Welcome!

IBM Cloud Authors: Yeshim Deniz, Elizabeth White, Pat Romanski, Liz McMillan, Stefan Bernbo

News Feed Item

The Future of Retail and Luxury: Digitas' "Affluence in America: The Next Generation"

Research Identifies Five GEN Y Segments Wielding the Greatest Spending Power; By 2017 Could Be Outspending the Boomer Generation

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 Affluent Survey.

(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.

Key Findings:

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

  • They 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.
  • Career paths: Technology or finance, but in non-metro regions.

2. Aspiring Children: Mean Age: 23/ Location: Northeast

  • They live at home with their parents. They earn a modest personal income, but are spending four times that due to access to household income.
  • Career 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

  • They 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 decade.
  • Career 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

  • They 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. 
  • Career paths: "Mission" careers like education, the arts, nonprofits or counseling.

5. Affluent Head of Household: Mean Age: 30/ Location: Northeast, West

  • They're likely to be married with children, and say that work dominates their lives.
  • Career 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:

  • Affluent and Aspiring Children spend between two and four times their own income, due to access to their parents' wealth.
  • Many 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 utility.

  • Authenticity: Unique, 'ever-cool' brands, i.e. Ray-Ban, Levi's, Volvo, and YSL.
  • Nostalgia: Heritage brands with a sense of history, i.e. Louis Vuitton, Chanel, and BMW.
  • Utility: Products that fit specific needs of the users, i.e. Hulu, Netflix, and HBO on Demand.

Definition of "Affluence":

  • The minimum threshold for living a consistently affluent life is $200K HHI—for all generations.
    • Generation Y segments are middle class in their spending habits and attitudes if their earnings are between $100-$199K.
    • But the Generation Y segments that have over $200K in HHI are affluent in the brands they buy and activities they engage in.
    • This 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 possible segments.

  • Technology has become a new driver for consumer patterns of Gen Y, and also as a means to affluence.
  • Media 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.
  • Therefore, affluent millennials are the most digital of all possible segments, with both the means to buy devices and the inclination to use them heavily.

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.

SOURCE Digitas

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

IoT & Smart Cities Stories
The deluge of IoT sensor data collected from connected devices and the powerful AI required to make that data actionable are giving rise to a hybrid ecosystem in which cloud, on-prem and edge processes become interweaved. Attendees will learn how emerging composable infrastructure solutions deliver the adaptive architecture needed to manage this new data reality. Machine learning algorithms can better anticipate data storms and automate resources to support surges, including fully scalable GPU-c...
Machine learning has taken residence at our cities' cores and now we can finally have "smart cities." Cities are a collection of buildings made to provide the structure and safety necessary for people to function, create and survive. Buildings are a pool of ever-changing performance data from large automated systems such as heating and cooling to the people that live and work within them. Through machine learning, buildings can optimize performance, reduce costs, and improve occupant comfort by ...
The explosion of new web/cloud/IoT-based applications and the data they generate are transforming our world right before our eyes. In this rush to adopt these new technologies, organizations are often ignoring fundamental questions concerning who owns the data and failing to ask for permission to conduct invasive surveillance of their customers. Organizations that are not transparent about how their systems gather data telemetry without offering shared data ownership risk product rejection, regu...
René Bostic is the Technical VP of the IBM Cloud Unit in North America. Enjoying her career with IBM during the modern millennial technological era, she is an expert in cloud computing, DevOps and emerging cloud technologies such as Blockchain. Her strengths and core competencies include a proven record of accomplishments in consensus building at all levels to assess, plan, and implement enterprise and cloud computing solutions. René is a member of the Society of Women Engineers (SWE) and a m...
Poor data quality and analytics drive down business value. In fact, Gartner estimated that the average financial impact of poor data quality on organizations is $9.7 million per year. But bad data is much more than a cost center. By eroding trust in information, analytics and the business decisions based on these, it is a serious impediment to digital transformation.
Digital Transformation: Preparing Cloud & IoT Security for the Age of Artificial Intelligence. As automation and artificial intelligence (AI) power solution development and delivery, many businesses need to build backend cloud capabilities. Well-poised organizations, marketing smart devices with AI and BlockChain capabilities prepare to refine compliance and regulatory capabilities in 2018. Volumes of health, financial, technical and privacy data, along with tightening compliance requirements by...
Predicting the future has never been more challenging - not because of the lack of data but because of the flood of ungoverned and risk laden information. Microsoft states that 2.5 exabytes of data are created every day. Expectations and reliance on data are being pushed to the limits, as demands around hybrid options continue to grow.
Digital Transformation and Disruption, Amazon Style - What You Can Learn. Chris Kocher is a co-founder of Grey Heron, a management and strategic marketing consulting firm. He has 25+ years in both strategic and hands-on operating experience helping executives and investors build revenues and shareholder value. He has consulted with over 130 companies on innovating with new business models, product strategies and monetization. Chris has held management positions at HP and Symantec in addition to ...
Enterprises have taken advantage of IoT to achieve important revenue and cost advantages. What is less apparent is how incumbent enterprises operating at scale have, following success with IoT, built analytic, operations management and software development capabilities - ranging from autonomous vehicles to manageable robotics installations. They have embraced these capabilities as if they were Silicon Valley startups.
As IoT continues to increase momentum, so does the associated risk. Secure Device Lifecycle Management (DLM) is ranked as one of the most important technology areas of IoT. Driving this trend is the realization that secure support for IoT devices provides companies the ability to deliver high-quality, reliable, secure offerings faster, create new revenue streams, and reduce support costs, all while building a competitive advantage in their markets. In this session, we will use customer use cases...