Seven Non-trends for the Luxury Market in 2013

With the new year only a week old, many predictions still are surfacing, forecasting everything from the failure of retail chains to the hot social media tool of 2013.

At the Atlanta-based American Affluence Research Center (AARC), President Ron Kurtz took time before Jan. 1 to compile his own list of trend caveats for the luxury market in 2013–points to keep in mind when reading forecasts for the year.

His anti-trend list, of sorts, contains seven facts that hold true from year to year. Kurtz urges business owners, particularly those with shorter-range business plans of one to three years, to take these facts into account when digesting the buffet of 2013 predictions.

1. Affluent consumers are not prone to substantial changes in their basic behavior and values from year to year or even over an extended period of time. Kurtz says he bases this trend on the work of longtime luxury researcher Thomas Stanley, whose most recent book is “Stop Acting Rich … and Start Living like a Real Millionaire.”

Stanley’s research on wealthy consumers began in the 1970s and shows that very little has changed over the past four decades. They are and always have been careful spenders and aggressive savers who spend within their means and are not conspicuous consumers. Kurtz adds that many people who are wealthy today grew up in middle-class families and retain the values learned there, even after they made their fortune.

2. A change from one year to the next is not necessarily a trend, especially if it applies to a large increase in a very small percentage of the market. Even though a market segment technically triples if it jumps from 1 percent to 3 percent, it still represents a very small percentage of the market. Kurtz says these types of increases are not necessarily indicative of a trend but perhaps a fad or an emerging market.

While business owners should monitor emerging markets, they shouldn’t be distractions from their major sources of revenue.

3. Affluent consumers are not necessarily luxury consumers. Only the top 1 percent of the population–those with annual incomes of at least $500,000 and a net worth of $6 million or more–are knowledgeable about, and purchase, what Kurtz would term true luxury goods.

This entails the very high-end products from brands such as Chanel, Hermes and Louis Vuitton, the top apparel, luggage, leather goods, jewelry and watches.

Prior to the recession, aspirational affluents–those with annual incomes of $200,000 to $300,000 but no accumulated wealth–were buying true luxury goods but aren’t doing so to the same extent post-recession.

“Some of them are coming back but, for the most part, they are out of the market relative to the numbers they represented before the recession,” Kurtz says.

4. It is important to stay focused on the key marketing priorities of retaining the loyalty and increasing the purchases of existing customers while working to attract new customers. The best source of business is existing customers, and it’s important to maintain their loyalty and look for ways to increase their purchases. “You really don’t want to lose sight of how important it is to go for the low-hanging fruit on the tree, which is your existing customer base,” Kurtz says.

Priority No. 2 is attracting new customers, specifically those with a profile similar to the existing customer base.

5. Traditional marketing communications channels should not be forsaken, especially if one is targeting affluent and luxury consumers. Digital media is a “double-edged sword,” Kurtz says. It gives retailers the chance to personalize communication to a person who has shown interest in the brand.

But it also fragments the market and puts retailers in touch with what Kurtz terms as “luxury voyeurs”–consumers who are fascinated with luxury goods and products but aren’t necessarily potential purchasers.

He said while social media should not be avoided entirely, traditional media, particularly print publications with a high-end audience and direct mail, needs to be the foundation of marketing plans geared toward the affluent.

6. The true affluent, who are typically careful spenders who live within their means, are the more knowledgeable and more sophisticated consumers. See No. 1. Kurtz says affluent consumers want quality and value and aren’t making a purchase simply as a means of touting their wealth to others.

Every new year, a handful of predictions call for a “new” emphasis on value and quality among wealthy consumers. “These have been the basic priorities and values of the wealthy and affluent for decades. This is not new,” he says. “Quality, value, good service: these are the things that are always important to the affluent and the luxury market.”

7. There is no substitute for using common sense when thinking about how to be consumer sensitive in all aspects of the relationship, interaction and communication with customers. Here, the “Golden Rule” applies, Kurtz says. Do unto your customers as you would have them do unto you. Luxury retailers need to put themselves in their customers’ shoes and make sure they are getting the type of service they deserve as purchases of high-end products.

“It’s just a little common sense to make sure you and your employees are following the Golden Rule when it comes to dealing with your customers,” he says.