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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Discounts by prestige 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 according to a new Spring 2011 survey of the wealthiest 10% of US households by the American Affluence Research Center.

About 60% of the affluent in the new Spring 2011 survey, the 19th in a continuing series of twice-yearly tracking studies, 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% said the discounts lowered the image/prestige of the brand.

This data suggests that the affluent recognize there are certain situations where discounting by prestige brands is reasonable and understandable, if not part of an ongoing practice. About half said discounts seemed to be a reasonable way to maintain sales during the past two or three years. Less than 20% 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 prestige brands communicate via the internet or mobile devices only to past customers or to “members” of special “flash sale” sites.

There were some substantial differences within the age, income, and net worth categories. Those under age 50 and the higher income and net worth groups (all of which have a higher than average awareness of the “flash sale” sites) are more likely to make incremental purchases.

This data suggests that the affluent do not have a problem with situations where discounting by prestige brands is limited to special groups. About 39% said this type of discounting seemed to be a reasonable way to build sales.

The age 50+, women, and the higher net worth groups were a bit more skeptical or critical in their responses to both questions.

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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This is a post from brandweek.com (http://www.brandweek.com/bw/content_display/news-and-features/direct/e3i5094e406e415c280d0da248c34faffdc) referencing AARC’s latest research about the affluent market.

November 3, 2010

It wasn’t very long ago that marketers were assured that most consumers were still willing to trade up. You remember, don’t you? Average Joes and Soccer Moms splurging for that extra “little” something—be it a $6 latte or a $300 Coach handbag—just because they worked so hard and deserved some of life’s finer things. A good many starry-eyed marketers predicted that, even in a recession, this be-good-to-yourself dynamic would somehow hold true.

It hasn’t. While no headlines have announced the official passing, it’s become clear that the “aspirational” consumer—that cherished demo of marketers everywhere—is dead.

According to a just-released study by the American Affluence Research Center, the spending habits of the utmost tier of earners remains robust, but everyone below has cut back and plans to stay there. “If you look at the 10-15% [sales volume] declines for upscale retailers and brands, it was [due to] people spending beyond their means and not being able to sustain it,” said AARC president Ron Kurtz. Even within the sphere most would consider well-off ($250,000 average annual household earnings), 41 percent reported they’re making a conscious effort to reduce expenditures for the next 12 months.

Isolated data? Hardly. Consumer Edge Research recently found that skipping top-shelf brands in favor of lower-end ones is most common in households with incomes of $100,000 or higher. A study conducted by PriceWaterhouseCoopers/Kantar Retail earlier this year revealed that 93 percent of shoppers say they’ve changed their shopping behavior—with 17 percent opting for cheaper brands. “Although we’re starting to see signs of shoppers getting tired of trading down, they remain cognizant of today’s economic realities,” said a Kantar official in a statement. These findings are in line with last year’s McKinsey study, which revealed 41 percent of consumers think that premium brands are “not worth the money.”

So much for life’s little indulgences. In fact, the whole affordable luxury pitch has lately been the target of various poison arrows, such as one recent posting on Families.com: “Aspirational marketing is a technique in which the goal is to sell items to people who can’t afford it.” Ouch.

“Marketers have long known that we have an aspirational society, and they’ve gone heavily after those consumers,” observed Claire Ratushny, a brand-positioning consultant based in Eastford, Conn. “Now, ‘aspirational’ is a dirty word.”

It was nice while it lasted.

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