided by the American Affluence Research Center, Ron Kurtz, President. The results of the Fall 2010 survey seemed to indicate some hope for the economic future, and for future affluent spending patterns.

Now, the results of the Spring 2011 American Affluence Research Center Survey appear even more hopeful. This report is based on the responses from 405 men and women who promptly responded and met the minimum net worth requirement of $800,000. Their households have an average annual income of $333,000, an average net worth of $3.1 million, average investable assets of $1.8 million, and an average primary residence value of $1.1 million.

The survey respondents represented 28 states and the District of Columbia. Eighty-eight percent are married. The average age is 57. Fifty-six percent are males and forty-four percent are females. This research survey is the 19th in a continuing series of twice-yearly surveys that focus on the 11.4 million households that represent the wealthiest 10 percent of all U.S. households, as determined by The Federal Reserve Board, based on net worth.

These households account for about half of all consumer spending and a third of gross domestic product.
These surveys measure and track how luxury and affluent consumers assess current business conditions and their 12-month outlook for the economy, the stock market and their personal household earnings. The surveys also monitor the anticipated changes in spending for a variety of different products and services, changes in expected rates of saving, and primary investment objectives. In addition, each survey contains special questions exploring new topics.

The survey results are based on self-administered questionnaires mailed to 4,500 households that, based on their income and ownership of certain assets, were expected to meet the minimum net worth requirement of $800,000. The maximum margin of error of this survey, at 95 percent confidence, is five percentage points. Index values shown in the report can range from 0 (negative) to 200 (positive), with an index of 100 being a neutral point and where little or no change is expected.

Here are the major findings:
In contrast to Fall 2010, the affluent, who account for about half of all consumer spending, report a better outlook for the economy and their personal spending plans. Spending plans for all 17 products and services tracked by these surveys are much stronger than in the Fall 2010 survey. There is also improvement in the plans to make major expenditures such as for a new auto, a cruise and a vacation home.

Discounts by prestigious brands during the past two or three years of a weak economy have apparently been accepted by affluent and luxury consumers without diluting the stature of the brands. About 60 percent of the affluent in the Spring 2011 survey say the discounts did not affect their opinion of the brands, while a quarter said the discounts motivated them to make purchases they may not have otherwise made. Only 5 percent said the discounts lowered the image/prestige of the brand.

This data suggests that the affluent recognize there are certain situations where discounting by luxury brands is reasonable and understandable, if not part of an ongoing practice. Less than 20 percent said the discounts raised potentially negative questions about whether quality had been lowered to offset the discounts and whether prior prices and profit margins were fair.

Similar responses were elicited when asked about their opinion of discounts that prestigious brands communicate via the Internet or mobile devices only to past customers or to “members” of special “flash sale” sites. While 65 percent of the affluent own a smart phone or a tablet (or both), the remainder have regular access to a computer. Half of the affluent say they do not participate in any type of social media.

Among those that do participate in social media, only a quarter say they use it to receive regular communication about product and related information from a manufacturer or retailer. In other words, only 12.5 percent of the affluent say they are using social media to receive regular product information from a manufacturer or retailer.

This relatively low number (12.5 percent of the affluent) may be surprising given all the amazing statistics being circulated by various research and traffic tracking companies about the volume and growth of e-commerce, the ubiquitous mobile devices, and the urgent emphasis to invest time and money into various forms of mobile apps and promotional activities online through proprietary sites and social media.

It is important to understand who will actually be reached through mobile devices and social media (and whether the ROI is reasonable), what technology is needed to be compatible with the various different mobile and other receiving devices, and who might be missed if communications are limited exclusively to these channels.

Based on a different business model and with 12 years in business, Zappos has established a much stronger position among affluent and luxury consumers than any of the 11 “flash sale” sites listed in the survey. Among the flash sale sites, Gilt and RueLaLa have established leading positions.

Over half of affluent and luxury consumers are aware of Zappos while none of the 11 listed “flash sale” sites have more than 10 percent awareness. A third of the affluent have visited Zappos in the past 90 days while 5 percent or less have visited any of the “flash sale” sites during that time. A third of the affluent and luxury consumers have ever made a purchase at Zappos while less than 4 percent have ever made a purchase at any of the individual flash sale sites.

