As retailers look to drive loyalty with high-income consumers, apparel and accessories emerge as a key point of entry for winning the biggest earners. The February/March installment of the PYMNTS Intelligence series “New Reality Check: The Paycheck-to-Paycheck Report: Why One-Third of High Earners Live Paycheck to Paycheck,” drew from a January survey of more than […]
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As retailers look to drive loyalty with high-income consumers, apparel and accessories emerge as a key point of entry for winning the biggest earners.
The February/March installment of the PYMNTS Intelligence series “New Reality Check: The Paycheck-to-Paycheck Report: Why One-Third of High Earners Live Paycheck to Paycheck,” drew from a January survey of more than 4,200 U.S. consumers to understand how those across income groups are spending their money. The results revealed that the highest earners are willing to carve out a significant portion of their paycheck for clothing and other fashion-related nice-to-haves.
Specifically, the study found that those who earn more than $200,000 a year spend the greatest portion of their personal income on clothing, accessories and personal care items — 8.5%, versus the population-wide 7.2%. Moreover, consumers who earn more than $100,000 a year were the likeliest to say that clothing and personal care had a high or very high impact on their budget in the last 12 months.
As such, retailers are going after this demographic, tailoring their apparel businesses to meet their needs. On the higher end, for instance, luxury fashion eCommerce platform Mytheresa shared on its most recent earnings call that it is turning its focus away from “aspirational” deal seekers, shifting to prioritizing shoppers with excess cash on hand, per CEO Michael Kliger’s comments.
He noted that shoppers in this higher income bracket “have the far better economics” as well as “far better loyalty ratios” and “far higher average order [value].”
It is not just luxury brands looking to meet this demand. Mass market retailers are also adjusting their clothing portfolios to include items that appeal to this demographic. Take, for instance, retailers such as Target and H&M, which have partnered with high-end designers on lines that are more accessible than those designers would usually offer but pricier than the retailers’ typical fare.
“For Target, it’s a way to pay off its ‘expect more, pay less’ brand proposition and amplify the ‘Tarjay’ moniker coined by shoppers who like the idea of buying upscale designer products without the upscale designer price tags,” PYMNTS’ Karen Webster observed in a recent feature. “It’s a playbook that Walmart has apparently been studying and is now rolling out at 800 stores.”
PYMNTS Intelligence research highlighted in the feature showed that 35% of Walmart’s shoppers made more than $100,000 a year as of November, up from 30% in December 2021, suggesting that the retailer’s efforts to drive penetration with higher-income shoppers are proving at least somewhat successful.
Yet it seems that, on the highest end, luxury shoppers may be turning away from retailers towards brands, shopping more from direct-to-consumer (D2C) stores and eCommerce platforms. Luxury brands are stepping up their D2C efforts, while traditional retailers are facing challenges.
Indeed, PYMNTS Intelligence research has found that those with annual incomes over $100,000 are disproportionately likely to prefer shopping from a brand’s online store versus a retailer’s. Thirty-one percent of high-income consumers report preferring D2C channels, considerably higher than the 27% of those who earned $50,000-$100,000 and the 24% of those who earned less than $50,000 who said the same.
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