Over the years, the spending habits of the luxury consumer have changed from a focus on acquiring physical goods to display social status to one that fosters a particular type of lifestyle through elite experiences.
Skosana says that over the past 27 years MasterCard has been tracking the needs of affluent consumers in Africa and has seen some interesting consumer lifestyle changes.
“One of the biggest changes we’ve seen has been the maturation of luxury purchases, from the traditional brand consumption to display status to the current travel and experiences purchases,” he says.
He goes on to explain that this shift doesn’t imply that luxury brand purchases have declined, but that consumers are now looking for a happy medium between material status goods and unique experiences.
“Consumers are now balancing their purchasing power between acquiring material status goods and the new social currency of unique experiences, such as visiting an art exhibition, learning a new skill, travelling and exploring dining outlets,” Skosana explains.
Providers need to create a bespoke service offering that distinguishes between mass and premium offerings.
This is an unusual shift in the spending choices of the elite which Skosana attributes to the need for exclusivity and to the rise of social media sharing platforms, like Instagram and Facebook.
“Consumers are constantly approached to buy certain goods. This purchasing pattern continues to a point where they question the need for the next “must-have” [item]. It is at this point, they search for unique purchases and experiences. The generational focus on social media has also resulted in this new social currency of enjoying unique experiences and sharing it with one’s community,” he maintains.
Out of the various spending categories, most invest in travelling, whether domestic and international. Other experience purchases South Africans are making include exclusive dining, high-end shopping and sporting activities or events. There’s also been a rise in the prevalence of polo events in the past year, which is seen as a luxury sport, as well as a fashion experience.
“We’ve found that premium sporting events are key experiences that affluent consumers want to enjoy with their friends and families,” Skosana said.
With this in mind, it’s imperative that luxury brands and service providers tailor their approach to meet and align with the evolving spending habits of the consumer. Skosana believes that brands need to focus more on the consumer’s overall experience, rather than simply on sales transactions.
“A consumer’s path to purchase also needs to be premium – with retailers focusing on all touch points – starting with brand awareness to the actual in-store sale. On the service side, providers need to create a bespoke service offering that distinguishes between the mass and premium offerings,” he concludes.