Lauren Clark LXFM 730 Winter 2012

Luxury Consumer Category Analysis

Generation Y Facts:

Known as “Millennials” Born 1977 to 1994 80 million strong Grew up with school shootings, 9/11, Hurricane Katrina, Iraq

Plagued with high levels of student debt Proficient with technology Confident Social Celebrate diversity Collaborative

Generation Y Consumer Spending

Based on an American Express report, traditional or old money consumers made up just 10% of the luxury market but did 70% of the spending. During the recession, 25% of these people slashed their spending and they haven’t returned to their old habits. Now, old money consumers make up just 40% of luxury spending, and Generation X and Y shoppers make up the rest.

-GenY influences 81% of their family apparel purchases and 52% of car choices -On average, GenY shoppers have more than 3 credit cards, and 20% carry a balance of more than $10,000 -Economic recovery will be shaped by the values of GenY -Among GenY consumers, just 25% say the economy has significantly changed their shopping behavior (36% in GenX and 37% in Baby Boomers)

Generation Y Luxury Buys: Young People Crave Designer

Brands

INTERMIX Background Started in 1993 in New York City by brothers Khajak and Haro Keledijian, INTERMIX is a leading luxury, multi-brand retailer, focusing on the best mix of emerging and established designers and the most sought after trends.

Today, there are 25 INTERMIX stores in the United States with 2 more stores opening in California this spring. There’s also 1 store in Toronto, Canada.

INTERMIX is a privately held company that is estimated to have an annual revenue of $2.5 to $5 million. Each store generates about $2,000 in sales per square foot each.

“INTERMIX is a destination where women who love fashion will be inspired by our unique selection, coveted designers, and exciting philosophy of mixing special pieces

together in unexpected ways.”

INTERMIX Designers

The designers that INTERMIX carries include:

Balmain Bottega Veneta Brian Atwood Chloe DVF Exclusive for INTERMIX Elizabeth & James Helmut Lang

Herve Leger J Brand Jimmy Choo Proenza Schouler Rag & Bone Stella McCartney Theory Vince

INTERMIX Consumer Segmentation

INTERMIX’s target customers are women aged between 18 and 35 who are willing to pay top dollar for trendy fashions. For example, these women are willing to pay $1,195 for a Helmut Lang hooded parka or $745 for a Stella McCartney silk blouse. Geographically, they are located in and around larger cities where INTERMIX stores are located.

Behavioral Data on the INTERMIX Customer

VIPs – represents 20% of the customer base, have a higher amount of disposable income, will shop for the latest trends and demonstrate low price sensitivity

Sale Shoppers – represents 40% of the customer base, are aspirational customers desirous of Intermix’s fashions but demonstrate high price sensitivity

Brand Shoppers – represents 40% of the customer base, shop specific designers, like a “good deal” and demonstrate only moderate price sensitivity

Consumer Breakdown

Throughout the U.S., there are 25 INTERMIX stores. At each store location, the merchandise differs and is catered toward their customers. Based on INTERMIX locations around the U.S., I’m going to focus on four segmentations:

Upper East Side Princess Hollywood Diva South Beach Caliente

Greenwich Prep

Upper East Side Princess

Name: Blair Age: 28

Income: N/A

Education: College graduate from well respected 4 year university Occupation: On various non-profit and museum boards Characteristics: strong heritage influence, well traveled and educated, impulsive spender, affluent spender with family money, VIP shopper Favorite Brands: Jay Godfrey, Herve Leger, Brian Atwood, Valentino, Vera Wang, Chanel

Hollywood Diva

Name: Roxy Age: 21

Income: $50,000

Education: High school diploma, college dropout

Occupation: Waitress (aspiring model/actress/singer) Characteristics: aspirational shopper, credit card spender, independent from family, body conscious, social butterfly, sale shopper

Favorite Brands: Rag & Bone, torn by ronny kobo, J Brand, Helmut Lang, Elizabeth & James, Dannijo

South Beach Caliente Name: Lola Age: 25 Income: $80,000 Education: College graduate from 4 year college Occupation: Sales associate at upscale art gallery Characteristics: boy crazy, strong Spanish heritage, well connected in society, works hard to play hard, brand shopper Favorite Brands: Herve Leger, Camilla, Mara Hoffman, Vix, Tbags

Greenwich Prep Name: Avery Age: 32 Income: $150,000 Education: College graduate from respected 4 year university Occupation: Mother and part-time event planning Characteristics: family oriented, affluent spender for herself as well as her family, strong heritage, VIP shopper Favorite Brands: Missoni, Splendid, Pucci, J Brand, DVF, Michael Kors

Recommendations

“When it comes to selecting locations for potential stores, demographics aren’t as important as psychographics. In other words, finding an area where the average household income is $100,000 doesn’t mean anything if the women there don’t care about dressing young

and hip.” – Jeff Green, Retail Consultant

INTERMIX already does a great job of making each store different and catering to that particular customer in that location. However, they don’t market to these customers individually. For example, in Miami there’s a large Hispanic population that enjoys luxury brands so INTERMIX should advertise in Hispanic media and places they visit in order to reach this target market.

When expanding in the future, INTERMIX should be open to unconventional locations that aren’t necessarily luxury shopping destinations. They’ll have to do extensive research on the customer base and determine if the new store would be successful.

Sources http://www.rosettathurman.com/2010/07/36-facts-about-generation-y-in-the-workplace-and-beyond/ http://www.usatoday.com/money/advertising/2006-10-11-retail-teens-usat_x.htm http://www.inc.com/news/articles/201107/why-you-should-market-to-generation-y.html http://milo.com/blog/gen-ys-luxury-buys-young-people-crave-designer-brands/?display=wide http://blogs.reuters.com/reuters-money/2011/07/19/how-generation-y-spends-on-luxury/ http://www.manta.com/c/mmd8jkf/intermix-inc http://www.intermixonline.com/home.do http://www.stores.org/stores-magazine-july-2009/mixing-it http://www.icsc.org/srch/sct/sct1107/retail_scoop.php