LUXURY CONSUMER INSIGHTS

LAB europe

How the Truly Affluent Shop Luxury Online

Preview of the latest LAB online study:

the ONLINE LUXURY INDEX 2013

&

MA G AZ IN ES  

EXCLUSIVELY FOR PLATINUM® AND CENTURION® MEMBERS FROM AMERICAN EXPRESS®

LUXURY ADVISORY BOARD 2013

LUXURY CONSUMER INSIGHTS

Contents §  Methodology

§  Audience Profile

§  Trends: 2011 vs. 2013, Consumer Behavior §  Comparison Online / Offline purchases §  Breakdown: product segments, frequency and spending limits §  Best shopping experiences §  Last but not least: how to reach this potential

LUXURY CONSUMER INSIGHTS

LAB europe

LUXURY ADVISORY BOARD 2013

How the Truly Affluent Shop Luxury Online

methodology

Methodology

What is important for us to find out? §  Do luxury consumers purchase high-end luxury products online?

§  If so, where do they draw the line?

§  How much is the online share compared to their total expenditure for luxury products?

§  What about off-line?

§  Which online channels are preferred?

§  Which product categories?

Methodology

Origin

Field time:

Field:



16-26 May 2013

n = 188

CENTURION

n = 397

DEPARTURES

n = 585

TOTAL

Middle East Finland Austria Region 2% 2% Denmark 1% 2% Spain France 2% 4% Switzerland United 6% Kingdom 33% Other 7% Sweden 7% The Netherland s 8%

Italy 8%

Germany 18%

5

Methodology

PLATINUM and CENTURION as ‘Filter’ HNWI HN

46 years € 369,000 Gross HHI

HNWI WI

HNWI

47 years € 986,000 Gross HHI

Highly affluent, credit worthy and high spending Cardmembers

= REAL HIGH-END LUXURY CONSUMERS 6

LUXURY CONSUMER INSIGHTS

LAB europe

LUXURY ADVISORY BOARD 2013

How the Truly Affluent Shop Luxury Online

Audience profile

audience profile

Average House Hold Income (Gross)

Compared to those who participate in the print surveys, the Online panel is similarly affluent

HHI

HHI TOTAL DEPARTURES CENTURION

8  

AVERAGE

CONTINENTAL EUROPE

UNITED KINGDOM

€ 564,000 € 369,000 € 986,000

€ 594,000 € 357,000 € 1,216,000

€ 526,000 € 396,000 € 758,000

8

Consumer profile

Age Compared to those who participate in the print surveys, the Online panel is 5 years younger on average (with the majority of 72% between 35 and 54 years).

Age AGE TOTAL DEPARTURES CENTURION

9  

AVERAGE

CONTINENTAL EUROPE

UNITED KINGDOM

46.5 46.2 47.3

46.4 45.8 48

46.5 46.5 46.5

9

Consumer profile

High Acceptance of Technology OWNERSHIP OF DEVICES IN %

Laptop Desktop Laptop & Desktop Smartphone Tablet Smart TV Smartphone & Tablet Smartphone, Tablet &

60% 80% 58%

own both – a Smartphone & Tablet

41% 78% 74% 14% 60% 49%

10

LUXURY CONSUMER INSIGHTS

LAB europe

LUXURY ADVISORY BOARD 2013

How the Truly Affluent Shop Luxury Online

Trends: 2011 vs. 2013 Consumer shopping behavior

Shopping Luxury Products Online Now Widely Accepted Willingness has increaseD 2011

2013

yesterday

44%

stated that they already bought luxury brand products online

In 2013,



25% considered this for the

Today,

In 2011,

future

Source:  2011,  2013  LAB  Europe  

today

86% of these affluent

consumers shop luxury products online

41% admit that their

willingness to buy luxury products online has increase in the last 2 years.

12

Luxury Consumers are Multi^Channel Shoppers Online Frequency set to increase Offline retail remains No. 1 retail channel, but Online shopping frequency sees 3 times the growth. Mobile, especially via Tablet gaining Momentum.