These results are not totally surprising as the affluent are typically careful spenders whose favorite stores include Target, Costco and Home Depot. Also not surprising, the results vary substantially within age, gender and wealth categories. What may be surprising is the fact that over 40 percent of affluent and luxury consumers are not aware of Zappos or any of the flash sale sites.

About 10 percent of the affluent say they will seriously consider acquiring access to a vacation home during the next 12 months. Plans to make an acquisition increase as age declines, income increases, and net worth increases. About 2.9 percent are considering two types of vacation home acquisition. Wholly-owned homes are the most favored type of vacation home access. Wholly-owned homes used primarily on a seasonal basis are more popular than those used frequently throughout the year.

In a recent interview with Ron Kurtz, President of the American Affluence Research Group, he said, “The affluent market, as defined by the top 10 percent of U.S. households, still spend carefully. Their favorite stores are still CostCo, Target and Home Depot. They are not conspicuous or ostentatious spenders. The recession may not have fiscally affected them, but in some deeper sense, they have been affected. But, there is reason to be hopeful.”

Mr. Kurtz recently presented his findings at the GNEX Shared Ownership Conference on May 11, where he was a keynote speaker. “The spending attitudes of the affluent seem to be improving,” he said.

“What we see is a continued conservatism, but tinged with optimism now. Unlike in other years, and taken as a whole, our research shows the affluent majority are not taking action to reduce or defer major expenditures now. They are interested in purchasing vacation homes and are again interested in travel. Things are looking better.”

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May, 2011 – This Luxury Daily article discusses some retailers eliminating shipping fees to be responsive to their customers (http://www.luxurydaily.com/gilt-groupe-responds-to-customer-concern-via-return-and-shipping-tweaks/).

By Rachel Lamb

Flash-sale site Gilt Groupe is tweaking its customer service policies to better reach the needs of buyers by offering incentives such as reduced shipping fees and more efficient return policies.

The company noted via email yesterday that the main reason for this change was because the customers asked for it. The move may also be a recation to pressure brought on by other retailers offering shipping for online purchases.

“It is very important to listen and to act in a way that is responsive to the customer,” said Ron Kurtz, president of American Affluence Research Center, Atlanta. “Both [lower shipping fees and return policies] are important in making it easier and more convenient for customers to do business with them.”

Gilt Groupe did not respond by press deadline.

Mr. Kurtz is not affiliated with Gilt Groupe, but agreed to comment as a third-party expert.

Gilty pleasure
Gilt Groupe sent an email to customers from CEO/founder Kevin Ryan explaining the changes.

Shipping fees now are only $5.95 for UPS ground shipping despite the size of the package.

Gilt is making more items including handbags, wallets, sunglasses, ties, belts, cufflinks and jewelry eligible for return.

Furthermore, customers will now receive a full return upon return.

Customers can choose whether they want to accept the refund minus the shipping charge, or no shipping fee and opt for Gilt credit.

Finally, unsatisfied customers can make returns via United States Postal Service and can return via home, office, mailbox or drop-off location.

In addition to the email, Gilt has posted the new changes on its Web site.

“Given the basic appeals of the flash-sale business, i.e. saving money and securing good value, Gilt’s customers may be particularly sensitive to [these changes],” Mr. Kurtz said.

Don’t discount shipping
Customer service has always been a huge part of the luxury industry.

Because consumers are paying such high prices for goods, they expect something in return such as free shipping or a gift upon purchase.

Many luxury retailers offer free shipping or, at least, discounted rates

Also, since luxury consumers are more inclined to start spending again (see story), extra incentives such as free shipping and easier return policies may further coerce them.

Luxury companies will not know what will make their customers happy unless they ask.

According to Gilt’s email, it asked and received customer feedback so that the company could get a better idea of what would make them happier.

More importantly, Gilt followed through.

Other luxury retailers are encouraging customers to come forward with feedback.

For instance, apparel and accessories designer Diane von Furstenberg maintained the brand’s trademark customer interaction by encouraging feedback during its Web site relaunch (see story).

“It is important to continually watch for opportunities to make changes that provide a better level of service and contribute to recognition as being customer sensitive,” Mr. Kurtz said.

