Luxury Market Consumer Spending Send Mixed Signals about the Luxury Economy
Announcing results of April 2011 luxury consumer survey...
Yet, despite their improved confidence, luxury consumers kept their spending flat in the first quarter 2011.
On a positive note, the Luxury Consumption Index (LCI) rose 6.7 points, the highest rate of growth since first quarter 2010, to reach 82.8 points. However, today the LCI still stands below its post-recession high of 86.9 points reached in January 2010.
Tempering luxury marketer's enthusiasm for the return of the luxury consumer market is the fact that spending on luxury by the affluent consumers surveyed was basically flat from previous quarter and 4.1 percent less than reported in the first quarter 2010.
Commenting on the conflicting results of Unity Marketing's latest Luxury Tracking Survey conducted April 6-13, 2011 among 1,321 luxury consumers (avg. income $287.2k; median net wealth $897k; age 45 years; men 45 percent & women 55 percent), Unity Marketing's president, Pam Danziger, and author of Putting the Luxe Back in Luxury, says, "There is a lot of 'noise' out there about the return of the luxury market. I am advising my clients not to believe everything they see or hear."
"While the worst may be behind us, there are still worrisome trends brewing in the market for luxury. For example, the rate of change in luxury consumers' spending peaked between the second and third quarter 2009. Since then the rate of change has steadily slowed, which indicates that much of the pent up demand for luxury goods that built during the worst of the recession has already been released. Spending on luxury is likely to flatten out over the coming quarters unless there is dramatic improvement in the economy overall, which seems doubtful."
Commenting on the latest luxury consumer survey results, Tom Bodenberg, Unity Marketing's chief consumer economist, said, "This quarter's rise in the LCI, but with luxury consumer spending flatlining at the same time, signifies a great deal of uncertainty and market demand volatility. The rise in the LCI (highest in the past 12 months) reflects a noted reduction in market pessimism. However, this has yet to FULLY translate into increased demand. While there is a slight yet continuous increase in the index over the past 12 months, increase in the rate of growth of the index will not pick up unless there is a sustained economic recovery."
About Unity Marketing's Luxury Tracking Study
Launched in January 2004, and every three months thereafter, Unity Marketing has measured the pulse of the affluent consumers in a longitudinal survey of 1,200+ affluent consumer households. One-third of each survey is comprised of ultra-affluents (HHI $250,000 and above).
Each quarter the Luxury Consumer Tracking Study reports what luxuries they bought during the past quarter, how much they spent, where they bought, the luxury brands they became aware of and used, and how they felt about their current and prospective financial status. A total of 22 major categories of luxury goods and services are included in the poll, including clothing, fashion accessories, home luxuries, travel, dining and jewelry.
Based upon the results of the survey, Unity Marketing also publishes a Luxury Consumption Index which tracks how luxury consumers feel and helps marketers anticipate consumers spending in the coming quarters.
In addition every quarter a special investigation of key trends in the luxury market are studied. The findings of this special investigation is available as a separate trend report) or as part of the full Luxury Tracking Report.
This Quarter's Special Investigation: Luxury Consumers & the Importance of Country of Origin for Luxury Goods
Luxury consumers were asked about which countries they associate with better quality luxury goods and which they associate with poorer quality goods. Their attitudes about the place of manufacture of luxury goods is also measured, including what qualities they associate with countries that produce better quality goods.
The results of the latest survey are compared with those from a study conducted January 2008 to help luxury brands evaluate their manufacturing partners and how their location impacts affluent consumers' perception of the quality of the goods produced.