Wealthy older consumers ready to splurge on luxury, says Underhill

Paco Underhill, founder and managing director of retail consultancy Envirosell, in a recent interview on BusinessWeek Online said that older, wealthier shoppers will use the holidays as an excuse to treat themselves or their families to once-in-a-lifetime splurges.

In a question-and-answer segment, Nov. 17, on the online edition of the weekly business magazine, Underhill said that an older population, signs of an economic turnaround, and political instability are contributing to what he predicts to be a good holiday season.

“One of the hot buttons driving sales this season will be a feeling of, ‘If not now, then when?’ ” Underhill said. “A significant number of people are going into the last third of their lives. The people with money are getting to a point where they’re starting to see a turnaround in the larger economy but not necessarily in the political world. There are things they have always wanted, and they’re thinking that if they don’t get it now, they may never get it.”

Because of these trends, Underhill says luxury items will be popular this holiday season. “There are different things for different kinds of people. It might be a second home, a Rolex watch, a boat, or an Alaskan cruise. People are in effect gifting themselves as well as gifting other people.”

He adds that retailers are doing a better job this year at creating a quality shopping experience for consumers.

“The merchant and the marketing community have woken up to the fact it’s the quality of customer experience that governs whether they manage to sustain a relationship,” he said. “Their goal should be to have the customer walking away thinking about the experience they just had rather than the price they paid.”

He also said that online companies are doing a “fabulous” job.

“It knows where its place is—it’s about convenience and making good use of bricks and clicks. It’s about leveraging relationships,” he said. “It’s not only a sales vehicle but a marketing vehicle.”