LUXURY ITEMS % SHOPPING AT LEAST ONCE A MONTH OFFLINE In-Store ONLINE MOBILE Laptop Desktop Tablet Smartphone

38% 44% 35% 34% 22%

74% 58%

% WHO WILL SHOP MORE OFTEN IN THE FUTURE

16% 41% 38% 27% 20% 34% 28% 13

Spending On Luxury Products Online ONLINE PORTION OF TOTAL LUXURY Spend? Approximately what percentage of your total expenditure on luxury items do you spend online?

0% percent

8%

10%-20%

38%

30%-40%

27%

50% or more

28%

The majority of 65% spends 10-40% of their total luxury budget online

TOTAL On average:

32%  

of total luxury expenditure happens Online 14

RESEARCH before purchasing ONLINE 86% of respondents research often, very often or always before they order a product ONLINE

7%

RESEARCH BEFORE PURCHASING ONLINE

8%

Never 3%

Occasionally

O$en

8% 8% 6% 11% 11% 11% 24% 27%

Very o$en 20%

51% 46%

Always

59% TOTAL

Continental Europe

United Kingdom 15

RESEARCH before purchasing in-store 82% of respondents research often, very often or always before they order a product IN-STORE.

Never

RESEARCH BEFORE PURCHASING IN-STORE

5% 6% 3% 12%

Occasionally

13% 10% 15% 17%

O$en 12%

30% Very o$en

32% 28% 37%

Always

31% 47% 16

Preferred online shopping channel PREFERRED LUXURY SHOPPING ONLINE RETAIL CHANNELS (RESPONDENTS IN %)

70%

Brand's own website/shop Online shops of retail w/ physical locations

57%

Online Only luxury retail offering multiple brands Off-price online luxury retailers/ shopping communities

Any of these (given authenticity)

45%

e.g. boss.com, tiffany.com,...

e.g. harrods.com, saksfi#havenue.com,... e.g. net-a-porter.com, stylebop.com, ...

31% e.g. vente-privee.com, myhabit.com, ...

57%

‘As long as I can be certain that I will receive the original and not a replica/ copy, I have no problem purchasing luxury items through any of these.’

17

LUXURY CONSUMER INSIGHTS

LAB europe

LUXURY ADVISORY BOARD 2013

How the Truly Affluent Shop Luxury Online

BREAKDOWN: Product segments, frequency, and spending limits

Luxury and general product categories % RESPONDENTS SHOPPING IN MULTIPLE CATEGORIES LUXURY ITEMS

GENERAL ITEMS 86% 95% 78% 91%

At least 1 category More than 1 category 61% 64% 59%

Wine/Champagne/Spirits Consumer Electronics

56%

Apparel/Clothing Food/Delicacies/Specialty Beauty Products/Cosmetics Accessories Shoes Interior Décor Handbags Furniture Watches Jewellery

25%

80%

74% 55% 64% 50% 64% 45% 57% 39% 52% 37%

25% 31% 21% 32% 20% 24% 19% 22%

RANKING LUXURY CATEGORIES (EXCLUDING FMCG) RANKING LUXURY PRODUCTS

% ORDER/ HAVE ORDERED

Apparel/Clothing

56%

Beauty Products/Cosmetics

50%

Accessories

45%

Shoes

39%

Handbags

25%

Interior Décor

25%

Furniture

21%

Watches

20%

Jewellery

19% 19

Online Shopping Q2. 2013 vs. Q.2 2011 Trending INCREASE ACROSS ALL SEGMENTS 2011

2013

% INCREASE

Consumer Electronics Apparel Wine, Champagne & Spirits Beauty Products/Cosmetics Food/Delicacies/Groceries Shoes

73% 56% 52% 45% 38% 36%

79% 75% 62% 63% 52% 51%

+8% +34% +19% +40% +26% +41%

Watches

16%

27%

Jewellery

12%

21%

+69% +75%

Top Categories

Source:  2011,  2013  LAB  Europe  

20

Growth potential across all categories % PARTICIPANTS TOTAL POTENTIAL ACROSS ALL CATEGORIES Ranked by current online customers…

