Luxury Sector Study Underscores Why RMs Still Matter

Tom Burroughes

10 March 2020

In findings that may resonate with wealth management advisors, a study of more than 3,100 affluent consumers around the world shows that a third of high-income shoppers want to talk to sales associates when they think about a purchase.

The findings from the New York-based Luxury Institute’s State of the Luxury Industry 2020 report might suggest that the march of online, digital services in specific sectors has – at least for the moment – certain limits. For example, there appears to be some maturation around “robo-advisor” hype that broke out in the wealth sector half a decade ago, as far as industry figures tell Family Wealth Report.

“Despite the gains made by online commerce, stores and sales associates remain central to the success of luxury providers,” Luxury Institute CEO Milton Pedraza said.

“Outstanding products and services are the bare minimum of what is required for luxury firms to thrive today. The sales associate remains relevant, although in some countries, such as the USA, brands have a huge opportunity to transform their transactional methods into emotionally intelligent relationship building experiences.”

The report suggests that the personal relationship factor is stronger in China than in the US. As China was minting HNW individuals at a fast pace, wealth managers operating in Hong Kong and the mainland will want to take note.

Among other findings from the LI report is that 35 per cent of respondents said meeting a helpful sales professional is a top factor in doing business with a brand; some 15 per cent said a relationship with a sales person was a “primary driver” in buying.

The desire to meet and talk with a salesperson is strongest in China, where more than half of shoppers say that they like to be guided by a salesperson while shopping for luxury goods, and 46 per cent will even go to a store to shop online with an associate. On the other end of the spectrum, only 22 per cent of affluent US shoppers want to interact with a sales associate, while 29 per cent strongly prefer to be left alone. Nearly three-fourths of affluent consumers agree that luxury brand sales associates deliver a personalized and relationship-oriented experience, a sentiment most widespread in China and Italy .

More than one-third of affluent consumers worldwide report having a specific salesperson that they prefer to work with when making a purchase from any luxury brand, a propensity that rises to 80 per cent in China. Affluent Chinese consumers are also most likely to receive “frequent” personalized offers from luxury salespersons, while US consumers are least likely to receive such offers.

Ranked by which luxury categories have the best salespersons: Jewelry and watches , and hotels and resorts are most frequently cited as industries in which the top sales professionals can be found. Fashion apparel and automotive are also widely viewed as having high concentrations of superior sales professionals. By contrast, home appliances, entertainment, and insurance are categories with the lowest percentage of consumers indicating that salespersons are exemplary.