NEW YORK: A quarter of wealthy consumers would regard an extension by a luxury brand into the mainstream market as potentially damaging to its image but most would continue to buy the product in one or other of its forms, the Luxury Institute has said.
The New York-based consultancy surveyed wealthy consumers with an annual household income of at least $150,000 for its quarterly Wealth Report and found that 80% of respondents would buy an offshoot of a luxury brand, while 75% said they would buy a luxury brand's mainstream line.
A sizeable minority, however, had reservations. As well as the 24% concerned about a brand's image, 28% were skeptical about consumer acceptance and 20% had quality concerns.
"One thing for sure is that consumers, regardless of what price point they're paying, expect great quality from luxury brands," Milton Pedraza, chief executive of the Luxury Institute, told Luxury Daily
"You do need to differentiate your brand offerings with quality, with design, with craftsmanship and with pricing," he added.
Quality was the main differentiator of luxury brands from the mainstream, cited by 60% of respondents, closely followed by price, named by 55%.
Craftsmanship was a factor mentioned by 48%, while 47% referred to prestige and 38% to design.
Pedraza noted that consumers' quality standards had increased for mainstream brands, "but the quality of a luxury brand has to be dramatically higher".
The Wealth Report also discovered that respondents were as likely to buy online as in-store during the past year, with 77% and 78% having done so in the respective channels.
But Pedraza expected the whole idea of "channels" to become redundant.
"As a retailer, it should be about a seamless relationship with your customer," he said. "Stop looking at it as channels, but relationship-building between the channels that you use and they use."
Data sourced from Luxury Daily; additional content by Warc staff