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This is an article from The Wall Street Journal by Christina Binkley (http://online.wsj.com/article/SB10001424052748703730804576317202215630540.html). The article references our Spring 2011 survey.

May 12, 2011
By Christina Binkley

Bentleys and Hermès bags are selling again. Yet the wealthiest Americans are emerging from the financial downturn as different consumers than they were.

Lyndie Benson says she now mentally calculates the “price per wear” of designer clothing. As the wife of saxophonist Kenny G, Ms. Benson, a photographer, can afford what she wants. She used to make a lot of impulse purchases, she says. But when shopping in Malibu, Calif., recently, she stopped herself before buying a gray Morgane Le Fay suit she’d tried on. “I walked outside and thought, ‘Hmmm, I don’t really love it that much,’” she says with contentment.

A number of surveys released in the past six weeks suggest Ms. Benson’s new selectiveness is widespread among the wealthiest Americans. Though many of these people might seem unscathed by the financial crisis—they didn’t lose their homes, jobs or retirement savings—they were deeply affected by what took place around them. “If you’re conscious at all, it just seeps in,” Ms. Benson says.

What’s showing up in the latest research is a broad-based caution—a sudden aversion to salespeople, a tepid response to ads focused on brand images, and a new interest in price-shopping. In Harrison Group’s first-quarter survey of consumers with a median income of $275,000, 38% said they wait for items to go on sale, versus 31% in 2010.

Indeed, obtaining discounts on luxury goods has become a competitive sport among many well-to-do consumers, including Jim Taylor, vice chairman of the Waterbury, Conn.-based Harrison Group. Though he is wealthier this year than last, he recently spent a week comparison-shopping for a suit. He ultimately bought his Michael Kors suit on Overstock.com for $185.

Laurence Geller, CEO of the luxury-resort-owning Strategic Hotels & Resorts, told me recently that his favorite place to shop is the Nordstrom Rack discount outlet in Chicago. Harrison Group researchers found Costco and Target were the favorite stores of the wealthiest Americans.

In fact, one time-honored tenet of the luxury industry—that discounted prices lower products’ prestige—appears to no longer be true, according to several studies. A survey released in April by the American Affluence Research Center, a luxury consultant based in Alpharetta, Ga., found that 60% of respondents said discounts didn’t affect their opinion of brands.

Items the rich do value at full price are one-of-a-kind clothes and accessories and experiences that create fond memories. Weekend getaways and vacations were the top two things the wealthy intended to spend more money on, Harrison Group says.

The new luxuries are things that are in limited supply and have an emotional quality, rather than just a high price tag. When I asked New York socialite Olivia Chantecaille about her luxury shopping, she cited a new Hermès Birkin bag—and a perfect mango she found in Paris. She and her husband have also been shopping a lot at Brunello Cucinelli, an Italian brand known for making J. Crew-style clothes such as cargo pants and comfy sweaters out of deluxe materials such as cashmere. Luxury may be back, but bling isn’t.

The affluent are less trusting of brands than a few years ago. That makes sense: When Saks and other stores slashed prices on luxury goods in winter 2008-2009, shoppers got an inkling of the outsized markups on $10,000 handbags.

Consumers are also less influenced by brands’ marketing. Harrison Group annually asks wealthy people if they agree with the statement: “I am willing to spend more for designer brands because they are the most stylish and fashionable.” In the first quarter of 2008, 51% of respondents agreed. Three years later, 32% agree.

Yet 82% say they are happy with the way they look. “They don’t need your brand to feel like they look good,” Mr. Taylor told a group of luxury executives last month.

Nor do they want salespeople hammering away at them. Only 2% said they trust salespeople—down from nearly 50% four years ago.

Part of this may be a reaction to the corporate push of commodity luxury. Ikram Goldman, the owner of the Ikram store in Chicago, says clients these days covet things that aren’t mass-produced. She cites Rodarte, which makes artful designs in tiny quantities, as a label that has benefited from new tastes. “They don’t feel like they’re a dime a dozen,” she says. “Our customers are desperate for that.”

Christophe Georges, chief operating officer of Bentley Motors Inc., says his clients are increasingly distrustful of corporate marketing. He types his own emails to them, rather than using automated customer-outreach programs. “We are a little amateurish,” he says, “and that’s a good thing.”

