Five ways to sell to the Rich: Affluent finds shopping experience more important

Published in Philippine Daily Inquirer, February 9, 2007

DON’T LOOK NOW, but shopping or consumptive behavior is not always meant to serve basic or physiological needs. As one’s income and lifestyle improves, socialpsychological needs emerge where people engage in unplanned purchases and where the shopping process and experience has become more important than the purchase of the final good or service. No doubt these needs are fuelled by today’s more sophisticated retail environments and pleasurable buying experiences.

Why Shop

Urban geographer and anthropologist turned consumer researcher Paco Underhill invokes retail therapy to explain this type of consumer behavior specially evident among those with money to burn “where shopping or consumption becomes a reward, bribe, pastime, an excuse to get out of the house, a social encounter, an entertainment, a form of education…” Economists Peter Earl and Jason Potts in their article Latent Demand and the Browsing Shopper published in the Managerial and Decision Economics journal affirmed, “Some people may thus shop because their social lives are largely empty: a visit to a mall opens up opportunities for social encounters, at least including interactions with store personnel if not with other shoppers”.

Where is affluent money spent on

Dr. Yuwa Hedrick-Wong, economic advertiser to Mastercard Worldwide in Asia- Pacific reveals that among Asia’s affluent markets that include Australia, Hongkong, Japan, Korea, Singapore and Taiwan, much of the discretionary spending (estimated at $282B in 2004 and projected to rise to $335B) specially by women consumers is devoted to dining out, personal travel, visiting health spas and other recreational and leisure activities. In the Philippines, there is a slight variation in discretionary spending dining comes first, followed by personal care and third is household appliances. On the other hand, the top three discretionary spending of the elderly household in affluent Asia amounting to 235.2B in 2005 and projected to rise to 306.10B in 2015 follows the same pattern as the affluent women consumers – dining and entertaining, shopping and travel and leisure activities. The same breakdown applies to elderly households in the Philippine market with a combined discretionary spending of 1.04B in 2005 projected to rise to 1.69B in 2015.
Data on discretionary spending reveals how rising income causes a change in buying behavior and preference from basic necessities to pleasurable and socially consumptive experiences.

Five ways to cater to affluent markets

There are at least five ways to cater to markets with discretionary spending. These are:

  1. Create a feel good selling environment. Consumers with high disposable income often replace goods before these wear out or consume the same type of services frequently than should be. G.A. Katona in his book, The Powerful Consumers, state that “consumers who become optimistic will dispose of old durables that in a more pessimistic frame of mind, they were inclined to keep using”. For example wealthy silver geries are likely to spend more than the usual when assisted by highly affable and responsive sales staff and in retail environments that allow them to conveniently browse and touch merchandise without having to reach or stoop dangerously high or low.
  2. Differentiate your product or service. Wealthy consumers are attracted to good and services that go beyond the norm or standard acceptable product or service in the category. Apple Mac products is the brand of choice of many among the affluent markets because of its sleek, stylish design and customer friendly feature not found among its more conventional, staid competitors. So with no-sting, no alcohol Oracare mouthwash that has become the favored oral care product among the affluent resulting in the recent introduction of an upsize 500ml version to cater to its more fastidious consumers.
  3. Offer a range of inter-related or complementary products or service to the mother product. Since quite a number among the affluent market consider shopping a retail therapy, consumed by the shopping process rather than the product bought, the buying spree becomes more engaging particularly if there is a sequential mode to it. For example, purchase of the latest designer bag from Louis Vuitton can lead to a pair of matching shoes, a suit, a headdress, etc. all from the same brand.
  4. Create avenues for social encounters and/or education. Many among the affluent market are avid learners and networkers. While this is so, activities must live up to the discriminating standard and preferences of this market. One must note that an increase in the time spent in the retail area is likely to increase the probability that the potential buyer will make substantial purchases.
  5. Let your window and merchandise displays stimulate consumer interest. Affluent shopping begins with browsing hence, window and merchandise displays are like tools of courtship that must work hard to acquire consumer approval.