HAVE ORDERED

CONSIDER ORDERING

Wine/Champagne/Spirits

61%

Consumer Electronics

59%

Neither/Nor

20%

19%

21%

19%

Apparel/Clothing

56%

19%

26%

Food/Delicacies/Specialty Foods

55%

21%

24%

50%

Beauty Products/Cosmetics

23%

45%

Accessories

28%

39%

Shoes

27% 27%

23%

38%

Interior Décor

25%

30%

45%

Handbags

25%

28%

47%

Furniture

21%

Watches

20%

Jewellery

19%

30% 26% 25%

49% 54% 56% 21

Open Question Participation: CEN: 82% DEP: 77%

Big Ticket Items Online? Most Definitely! The Possibilities Are Unlimited! Here is a selection of original open answers from LAB members…

“

“Wrist watch €3,500”

“Women’s costume €5,000”

“Powerplate €5,000”

“Vintage Charles Eames chairs €8,000”

“Louis Vui&on bag €3,000”

“Clothing €1,500” “iPad-Tablet €800”

“YSL shoes €650” “Perfume €165” “Champagne €50”

“Designer Bag £15,000”

“Flight tickets €10,000”

What is the most you spent on a single luxury online purchase? “Diamond €12,500,000”

“Louis Vui&on Trunk €15,000”

“Wine €20,000”

“Vacation Rental €15,000”

“Diamond necklace €23,000”

“Boat €2,600,000”

“Diamond €25,000”

“Watch €35,000”

“Car €120,000”

“Furniture €60,000”

22

What Is The Spending Threshold? Threshold quantified in brackets HIGHEST AMOUNT EVER SPENT ONLINE - AVERAGED

43,3%

26,5%

32,8% 28,6% 22,4% 19,3%

CENTURION

DEPARTURES

€9,700

€ 3,400

22,5%

4,9%

23

What is the most you spent on a single luxury online purchase, and what was it? Highest amounts spent on jewels & watches DEPARTURES

CENTURION

jewellery

5.830 €

watches

5.560 € 3.800 €

furniture/interior décor bags

3.200 € 1.890 €

technology clothing wine/spirits beauty products

670 €

food

625 €

accessories

625 €

shoes

590 €

other

12.000 €

furniture

11.755 €

jewellery

8.700 €

bags

5.943 €

Wine/Spirits

1.260 € 930 €

watches

DEPARTURES Total Average

€ 3,400

technology

2.650 €

clothing

2.163 €

CENTURION Total Average

accessories

2.112 €

€9,700

shoes Beauty products

3.800 €

3.200 €

Other

675 € 165 €

18.000 €

24

What Was Your Best Online shopping experience and why?

25

What was your best online shopping experience, and why? One participant delivers a great summary…

“

“1. Amazon. The breadth of product is incredible. And if Amazon Prime, then shipping usually free. Stores my credit card details. While not in the luxury bracket per se, I would estimate that I spend on general merchandise etc... with Amazon $20,000 p.a.

2. Ocado. So much be#er than any of the supermarket sites. Keeps my favourites, credit card details etc...

3. Burberry. If you cannot find it in store, you can usually find it on line with Burberry. And the runway to reality/made to order following a runway show to buy before it hits the bricks and mortar store is great. Plus, it is not just an e-commerce/digital commerce site. There are also brand experiences.”

26

Best Online Shopping Experience? Moët & Chandon Group vintage Champagne. Good website, efficient delivery, great packaging.

Hermes; the colour, creativity and a calm website. It matched the experience in store. Online buying from Ralph Lauren store is a nice experience, you get exactly what you see HUGO BOSS online store, good and clear layout, excellent customers' relations women handbag - Parazul - saw them in the Caribbean, could not find locally. Online was perfect. eBay and Amazon for everyday, but Prada is a good luxury site. Levenger. Simple and offers advantages, rather than being a pale imitation of the store. marks and spencer - even when things go wrong they fix it Good and fast service is always a good experience, and that your additional questions are quickly answered by email. Best so far Saint Laurent. Creme De La Mer due to follow up service Mr Porter: very easy and excellent service, very fast. Ralph Lauren: Excellent service. 27

