The Future of Retail and Luxury: Digitas' "Affluence in America: The Next
Research Identifies Five GEN Y Segments Wielding the Greatest Spending Power;
By 2017 Could Be Outspending the Boomer Generation
NEW YORK, Dec. 11, 2012
NEW YORK, Dec. 11, 2012 /PRNewswire/ -- What makes the high-rollers of
Generation Y tick? Digitas, a digitally led global integrated brand agency,
answers that question in a new proprietary study on consumer preferences and
affluence: "Affluence in America: The Next Generation." The study synthesizes
insights from a variety of sources, including the industry-leading Mendelsohn
(Logo: http://photos.prnewswire.com/prnh/20100616/NE22345LOGO )
The study, which follows on previous research released last year—"Affluence in
America: The New Consumer Landscape"—reveals just how crucial Generation Y has
become for luxury marketers. The affluent segment of Generation Y (those ages
18-34, living in a household that earns over $100K in annual income), has both
the largest current and potential spending for luxury items. Research shows
that by 2017, they could be outspending the boomer generation.
"Luxury spending is increasingly becoming the domain of Generation Y" said
George Scribner, SVP/Account Planning, Digitas and leading force behind the
study. "It's important for luxury marketers—and really, all retail
marketers—to hone in on how the millennial generation is redefining the
experience of luxury. Only then can they create the bold ideas and programs
that connect with the Gen Y growth engine."
"Luxury has changed significantly in the past few years, becoming more
personal, more intimate, more value-focused, and more tech-savvy. Looking
ahead, Gen Y will lead these and other trends in luxury – marketers must heed
this generational shift, and heighten their understanding of Gen Y and its
many sub-segments," said Dr. Stephen Kraus, SVP & Chief Insights Officer,
Audience Measurement Group, Ipsos MediaCT.
The study broke down affluent millennials (population: 16.6 million) into five
segments across Aspiring, Emerging, and Affluent.
ASPIRING: Annual HHI: $100-$199K
1. Aspiring Head of Household: Mean Age: 30/ Location: Midwest, South
oThey tend to be married with children, and are likely to prioritize family
(and work-life balance), which can impact future earnings. They are
considered the least wealthy of the Gen Y subsets.
oCareer paths: Technology or finance, but in non-metro regions.
2. Aspiring Children: Mean Age: 23/ Location: Northeast
oThey live at home with their parents. They earn a modest personal income,
but are spending four times that due to access to household income.
oCareer paths: Retail jobs rather than careers, or pursuing "passion"
careers like acting or entertainment.
EMERGING Annual HHI: $100-$199K
3. Emerging Head of Household: Mean Age: 28/ Location: South, West
oThey tend to be unmarried. They spend frugally now, but many are pursuing
career paths that will put them on track to become wealthy in the next
oCareer paths: Creative, upwardly mobile in financial services, technology,
architecture, advertising and real estate.
AFFLUENT Annual HHI: $200K+
4. Affluent Children: Mean Age: 23/ Location: Northeast, South
oThey live at home with their parents. They spend 3x what they earn due to
access to a household income that's 10x their own earnings.
oCareer paths: "Mission" careers like education, the arts, nonprofits or
5.Affluent Head of Household: Mean Age: 30/ Location: Northeast, West
oThey're likely to be married with children, and say that work dominates
oCareer paths: Traditional high-paying careers like medicine, legal and
finance, as well as software design and engineering.
A large portion of affluent Generation Y attains their wealth from their
parents—but they may not be on track for it in the future:
oAffluent and Aspiring Children spend between two and four times their own
income, due to access to their parents' wealth.
oMany of these millennials choose careers that do not put them on track to
become as affluent as their parents.
The takeaway for marketers: Luxury goods marketers must balance between
catering to this financially dependent Gen Y subset now, and cultivating those
who will eventually support themselves by building their own wealth and assets
as they grow in their careers.
What makes millennials buy luxury products? Authenticity, nostalgia and
oAuthenticity: Unique, 'ever-cool' brands, i.e. Ray-Ban, Levi's, Volvo, and
oNostalgia: Heritage brands with a sense of history, i.e. Louis Vuitton,
Chanel, and BMW.
oUtility: Products that fit specific needs of the users, i.e. Hulu,
Netflix, and HBO on Demand.
Definition of "Affluence":
oThe minimum threshold for living a consistently affluent life is $200K
HHI—for all generations.
oGeneration Y segments are middle class in their spending habits and
attitudes if their earnings are between $100-$199K.
oBut the Generation Y segments that have over $200K in HHI are
affluent in the brands they buy and activities they engage in.
oThis correlates with last year's Affluence in America study, which
showed that those 35 and older and making between $100-$199K consider
themselves middle class.
Generation Y Media Habits: Affluent millennials are the most digital of all
oTechnology has become a new driver for consumer patterns of Gen Y, and
also as a means to affluence.
oMedia use is moving toward digital, and younger consumers are early and
frequent adopters of new devices. Whereas earlier analysis found that
youth was a greater indicator of digital behavior, Digitas found that
affluence is a better predictor of device ownership.
oTherefore, affluent millennials are the most digital of all possible
segments, with both the means to buy devices and the inclination to use
Digitas—Leader in Research and Insights
This second "Affluence in America" study comes on the heels of a number of
other research initiatives launched by Digitas. Just recently, the agency
released research on holiday shopping that analyzed over 2.6 million social
media conversations. And right before that, Digitas released a survey that
predicted the rise of "Mobile Thursday" for the Thanksgiving holiday—and was
proven right through later data from IBM and others.
The agency has also launched a series of industry predictions for 2013 on its
blog, with global insights across mobile, brand content, design, and more.
Contact: Julie Gomstyn, +1-617-369-8020, email@example.com
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