A Celebration of Jewelry and the Business Behind the Beauty
Leibish & Co
Monday, October 25, 2010
Affluent Shoppers are Spending Less on Luxury
Affluent consumers continue to express pessimism when it comes to the U.S. economy and it’s affecting how they shop, according to Unity Marketing's Luxury Consumption Index.
The quarterly survey of 1,364 affluent luxury consumers (avg. income $298,300) dropped 6.2 points to 72.1 points in the third quarter with these high-net worth individuals spending 1.4 percent less than they did in the second quarter.
“Luxury consumers started 2010 with a feeling of optimism that the worst of the economic turmoil was over,” said Pam Danziger, president of the Steven, Pa.-based marketing research firm and author of the upcoming book, Putting the Luxe Back in Luxury. “But through the course of the year, reality hasn't lived up to those expectations, so we have seen a retreat of the LCI throughout the year. Lower levels of affluent consumer confidence are playing out in terms of reduced of spending on luxuries.”
Danziger said the survey reported declines in expenditures in most of the 22 categories of luxury goods and services.
Among the findings in the third quarter Luxury Tracking Study:
* Spending on luxury declined 1.4 percent overall in the third quarter, when compared to the second quarter. However, ultra-affluents (top 2 percent of U.S. households with incomes over $250,000) cut their luxury spending by 11 percent for the period. Luxury consumer spending dropped from $31,665 on average in the second quarter to $31,225 in the third quarter. “This pull back … will have the strongest impact on the heritage luxury brands at the high end of the luxury market,” Danziger said. “The good news for luxury marketers is that luxury consumers spent 33 percent more this year as compared with last year. But marketers should prepare for another tough fourth quarter as the affluent look once again for more bargains and discounts.”
* Personal electronics will be the most popular holiday present for these consumers. The only luxury goods category posting quarter-to-quarter growth was personal electronics, including laptop computers, GPS, cell phones, MP3 players and eBook readers.
* More affluent consumers purchased luxury in the third quarter, even though they spent less overall. Luxury goods and services categories that captured a greater share of affluent shoppers this quarter included luxury clothing and apparel, wine and spirits, fine dining, entertainment and travel. “What the data says about the third quarter is that in these five categories marketers attracted a greater share of customers, but they were not able to convert them into higher-spending customers,” Danziger said.
* Luxury consumers traded down to more mass brands in search of value. For example, more ultra-affluent shoppers frequented Costco (35.5 percent) and Target (36.1 percent) this quarter than Neiman Marcus (21.3 percent).
* In the fashion boutique sector, Ann Taylor (17.6 percent), Banana Republic (16.6 percent) and Ann Taylor Loft (16.1 percent), were patronized more by ultra-affluent shoppers this quarter than traditional 'luxe' brands such as Chanel (10.8 percent), Louis Vuitton (11 percent) or Coach (11.8 percent).
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I am a freelance writer and editor who covers the luxury jewelry and watch industry for several publications, including Forbes.com the Financial Times, Hong Kong-based JewelleryNetAsiaand the Italian jewelry magazine, VO+. In addition, I have my own blog covering the jewelry and watch industry, Jewelry News Network.