Retail Reborn: How the Aspirational Purchase Has Shifted

Key Considerations for Retailers and Brands for the Future of Commerce

White paper featuring Marshal Cohen’s industry expertise and information from The NPD Group and Checkout TrackingSM 

Executive Summary

The aspirational purchase – buying an item because it evokes a sense of financial achievement beyond what is realistic – drove much of the retail world in recent years. Designers led the market, particularly in apparel, and consumers followed.

Those days are over.

Consumer born trends lead the market now. And retailers, manufacturers, and designers scramble to keep up. Once it was common for consumers to spend heavily in order to appear affluent, but now even the truly affluent shop in dollar stores. And once everyone wanted to look comfortable, if not actually rich – now consumers want to feel comfortable.

Responsible spending is in. Credit is out. Consumers aren’t interested in looking or acting like someone else; they want to look and act like the most authentic (and Instagram-friendly) version of themselves.

In this white paper, we’ll look at what the data shows about the key considerations for retailers and manufacturers in the U.S. looking to thrive in post-aspirational retail. Chief among these are:

  • Consumers are prioritizing purchases.
  • Millennials aren’t aspirational. They’re frugal, except in a handful of categories.
  • Boomers, who have more discretionary income than any other demographic group, aren’t spending in the same categories they did a few years ago.
  • Signature items are where consumers are putting their money and effort. Shoppers invest time in researching and choosing items that serve as the focal point of how they want to be seen.
  • The home, the street, and social media (and not the runway) are where these new trends come to life.

That Was Then . . .

The aspirational purchase as we once knew it is gone.

Designers used to introduce their lines at the start of the season and the rest of the market followed. But the market was divided. There was the small contingent of moneyed consumers who bought actual designer items. And there was a larger group of average consumers who bought knock-offs or inexpensive items influenced by top designers, if not actually made by them.

But in the decade or so prior to 9/11, things got a little extreme. Even the least affluent Americans were willing to spend heavily to appear affluent. The very idea of aspiration made sense then. The United States economy grew by an average of 4 percent a year between 1992 and 1999. Consumers felt money was easy to come by. Or if not money, at least credit. Designers noted for top-tier items created mid-tier lines aimed at making the aspirational purchase even easier.

Retail became the place where consumers played out their ambition, not their reality.

Prioritizing Purchases

The trend of aspirational sales has been on an increasingly steep decline. Aspirational brands are no longer the lead dog.

NPD Group Chart | Sales | Trends | Global Market Insights

Shaped largely by the Great Recession, diminishing discretionary income, and the desire for experiences over things, consumers today:

  • Prioritize their purchases
  • Are fascinated by artisanal and handcrafted items
  • Chase individuality rather than fashion
  • Are skittish about debt
  • Prefer experiences to things
  • Search carefully for items or foods that enhance an experience and render it photogenic and suitable for sharing on social media

Some of the categories hit hardest by these dynamics include high-end accessories like jewelry and handbags. However, categories like small personal accessories and luggage are faring better. Post-aspirational consumers are willing to spend for luggage as an accessory to facilitate or enhance a travel experience and make memories.

NPD Group Chart | Sales | Trends | Global Market Insights


The Desire to Save Money

One area where the decline of aspirational shopping is clear is, predictably, in the world of high-end, high-price fashion. We took a look at how the most expensive brands in apparel have fared in recent years. Using our Retail Tracking Service data, we sorted brands according to average price per item, and then looked at changes in dollars spent on those brands. The results were telling. Of the 10 most expensive brands we examined:

  • Eight saw declines in 2016.
  • Six saw double-digit declines.
  • In the prior year (2015), seven of the brands declined.
  • Five of them saw double-digit drops in 2016.

More surprising is that even well-to-do consumers are behaving in more frugal ways, like shopping in the dollar store channel.

  • A recent study from our Checkout TrackingSM service showed about 19 percent of spend at Dollar Tree, Dollar General, and Family Dollar came from households with an income in excess of $100,000 a year. 
  • The dollar-store phenomenon is even more significant among Millennials. Checkout Tracking found Millennials with annual incomes of $100,000 or more made purchases at these stores nearly 13 times a year and spent more than $135.

Seemingly everyone has developed a preference for off-price stores. Checkout Tracking research shows two-thirds of consumers now purchase at off-price retail outlets. Apparel is most likely to be in their shopping basket.

What Appeals to Millennial Consumers?

Are there opportunities in the post-aspirational world for businesses that don’t operate dollar stores or off-price shops? Yes. And most encouragingly, those opportunities center on today’s young adults. Here’s why: Checkout Tracking data shows Millennials aren’t always thrifty. They’ll spend more when certain conditions are met:

  • Millennials shop more frequently at brick-and-mortar, but they spend more money when shopping online.
  • Millennials spend more than twice as much per order when shopping online in three categories: clothing, electronics, and home/kitchen. The gap is bigger for older Millennials than for younger Millennials.

NPD Group Chart | Sales | Trends | Global Market Insights

Three factors seem to drive this higher online spending:

  • Minimum order requirements for free shipping
  • The ease of comparing prices for higher-ticket items online
  • Easy return policies for items that often require returns, such as clothing.

The Signature Item

Another post-aspirational behavior we’ve noted is the rise of the “signature item.” Such items are best thought of as an attempt by a consumer to stand out in a personally significant manner.

A signature item may be a one-of-a-kind coat purchased from an obscure Japanese manufacturer that becomes the central theme of one’s entire wardrobe. It could be the large-screen TV and soundbar combination that makes one young man’s apartment the go-to destination on game day. It could be the pair of vintage collectible sneakers worn by a college student, the handcrafted, leather-bound notebook the young professional carries to the office, or the eco-friendly lunch-box and backpack combo a young mother chooses for her child’s first day of school.

