The idea of luxury is evolving for consumers, as they're spending any extra money they have in a variety of different ways than they did before the recession, according to a report this week by consumer-research company IBIS World. For entrepreneurs, these lifestyle shifts can help spark new business ideas.
"Instead of returning to those discretionary purchases that they previously cut and readily splurging on luxury goods like full-priced jewelry or sports cars, Americans have opted for more subdued, conscientious and functional versions of luxury," wrote Nikoleta Panteva and Agata Kaczanowska, the IBIS analysts who authored the report.
The report defined this "new luxury market" as one where consumers are focused on cheap splurges, tailored attention, and green or healthy choices. These market trends are expected to drive more than $1.5 trillion in revenue this year.
Here, three ways you can tailor your startup to capitalize on the trends:
1. Offer an affordable splurge. While consumers still lust after designer brands, they are demanding deals. In the past 5 years, 73 new sample sale websites -- like Gilt.com and HauteLook.com -- have launched, hawking luxury goods at a discount. IBISWorld expects there to be 89 such sites by the end of the year. In the same time frame, the number of sites selling discount vouchers for goods and services -- like Groupon.com and LivingSocial.com -- has surged to more than 600.
And while consumers are less likely to spend top dollar for fancy destination spa experiences, they are turning increasingly to mini-splurges like a manicure at a nail salon franchise or day spa.
2. Create more personalized options. Shoppers are more likely to crack their wallets if what they are buying has been tailored specifically for them. The market for colorful, individualized tech gadgets is expected to do well this year. And in this vein of personalized goods, the report noted that consumers are willing to spend on adjustable beds and personalized mattresses.
If you have a retail location, think about offering personal shopping assistance or makeovers, lux services offered by some department stores that consumers are willing to shell out for these days. Keep this in mind for your online marketing, too. One reason search engines and social networks are so successful is their ability to gather data on users and personalize their shopping experiences with targeted ads.
3. Show how your product is a healthy and/or eco-friendly choice. Americans are increasingly willing to spend more money on their health and the environment, according to IBIS World data. As a result, farmers' markets are now considered mainstream and consumers are more willing to pay the higher prices of organic food at grocery stores, too. If you're in the snack food business, the report noted that cookie and cracker producers are expected to continue to fetch a premium for organic choices as well.
When it comes to exercise, consumers are treating themselves with expensive gym memberships and fitness classes. The report also noted that Americans are opting more for electric and hybrid vehicles in their effort to be green.
What other lifestyle trends are you seeing that businesses can cash in on? Leave a comment below and let us know.