Best Online Shopping Experience? Believe it or not, Ocado - easy website, lots of options, lots of 'did you forget' things which make 'spontaneous' shopping easy, lots of accurate recommendations. (any shop that can do proper recommendations is great for me, I am a lazy shopper and I like others to 'shop' for me) Purchase from Apple.com - when spending a lot of money it is good to know a site is secure, confirmation emails are received, and payment is to a trusted brand you recognise. I could have made purchase elsewhere and probably saved some money, but I'm willing to pay for security. Ordering recent designer clothing from yoox.com, got items I haven't found in store because they were sold out. Free delivery, free returns - no questions asked 28 day return period

I have had many and mostly due to quick delivery, personal service, good prices and special surprise treats inside the boxes. Several. What they have in common: Excellent service, personal a#ention like genuine handwri#en thank-you notes with the order, calling you if necessary etc. Buying my Ralph Lauren Pyjamas from a website called Matches as American Express gave me 20% off my order for being a Platinum Charge Card member.

28

traditional marketing as basis % LAB AGREEMENT: ADVERTISING IN THE FOLLOWING MEDIA IS TRUSTWORTHY AND RELIABLE...

DEPARTURES/CENTURION

83%

Magazines

72%

Newspapers

59%

TV Internet

49% 39%

PROMOTIONS THAT TRIGGER THE RESEARCH AND/OR PURCHASE OF LUXURY PRODUCTS 1. Advertisement in DEPARTURES/CENTURION 2. Advertisement in magazines 3. Advertisements in newspapers 4. Advertisements on a website

DEPARTURES CENTURION 66% 64% 46% 42%

68% 60% 42% 42% 29

Online media comparison % LAB AGREEMENT: ADVERTISING IN THE FOLLOWING MEDIA IS TRUSTWORTHY AND RELIABLE...

80%

77% 41%

DEPARTURES website

Internet

35%

CENTURION website

Internet

Luxury brands need to place online campaigns in a fi%ing and trusted environment in order not to devalue their brand image. 30

Crossmedia is the solution PURCHASE  

RESEARCH   ONLINE  /   IN-­‐STORE  

ONLINE  

PRINT  =  BASIS   31

THANK YOU!

questions?

Irena Raltcheva DEPARTURES & CENTURION Magazine

[email protected]

32

Appendix  

33

What is the most you spent on a single luxury online purchase, and what was it? MOST FREQUENT MENTIONS DEPARTURES

CENTURION

technology

31%

watches

10%

technology

26%

watches

15%

wine/spirits

8%

clothing

furniture/interior décor

8%

Wine/Spirits

7%

bags

7%

clothing

7%

bags

6%

travel

4%

shoes

4%

jewellery

4%

beauty products

2%

food

1%

accessories

1%

8%

furniture

6%

Motoring

5%

travel

3%

shoes

3%

jewellery

2%

accessories

2%

boat

0%

diamond

1%

motoring

0%

Beauty products

1%

other

13%

Other

15% 34

What is the most you spent on a single luxury online purchase, and what was it? DEPARTURES technology

31%

watches

10%

wine/spirits

8%

furniture/interior décor

8%

clothing

4%

shoes

4%

jewellery

4%

3.800 € 3.200 € 1.890 €

technology clothing wine/spirits

1.260 € 930 €

beauty products

670 €

1%

food

625 €

1%

accessories

625 €

shoes

590 €

beauty products

2%

food accessories boat

0%

motoring

0%

other

5.560 €

watches

bags

6%

travel

5.830 €

furniture/interior décor

7%

bags

jewellery

13%

other

3.800 €

35

What is the most you spent on a single luxury online purchase, and what was it? CENTURION technology

26%

watches

15%

clothing

watches

12.000 €

furniture

11.755 €

8%

Wine/Spirits

7%

bags

7%

furniture

jewellery

Wine/Spirits

5%

travel

3%

shoes

3%

technology

2.112 €

accessories

accessories

2%

shoes

Beauty products

1%

Other

Beauty products

15%

2.650 € 2.163 €

2%

1%

3.200 €

clothing

jewellery

diamond

5.943 €

bags

6%

Motoring

8.700 €

Other

675 € 165 €

18.000 € 36

Luxury Categories (EXCLUDING FMCG) ADDITONAL LUXURY ONLINE BUYERS

% BUYING ONLINE IN THE FUTURE

EXCERPT - RANKING % CURRENTLY BUYING ONLINE RANKING LUXURY PRODUCTS Apparel/Clothing Beauty Products/Cosmetics Accessories Shoes Handbags Interior Décor Furniture Watches Jewellery

