How Luxury Shopping Is Changing
The world of luxury shopping is changing — and younger generations are becoming its guiding light.
A new report from Klarna, a Swedish buy now, pay later (BNPL) platform, reveals that 45% of consumers bought a luxury product in the past 12 months. And while baby boomers and Gen Xers accounted for the bulk of luxury shopping before the coronavirus pandemic, millennials and Gen Zers are now making purchases at far higher rates than their older counterparts.
Here’s what we learned from Klarna about why and where consumers are shopping luxury.
More than 6 in 10 millennials have bought luxury in past 12 months
Indeed, younger generations have been buying luxury products in the past 12 months. (To define “luxury,” Klarna points to price points above $300 for beauty, $500 for fashion, shoes and accessories, $1,000 for jewelry and $1,000 for home.)
More than 6 in 10 millennials (ages 25 to 40) (63%) have bought luxury items in this period, followed by:
- 60% of Gen Zers (ages 18 to 24)
- 46% of Gen Xers (ages 41 to 56)
- 18% of baby boomers (ages 57 to 66)
But why do consumers choose products — and brands — with heftier price tags? At the top of the list, 64% of consumers cite higher-quality materials, followed by:
- Brand name (52%)
- Longevity (50%)
- Authenticity (48%)
- Exclusivity (39%)
On that innovation and new technologies front, 61% of luxury shoppers want to use a mobile app, while 57% want flexible payment options. One flexible option is a BNPL loan, which can help make expensive purchases more affordable by spreading out payments.
BNPL loans are growing in popularity, too, as 36% of consumers say they were at least considering using a BNPL loan in January 2022, according to the LendingTree BNPL Tracker. But it’s important to proceed with caution, especially with more expensive luxury purchases.
Consumers could also consider using a credit card with generous cash back rewards.
Luxury shoppers prefer brick-and-mortar
Amid a global coronavirus pandemic, it’s interesting to track how people are doing their shopping. While 2 in 5 consumers who purchased luxury items last year did so online, physical brick-and-mortar stores appear to be the preferred way to shop for high-end goods.
More than 4 in 5 consumers (84%) say that seeing — and touching — these premium products are essential to the shopping experience.
Across product categories, here’s where consumers lean:
- Food and beverage (45% in-store, versus 16% online)
- Watches and jewelry (45% in-store, versus 18% online)
- Homeware/interiors (37% in-store, versus 18% online)
- Beauty (37% in-store, versus 22% online)
- Health and fitness (36% in-store, versus 23% online)
The only two categories where the findings were flipped were travel (51% online, versus 14% in-store) and fashion (35% online, versus 26% in-store).
Lastly, what matters most in the online shopping experience appears to vary by generation. Older generations care most about paying securely when shopping online (54% of baby boomers, versus 34% of Gen Zers). Younger generations, however, value the option to purchase online and pick up in-store (57% of Gen Zers and 54% of millennials, versus 30% of baby boomers).
These factors matter, so make sure you know what’s most important to you when considering high-price luxury items.
Methodology: Klarna commissioned research agency Dynata to survey more than 5,000 consumers ages 18 and older — including 1,051 in the U.S. The survey was fielded in October 2021.
Generations mentioned in the survey as defined as follows:
- Generation Z, ages 18-24
- Millennials, ages 25-40
- Generation X, ages 41-56
- Baby boomers, ages 57-66
The report also used insights from Klarna’s proprietary shopping index data of 58 million online purchases on its platform, made in the U.S. between January and December 2021.