The market for luxury goods in the U.S. may grow slowly, but it still leads the world as an estimated $85 billion industry, and growth is relatively steady (roughly 5% annually), thanks to a growing economy and international tourism. Plus, the forecast for luxury goods is extremely positive, with an estimated growth of more than 50% predicted in the coming decade, based on current trends.
What does this mean for boutique level retailers interested in expanding their brand and increasing profits? A couple of things. First and foremost, it’s time to think about offering luxury goods or moving current products into the luxury marketplace as a way to capitalize on this growing trend. Second, you need to consider the possibility of setting up a retail store in a resort or hotel setting to nab both domestic and international travel business.
Travelers Treat Themselves
A local boutique experience may draw shoppers seeking gifts for others, but tourists have a different mindset; they’re looking to treat themselves while on vacation. Offering luxury goods that appeal to travelers can give you an in to enter this growing market. Further, if you provide exclusive goods in a unique setting, say for a specific hotel chain, you can create an even greater level of demand.
Millennials Versus Boomers
There’s no denying retired boomers have money to spend and a taste for luxury goods, but luxury retailers also want to focus on cultivating a new generation of buyers (i.e., millennials). It is estimated that there are now roughly 99 million millennials and 77 million boomers making up the luxury market. That said, marketing to these two different audiences could be tricky.
On the one hand, boomers have money to spend on luxury goods and they’re a reliably loyal bunch who will continue to support beloved brands. Millennials, on the other hand, want to sample the vast panoply of available goods and services. How do you nab a new market without alienating the old one?
You can kill two birds with one stone by creating a unique, luxury experience. Everyone wants to feel represented and treated well, but millennials value the experiential over the tangible. You must create a desirable experience if you want to get their consumer dollars. Inclusion in a location that offers high-end lodgings, dining, and entertainment options is a great way to target both groups.
Digital Age Amenities
Luxury is not just about being expensive or elite; it’s also about offering added value and convenience. In this day and age, you’ll have to provide digital accommodations, including responsive websites to cater to a growing mobile market, as well as options to buy online and pick-up in store or get items delivered right to a guest room, for example.
While 65% of luxury customers still like to “try before they buy,” so to speak, making physical locations essential, an estimated 75% of luxury shoppers research online before buying, and online luxury sales increased by 24% in 2017, with further growth anticipated. If you’re not offering online conveniences, you’re missing out on a growing market for luxury sales.
Retail Space
Every effort should be made to use higher end display cases, shelving, and fixtures when creating your retail space. Pay close attention to your brand and make sure your store fixtures are on point with your brand. This is not the time to skimp using worn out or beat up store fixtures.
Lighting is also critical. Your lighting should invite shoppers into your store while also showcasing your goods in the most flattering way. Many display cases come with built-in lighting for jewelry or all fine wares. Overhead lighting sets the mood and tone for the overall shopping experience. The right light conveys luxury while the wrong lighting states discount, the opposite of your aim.
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