% ORDER/ HAVE ORDERED

56% 50% 45% 39% 25% 25% 21% 20% 19%

CONSIDER ORDERING

Furniture

30%

Interior Décor

30%

Accessories

28%

Handbags

28%

Watches

26%

Jewellery

25%

Shoes

23%

Beauty Products/

23%

Apparel/Clothing

19%

37

Number of Orders and Amount per Order (NOT Luxury Specific) The Spending Depends On The Degree Of Affluence AVERAGE NUMBER ORDERS PER YEAR

AVERAGE AMOUNT PER ORDER DEPARTURES vs. CENTURION PARTICIPANTS Food

16,5 Food

Apparel/Clothing

12,5 Apparel 10,9

Wine/Champagne/Spirits

Wine

Beauty Products/Cosmetics

10,8 Beauty Products/Cosmetics

Consumer Electronics

8,4 Consumer Electronics

Accessories

6,0 4,3

Shoes Interior Décor

2,7

Accessories Shoes Interior Décor

Handbags

2,0

Handbags

Jewellery

2,0

Jewellery

Furniture

2,0

Furniture

Watches

1,5 Total

Watches

330 € 460 € 500 €

2.260 € 370 € 850 € 300 € 400 € 800 € 1.150 € 260 € 450 € 420 € 650 € 540 € 970 € 730 € 820 € 920 € 2.150 € 2.050 € 2.840 € 1.840 € 5.040 € DEPARTURES CENTURION

38

Do They Shop Exclusively Online? ONLINE RETAIL special importance % BUYING LUXURY ITEMS EXCLUSIVELY ONLINE MARKET COMPARISON Luxury Items Consumer Electronics

26%

Wine/Champagne/Spirits

23%

Beauty Products/Cosmetics

20%

Food/Delicacies/Speciality Foods

18%

Apparel/Clothing

18%

Accessories

18%

Shoes

15%

Handbags

12%

Interior Décor

11%

Watches

11%

Furniture Jewellery

TOP 3 – LUXURY GOODS 1.  Apparel/Clothing 2.  Accessories 3.  Shoes

11% 8% 39

Best Online Shopping Experience? Moët & Chandon Group vintage Champagne. Good website, efficient delivery, great packaging.

Hermes; the colour, creativity and a calm website. It matched the experience in store. Online buying from Ralph Lauren store is a nice experience, you get exactly what you see HUGO BOSS online store, good and clear layout, excellent customers' relations women handbag - Parazul - saw them in the Caribbean, could not find locally. Online was perfect. eBay and Amazon for everyday, but Prada is a good luxury site. Levenger. Simple and offers advantages, rather than being a pale imitation of the store. marks and spencer - even when things go wrong they fix it Good and fast service is always a good experience, and that your additional questions are quickly answered by email. Best so far Saint Laurent. Creme De La Mer due to follow up service Mr Porter: very easy and excellent service, very fast. Ralph Lauren: Excellent service. 40

Best Online Shopping Erfahrung? Believe it or not, Ocado - easy website, lots of options, lots of 'did you forget' things which make 'spontaneous' shopping easy, lots of accurate recommendations. (any shop that can do proper recommendations is great for me, I am a lazy shopper and I like others to 'shop' for me) Purchase from Apple.com - when spending a lot of money it is good to know a site is secure, confirmation emails are received, and payment is to a trusted brand you recognise. I could have made purchase elsewhere and probably saved some money, but I'm willing to pay for security. Ordering recent designer clothing from yoox.com, got items I haven't found in store because they were sold out. Free delivery, free returns - no questions asked 28 day return period

I have had many and mostly due to quick delivery, personal service, good prices and special surprise treats inside the boxes. Several. What they have in common: Excellent service, personal a#ention like genuine handwri#en thank-you notes with the order, calling you if necessary etc. Buying my Ralph Lauren Pyjamas from a website called Matches as American Express gave me 20% off my order for being a Platinum Charge Card member.

41