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| Barneys New York flagship store |
Barneys New York, Nordstrom, and Bergdorf Goodman emerged as the top three luxury department store destinations among those with annual incomes of at least $250,000, according to a recent survey by Unity Marketing. However, a look back at the previous year shows ups and downs among ultra-affluent patronage of these retailers:
* Barneys New York, which currently attracts some 22 percent of ultra-affluent consumers, has weathered two quarters in the past year when patronage dipped as low as 16 percent.
* Nordstrom ranks as the second most popular destination, however, its share of purchase among ultra-affluents dropped by more than 5 percentage points from the fourth quarter 2010 to first quarter 2011.
In fact, among the seven leading luxury department stores included in Unity Marketing's luxury tracking survey, only one—Saks Fifth Avenue—captured a larger share of ultra-affluent shoppers this quarter as compared with last quarter, according to the survey titled, “The Luxury Report 2011: Ultimate Guide to the Luxury Consumer Market.”
Luxe department store patronage among ultra-affluents is down after peaking in third quarter 2010. The survey from the Stevens, Pa.-based luxury market research firm defines ultra affluents as those with annual household incomes of $250,000 and above, the wealthiest 2 percent of U.S. households who spend the most in the consumer economy.
Even more striking is the decline in the percentage of ultra-affluents shopping in these luxe department stores overall, said Pam Danziger, Unity Marketing president. While the percentage of ultra-affluents shopping in luxury department stores peaked at nearly 75 percent in the third quarter 2010, it has declined since, leveling off at about 70 percent. She says that relatively small declines in patronage on a percentage basis translate into big drops across the market. Regardless of ultra-affluents' favorite luxe department stores, it is clear that nearly a third of these wealthiest Americans are not passing through any of their doors each quarter.
“These top retailers—who are known for being destinations for the wealthiest customers—can serve as both a model and a cautionary tale for others who would like to operate in this space,” Danziger said. “While the popularity of each store waxes and wanes quarter-to-quarter, the overall trend is that ultra-affluents are slowing their pace of shopping in the luxury department store sector. If the downward trend among ultra-affluents continues, each of these stores may have to rethink their approach if they are to remain a compelling and attractive destination for the wealthy.”