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May, 2011 – This Luxury Daily article discusses the affluent market’s use of smartphones and tablets (http://www.luxurydaily.com/61pc-of-us-affluent-own-smartphones-study/).

By Rachel Lamb

Approximately 61 percent of the 22 million wealthiest individuals in the United States own a smartphone, indicating a potentially untapped market for about 8 million smartphones, or 39 percent of the affluent, according to a recent study by American Affluence Research Center.

According to the data, 22 percent of those surveyed own a tablet, meaning that there is a probable untapped market 78 percent of the affluent. The study was able to dissect the ages and demographics of individuals, along with types of devices.

“There is so much talk about pervasiveness of mobile devices, but it’s important to understand who has these devices and how they are using them in order for people to market effectively through them,” said Ron Kurtz, principal of American Affluence Research Center, Atlanta. “It’s interesting that affluent have a smartphone or tablet, so clearly this is a medium in a way to reach people.

“It’s important to know what platform [marketers] need to be communicating through to be convenient and easy to access a brand’s information, and to receive or use an app,” he said.

Participants in the survey have an annual household income of $333,000 and an average primary residence value of $1.2 million. Their net worth is, on average, $3.1 million with investable assets of $1.8 million.

These are the top 10 percent of the wealthiest individuals in the U.S.

Dissecting the affluent
In addition to 61 percent of individuals who actually own a tablet or smartphone, it is said that about 65 percent of the affluent at least have access to smartphones or tablets.

The survey broke down the participants into demographics and type of mobile device used.

For instance, 84 percent of affluent individuals under 50 own a smartphone, whereas only 38 percent of those 60 and up own one.

The study also showed a correlation between income and type of smartphone.

Individuals who earn more than $200,000 per year are almost twice as likely to own a smartphone and have a slight preference for the BlackBerry.

Moreover, those with a slightly lower income, less than $200,000 per year, favor the iPhone.

The study did not see much difference in gender pertaining to preference and ownership of tablets, but four out of five individuals favored the iPad as their chosen tablet.

Predictably, younger individuals are more likely to own tablets and smartphones. Also, the increased likelihood to own a smartphone or tablet has a direct relationship with net worth and income.

Moving forward
Many luxury brands are reluctant to move their marketing into the tablet or smartphone sphere.

However, since 61 percent of the most affluent individuals in America have a smartphone, it seems like brands should be rethinking their strategy.

Some brands, even the most prestigious, are learning.

For instance, French fashion house Chanel is taking one giant leap for iconic luxury brands with the launch of two mobile-optimized sites for its fine jewelry and watch collections (see story).

Still, many luxury brands are beginning to understand the power of mobile applications, mobile-optimized sites and SMS messaging.

These are all ways that luxury brands can use smartphones and tablets to get in touch with their customer base, move products and build loyalty and relationships.

“The smartphone and tablet users are still younger users, which aren’t the absolute key demographic for luxury brands, but it’s a start,” Mr. Kurtz said. “Clearly, it is a channel to which the affluent are connected, though certainly a younger segment.

“Brands need to take this information into consideration and what they’re going to be offering and saying, how they’re going to be saying it and how much they’re going to be spending on these channels and on [mobile],” he said.

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About 65% of the affluent have access to one or more smart phones or tablets and another 34% have regular access to a computer according to a new Spring 2011 survey of the wealthiest 10% of US households by the American Affluence Research Center. Only 1% of the affluent lack access to the internet.

On average, 61% of the affluent own a smart phone and 22% own a tablet. With a population of about 22 million individuals in the 11.4 million households of the affluent, there is a potential untapped market for about 8 million smart phones (39% of the affluent) and 17 million tablets (78%).

The incidence of ownership of a smart phone, and the type of phone, can vary substantially within the age, income, and net worth groupings. For example, 84% of the under 50 age group own a smart phone versus only 38% of the 60+ age group. Those with $200K+ income are almost twice as likely to own a smart phone (73% versus 40%) as those with less than $200K income, and they have a slight preference for the Blackberry whereas the lower income group favors the iPhone.

