As the balance of wealth shifts, women are gaining more buying power and influence in luxury products.
It’s no secret many women like to shop, but as the balance of wealth shifts globally, women’s influence in the luxury sector is growing stronger. Their discretionary income may be less than men’s, on average and in the aggregate, but it’s rising. And though they tend not to spend as much money on luxury goods as men do, or buy as many items, women are likely determining many of the luxury purchases that men make.
Five years ago, Boston Consulting Group estimated that by this year, women worldwide would control $40 trillion in discretionary income—what’s left after you pay all the bills and taxes. In 2013, that figure was $29 trillion. And a 2009 study published in Harvard Business Review projected that by 2020, women would control 50 percent of the high-net wealth in the United States. A report issued last year by the Shullman Research Center, a consulting firm in New York that focuses on wealthy consumers, further supports that data. It estimated that of the 67 million people who made luxury purchases in 2016, 42 percent (28 million) were women and 58 percent were men (38 million). A majority of those consumers (54 percent) had annual household incomes of less than $100,000. When you look at only the wealthier households—$500,000 or more in annual income—the gap disappears, with men and women equally likely to have made luxury purchases.
The median numbers of luxury purchases over the course of a year were roughly the same for men and women, according to the Shullman report, but the median cost of women’s most recently reported luxury purchases was about four times less than men’s. And twice as many men as women reported spending $10,000 or more on their most recent luxury purchase.
The report also found that women were more likely than men to have made their latest luxury purchase for themselves (89 percent versus 79 percent), while men were more likely than women to have made a luxury purchase for a family member or as a gift to someone else (47 percent versus 31 percent).
“Men tend to be bigger spender on luxuries,” says Bob Shullman, the founder and CEO of the research center, “but I’d like to do a follow-up study in which we ask not only what luxuries you bought, but also what luxuries did you receive. You can infer that many women are the recipients of luxuries that men buy. Think about gift giving.”
This appears to be the case still with women’s jewelry. Though there may be more women buying jewelry for themselves now than in the past, men seemingly remain the primary purchasers. A De Beers report cited last summer by the Diamond Producers Association notes that in 2015, 31 percent of all non-bridal diamond transactions involved millennial women buying the jewelry for themselves. That number grew from 25 percent in 2013, but it suggests that more than two-thirds of the non-bridal diamonds are still purchased by men for women.
Likewise, in the luxury-car market, women are exerting more buying power than they have in the past, but men still make more purchases. A study found that last year, women accounted for nearly 41 percent of sales (compared to just under 37 percent in 2012). Shullman doesn’t think that figure accurately reflects women’s influence on car sales. It’s much stronger. In the traditional domestic scenario with a wife, husband, and kids, the wife is often the decision-maker, he says, even if the car sale is under the husband’s name. “I did a major study last year for one of the luxury car brands, working with the brand and its ad agency,” says Shullman. “When we did the research, we found that it was all about how women looked at the car, not how the man looked at the car. So even though cars tend to be a male purchase, the whole focus of the advertising was getting women to influence what men want. And it was successful, but it seems like they can’t produce enough of that car now.”
Maybe it’s this type of influence, along with women’s roles as recipients of luxury purchases such as jewelry, that The New York Times was referring to when, in an article titled “In Luxury, the Female Factor,” it claimed that women were responsible for 85 percent of luxury sales in 2015. Shullman doesn’t dispute that assertion.
“I’ve heard that number at a lot of the conferences that luxury brands go to,” says Shullman. “There’s no ands, ifs, or buts about it, women are heavy influencers. If you look at what I call the buying journey, women—particularly for a lot of luxuries—tend to be at the front end of it.”