Or, in simpler terms, a signature item is a consumer good that requires careful selection. An easily found, mass-produced, available-everywhere item doesn’t fit the bill. For example, a recent study by NPD in partnership with Stylitics found Millennial customers treat a handbag purchase as a multi-step process, and 41 percent said they started thinking about their most recent handbag purchase more than a month in advance. A signature item also has photographic appeal. For Millennials, a generation that records everything and shares it on social media, a signature item’s purpose is to be shown, as much as it is to be used.

The Need to Spend Time Together 

There is a place where signature items are gaining traction among Baby Boomers as much as among Millennials: the home. Millennials long for experiences. Boomers want to maintain connections as they age. The home is the common ground for both generational trends. Home cooking, home entertaining, and home décor are extraordinarily important to both Millennials and Boomers. And both generations have developed an affinity for signature items around which friends and family can gather.

We see multiple opportunities tied to this trend for retailers and manufacturers:

Home for the holidays

In-store purchasing of housewares and small appliances tended to happen on Saturdays in December. Home and kitchen holiday online purchases were concentrated during Black Friday weekend. If you’re seeking your fair share of such purchases among Millennials and Boomers, you’ll want to focus your efforts on those time periods.

NPD Group Chart | Sales | Trends | Global Market Insights

NPD Group Chart | Sales | Trends | Global Market Insights

Cooking and food prep

Perhaps the biggest single opportunity in the “signature item at home” world involves selling conversation-starting small appliances, such as high-end coffee makers and pressure cookers, to Millennials.

Consumers between the ages of 25 and 34 contributed 61 percent of U.S. small appliance dollar sales gains in 2015, shown by Checkout Tracking.

Restaurants’ role in home meals

Our 2016 Eating Patterns in America research revealed that even when consumers prepare food at home, more than 11 percent of in-home dinners are built around an entree that came from foodservice. In addition, digital ordering, which is an order via the Internet or a mobile app for either delivery or pick-up, accounts for 3 percent of total restaurant traffic, or about 1.9 billion visits. Fifty percent of digital orders come at dinner time, and 35 percent of digital ordering includes parties with kids. Fifty percent of dinner meals purchased at a restaurant are taken home to eat.

NPD Group Chart | Sales | Trends | Global Market Insights

Tableware and decorating

If you’re looking to sell dishes and related items to people who seek to put signature items on the table, pay attention to older consumers. Our report, A Generational Study: The Evolution of Eating, shows consumers 55 and older accounted for 61 percent of the dollar gains in non-electric housewares categories last year, and 66 percent of the home textiles growth.

Fun and games

The adult games subclass grew 256 percent in Nov/Dec 2016 versus YAG. The games segment grew 24 percent.

Predicting a Signature Purchase 

One of the more interesting things about spotting signature purchases in a consumer’s receipts is that post-aspirational buyers tend to exhibit similar behaviors.

Checkout Tracking provides longitudinal data. It allows us to look at the same buyers across all channels and all retailers, both online and at brick-and-mortar, over time. That allows us to watch the development of buying behaviors.

For example, consider Morgan. She’s a real person in the Checkout Tracking database, although we’ve changed her name and removed personally identifiable information. Her buying behavior shows a clear interest in signature items that enhance nesting experiences and reinforce her personal brand.

Meet Morgan 

Morgan is 30 years old and lives in Los Angeles, California. She is in the $50 – $75k income segment.

Retailer Hopping with Morgan 

Morgan visits many different sites to find ways to improve her quality of life and life experiences. The variety of retailers she visits and types of products she purchases suggest she has a creative flair, and is a homeowner. Her purchases speak volumes about her lifestyle and affinities.

NPD Group Chart | Sales | Trends | Global Market Insights

Morgan Picks Her Products 

The laptop case and fountain from Wayfair suggest an expressive personality  — while the TV and soundbar purchase infer that she is upgrading her TV-viewing experience.

She took advantage of a Best Buy bundle of Samsung TV/Soundbar. But note she bought a Samsung washer dryer and owns a Mac. Her purchases match her lifestyle. But she is not loyal to a retailer.

Morgan Subscribes to Services Important to Her Lifestyle

NPD Group Chart | Sales | Trends | Global Market Insights

So What’s Next for Morgan? 

Because Checkout Tracking is longitudinal data, based on what she’s purchased we can predict what she’s likely to buy next. Since Morgan is concerned with her home, her activity, and likes technology, it’s likely home automation products, a smart watch, and a smart speaker are in her consideration set for future purchases.  

We predict she’ll opt for the smart speaker first because it makes a statement. She’ll likely add on home automation products as her smart speaker will help her personalize and link them.

NPD Group Chart | Sales | Trends | Global Market Insights

Consider This . . . 

Consumers no longer aspire to more. Instead, they aspire to be. Instead of craving a cult item or brand adored by the masses, consumers seek items that enhance their personal brand. Factors such as the uniqueness of the item or delivering an experience or enhancement of lifestyle are key criteria. So far, this has generally meant clothing, electronics, and items for the home or kitchen.

To understand what that means for retailers and manufacturers, look once again at Morgan’s buying behavior. She and the multitudes of consumers like her are post-aspirational.

  • Not particularly loyal to any particular retailer or brand
  • Not buying traditional luxury goods
  • Investing in signature items, subscription entertainment providers, and food services that enhance the nesting lifestyle
  • Seeking signature items that convey to the world (and social media) that she is distinctly herself and doesn’t aspire to be anyone else

If you want to sell to Morgan, you’ll need to understand that the only brand that she’s truly interested in is her own.

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