There are minimal differences by gender for ownership and brand preferences of smart phones and tablets. Ownership of tablets and both tablets and smart phones increases as age declines and as income and net worth increase. The iPad is favored by a margin of 4 or 5 to one over other tablets.

About 18% of the affluent in the new Spring 2011 survey, the 19th in a continuing series of twice-yearly tracking studies by the American Affluence Research Center, own both a smart phone and tablet. Ownership of both is highest among those under age 50 (32%), those with income of $250K+ (25%), and those with a net worth of $6M+ (37%).

Half (50%) of the affluent with a mobile device and/or computer participate in one of more of the types of social media. On average, they participate in about 1.5 types of the social media listed. Participation in social media declines as age and net worth increase. Men participate a bit less than women because they are much less likely to participate in Facebook (33% versus 49%). LinkedIn is somewhat more popular among those age 50 to 59 and those with a $200K+ income.

As might be expected, owners of both smart phones and tablets are most likely (70%) to participate in some form of social media. On average they participate in 1.8 types of social media. Those with access to only a computer are least likely (69%) to participate in some form of social media.

Participants in the American Affluence Research Center Spring 2011 survey have an average annual household income of $333,000, an average primary residence value of $1.2 million, an average net worth of $3.1 million, and average investable assets of $1.8 million.

A description of the survey methodology and other detailed highlights of the survey can be viewed at:
http://affluenceresearch.org/most-recent-tracking-study/highlights-of-most-recent-survey/

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May, 2011 – This Luxury Daily article discusses experts’ predictions of a possible 8 percent growth on luxury goods spending in 2011 (http://www.luxurydaily.com/luxury-goods-spending-could-reach-275-billion-in-2011-study/).

By Rachel Lamb

Experts have predicted a possible $275 billion spend on luxury goods in 2011, an 8 percent growth from last year’s $255 billion, according to a new study from Bain & Co.

The study indicated that luxury retailers were confident that consumers will keep spending, maybe even to pre-recession levels. The study focused on emerging market China and the natural disaster toll on Japan’s economy.

“Good sales growth in the emerging markets, where economic conditions have been favorable are the probable causes for the sales bump,” said Ron Kurtz, principal of Atlanta-based American Affluence Research Center.

“Also, a stronger pace of sales in the U.S., where our surveys have shown the affluent becoming more positive in their spending plans,” he said.

Mr. Kurtz is not affiliated with Bain or its study. He has agreed to comment as a third-party industry expert on the results.

Bain was not able to comment before press deadline.

Predictions, predictions
Luxury department stores and direct-owned stores saw double-digit increase in sales in February and March from 2010.

Furthermore, many stores have found that they are quickly running out of accessories, leather goods, jewelry and watches.

Another finding of the study is that most of the market shares in luxury spending have increased from last year.

The United States, which saw 48.1 market ranking; Japan, which saw 18 percent ranking; Italy, which saw 16.6; France, which saw a 12.6 marketing ranking; Britain, which saw an 8.8 market ranking; Germany, at 8; Korea, at 5.5; Russia, at 4..8 market share; and Hong Kong, at 4.4.

Greater China, comprising China, Hong Kong, Taiwan and Macau, had a 17.6 market share.

This region saw the most amount of growth year-over-year, at 23 percent.

Bain predicts that China will continue to be the fastest growing market. In fact, the study expects it will become the third luxury market in five years.

Additionally, more than 50 percent of the overseas market will account for Chinese spending.

Asia-Pacific and China will drive the luxury goods consumption worldwide.

The market will also see a consolidation of mature markets U.S. and Europe, which still hold the majority of personal wealth.

The March earthquakes in Japan devastated the northern shore of the country, as nuclear risks forced luxury retailers to close Tokyo stores for over 10 days.

However, strong performance after reopening leads experts to doubt that Japan’s economic hit in 2011 will be anything too significant.

“I don’t see anything really surprising, given data from various sources over the past two years, unless it is the strong optimism for fall/winter 2012 season of retailers in the study,” Mr. Kurtz said. “Given the many uncertainties, that could cause a relapse of currently favorable economic conditions.”

Moving forward
The study suggests that over the next 15 years, luxury spending will cross $400 billion.

In order to keep up with trends, marketers should look to China as a symbol for emerging markets, per Bain. This especially pertains to customer insight, good locations and flexible sourcing.

