Unity's Luxury Consumption Index (LCI) proves predictive of third quarter results, offers indications for future
According to reporting in The Wall Street Journal, U.S. consumers spent less in October than hoped, disappointing retailers and leading to a rocky first part of November on Wall Street, as the stock market reacted to this decline in consumer spending. However, those who follow Unity Marketing's Luxury Consumption Index(LCI) expected the dip and could plan accordingly.
In July Unity Marketing's exclusive LCI took a deep dive, predicting a drop in luxury consumer spending during the third quarter -- which is exactly what happened, according to the results of Unity Marketing's latest survey of affluent consumers luxury purchases. Luxury consumers spent nearly 20 percent less in the third quarter than in the second quarter 2011.
New survey finds improved outlook for 1Q2012
Commenting on Unity Marketing's fourth quarter survey of 1,498 affluent luxury consumers (average income $279.1k; avg. age 44.4 yrs.), Pam Danziger, president of Unity Marketing and author of the just released Putting the Luxe Back in Luxury, says, "Our latest survey reveals turmoil in the luxury consumer mindset, just like the Dow Jones Industrial Average measures turmoil in the investment markets.
Affluents are uncertain about their present financial status and worried about the overall economy, which translates into more cautious spending on luxury indulgences. For example, 70 percent of the luxury consumers surveyed this month said they are spending the same or less on luxury now than they did twelve months ago."
However, looking to the future, the luxury consumers are growing more optimistic that things will get better in 2012. Some 45 percent of the luxury consumers surveyed said they expect their financial situation to be improved twelve months from now. This, combined with an increased percentage of luxury consumers that expect to spend more on luxury in the coming twelve months, gave a boost to the LCI for the fourth quarter 2011 and a more positive outlook for luxury sales through the first quarter of the new year.
Danziger says, "The recent uptick in the LCI combined with the trend we have seen in our studies that people typically have a more positive outlook and greater confidence in the first quarter of the year may signal a good first quarter in the market for luxury goods and services. But that doesn't mean luxury marketers can ease off. They must keep doing all the right things to pull in affluent customers and encourage them to spend, and that means delivering high quality and good value at the right price."
"Maintaining high levels of customer service is also critical, so retailers need to emphasize sales training for both their new and long term employees. As we look to 2012, luxury retailing is more about how you sell, rather than what you are selling. Making the customer feel attended to, even pampered, will position your store and brand above the competition," reminds Danziger.
Luxury marketers cannot afford to sit back and wait for an upswing, however. "Since luxury is 100 percent discretionary, it's the first place for people to look to manage their spending," Danziger continues. "Nearly three-fourths of affluent customers surveyed are using one or more money-saving strategies. Among the most popular ways luxury consumers save are to do more comparison shopping, shop less frequently and reduce the number of times they dine out. Clipping coupons and doing product research are also popular ways to cut costs."
Unity Marketing Gives Insight Into 4Q2011, Lays Foundation for 2012
The LCI has consistently proven predictive of luxury consumer behavior, foretelling changes in consumption one to three quarters in advance. This powerful tool helps marketers prepare for the changes they will face in the upcoming quarters.
We invite you to tune into a recording of Danziger's most recent webinar, which details:
- The latest LCI and what it predicts for the Christmas shopping season in the fourth quarter of 2011 and into the first half of 2012.
- Key trends in luxury consumer spending and purchases in the 22 luxury categories included in the luxury tracking survey (conducted October 5-13, 2011, with n=1,340 affluent consumers), specifically:
- How has the luxury market performed throughout of 2011? What can we expect for next year?
- Which segments of the luxury consumer market have recovered after the recession? Which segments are still being impacted by recessionary pressures?
- When will the recession finally be over for the affluent luxury market?
- What's hot, what's not in luxury today?
Subscribers will also receive a copy of the detail slides used in the presentation. The recorded webinar will only be available through December 31, 2011 so you will be able to listen at your convenience or to hear the talk again. Finally, your subscription fee can be applied as credit toward the purchase of any Unity Marketing report.
Pamela N. Danziger is an internationally recognized expert specializing in consumer insights for marketers targeting the affluent consumer. She is president of Unity Marketing, a marketing consulting firm she founded in 1992. Pam received the Global Luxury Award for top luxury industry achievers presented at the Global Luxury Forum in 2007 by Harper's Bazaar.
Pam gives luxury marketers "All Access" to the mind of the luxury consumer. She uses qualitative and quantitative market research to learn about their brand preferences, shopping habits, and attitudes about their luxury lifestyles, then turns these insights into actionable strategies for marketers to use to reach these high spending consumers. Unity Marketing is the voice of the luxury consumer for such clients as PPR, Diageo, Tempur-Pedic, Google, Swarovski, Constellation Wines, Luxottica, Orient-Express Hotels, Italian Trade Commission, Marie Claire magazine, The World Gold Council, and The Conference Board.
Pam's latest book is Putting the Luxe Back in Luxury: How new consumer values are redefining the way we market luxury (Paramount Market Publishing, 2011). Her other books include Shopping: Why We Love It and How Retailers Can Create the Ultimate Customer Experience, published by Kaplan Publishing in October 2006; Let Them Eat Cake: Marketing Luxury to the Masses˜as well as the Classes, (Dearborn Trade Publishing, $27, hardcover) and Why People Buy Things They Don't Need: Understanding and Predicting Consumer Behavior(Chicago: Dearborn Trade Publishing, 2004).