Affluent shoppers rang the cash register more in 3Q
Susan Dickenson -- Home Accents Today, October 22, 2009
Stevens, Pa. – Affluent consumers – whose average annual income is $228,800 – increased their spending in the third quarter compared to the second quarter, according to the Unity Marketing's Luxury Consumption Index.
In the second quarter, affluent consumers showed the largest historic increase in consumer confidence as measured by the Index. In the third quarter they demonstrated it by boosting their spending on luxury at near historic levels.
Overall spending on luxury goods and services rose 29.4% from the second to the third quarter, according to Unity Marketing. In all but three of 22 product and service categories in the tracking survey of 1,067 affluent consumers, higher-end shoppers spent more from one quarter to the next. This was particularly true for luxury home goods and experiential luxuries like travel and dining.
But there are caveats.
“Marketers’ optimism should be tempered with realism, as a deeper look at the data discloses a dramatic difference in attitude toward luxury between ultra-affluent consumers with the highest household incomes and affluents with a less robust income level,” the Index reported. “The findings are further confirmation that the coming post-recession luxury market will be far different from the one that came before.”
Furthermore, Pam Danziger, president of Unity Marketing and lead researcher in the luxury tracking study, warned that quarter's uptick might simply be a sign that consumers were releasing pent-up demand and that such strong spending on luxury may not carry over to future quarters.
"In digging deeper into the data, the results show that the sharp rise in luxury spending was driven primarily by increased spending and participation in the luxury market by those at the highest-income levels [earning annual incomes of $250,000 and above],” she said. “Affluent consumers at the lowest-income level [$100,000 to $149,999 in annual incomes] were reluctant to trade up to the luxury level. So this quarter's luxury tracking study was heavily weighted toward those in the upper-income levels."