Marketers should also account for the generational shift. Baby boomers will start to retire and teenagers are proving to be big spenders.

Brands need to also be aware of Generation Z, which is always connected. Marketers could try to engage with them via new technology.

As always, brands should rely on enhanced customer experience, especially in-store.

“The luxury market is resilient, and the pundits who, two years ago, were predicting major changes and a dire future for the luxury business are being proven wrong,” Mr. Kurtz said. “The Chicken Littles were wrong – the sky is not falling.”

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May, 2011 – This Luxury Daily article discusses AARC research about affluent cutomer’s use of mobile devices to make purchases (http://www.luxurydaily.com/recent-flash-sale-mobile-sales-increase-could-signal-luxury-mcommerce-boom/).

By Rachel Lamb

Online retailers Gilt Groupe and Rue La La have announced a significant jump of sales through mobile, which could be indicative of a future explosion in luxury mobile commerce.

Although these sites’ designer apparel is considerably reduced for the purpose of flash sales, this probably does not mean that luxury customers are getting used to sales discounts. However, some experts think that customers will start getting comfortable with mobile commerce.

“I doubt consumers are becoming too comfortable with discounted luxury goods,” said Ron Kurtz, president of American Affluence Research Center, Atlanta. “Our recent survey of the affluent showed that not any flash-sale sites – including Gilt Groupe and Rue La La, which are the two best established – had more than 10 percent awareness among the wealthiest 10 percent of U.S. households.

“I would expect that, over time, mobile devices will become a larger percentage of sales for at least two reasons,” he said. “More people will be using the devices and businesses will be improving the experience of shopping on a mobile device.”

Mr. Kurtz is not affiliated with Rue La La and agreed to comment as a third-party expert.

Flash in the pan
Gilt Groupe, a seller of brands such as Cynthia Rowley, Valentino and Rafe, has said that it gets approximately 15 percent of its weekly revenue from mobile (see story).

Gilt has developed six mobile apps, and has 1.3 million downloads from just one of its apps, Gilt on the Go, available on iPhone, iPad and Android mobile devices.

Competitor flash-sale site Rue La La has just reported that approximately 12 percent of its first-quarter 2011 sales were made from Rue La La’s mobile commerce-enabled site and apps.

Luxury consumers are most likely to have the latest and most expensive smartphones, whose data plans and Internet enable the download of mobile apps and support optimized sites.

Moreover, most individuals constantly carry their smartphones with them and apps like those developed by Gilt Groupe and Rue La La make it easy for affluent consumers to buy luxury goods on-the-go.

This is supported by a new study from InMobi reveals that mobile Internet users would rather shop using a mobile device than a personal computer or laptop (see story).

Too reliant?
While this bodes well for luxury retailers such as Gilt Groupe and Rue La La, does it mean that mobile customers are relying more on flash-sale sites, rather than actual luxury brands and retailers?

“I do not expect the percentage of such sales for true luxury products to be as high as the percentage for businesses such as Rue La La, which I feel are supported more by younger and more aspirational consumers,” Mr. Kurtz said.

The belief is that most luxury consumers, the truly affluent, do not need discounted prices on luxury goods and therefore may not even be aware that these sites exist.

This means that the business of an upscale’s main target, the already-affluent, will not be taking business away from the brands by using flash-sale sites.

More than half of affluent and luxury consumers are aware of discounted sites such as Zappos, while none of the 11 listed flash-sale sites have more than 10 percent awareness, according to a sweep by American Affluence Research Center that surveyed the top 10 percent of the U.S.’s most wealthy individuals.

Furthermore, one-third of the affluent consumers have visited Zappos in the past 90 days while 5 percent or less have visited any of the flash-sale sites during that time.

And still, a third of the affluent and luxury consumers have ever made a purchase at Zappos, while less than 4 percent have ever made a purchase at any of the individual flash-sale sites.

“Our recent survey showed that 65 percent of the affluent have one or more mobile devices,” Mr. Kurtz said. “That percentage will continue to grow for at least the next two or three years.

“As businesses make it easier for people to shop on a mobile device, there will be growth in the sales of all types of products and services, including the luxury sector,” he said.

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