But should they cut back on spending, jewelry and accessories may likely be among the categories they’ll curtail.
According to The Luxury Institute’s State of the Luxury Industry, the results for August 2011 “paint a far brighter picture than previous State of the Luxury Industry reports” in August 2010 and 2009.
“Compared to 2009 or 2010, fewer high net worth U.S. consumers have plans to curtail spending this year,” the report states. “And many expect to spend much more, especially on travel and technology gear.”
The study, which surveyed affluent consumers earning at least $150,000 a year, found that 32% said they were still spending less on luxury purchases as a result of current economic condition, down from 37% in August 2010 and 42% in August 2009.
“In fact 10% of respondents reported boosting their luxury spending in recent months, up from 7% who said the same thing one year ago,” the study reports.
When asked about future spending, fewer say are will curtail spending, too, about 32%, down from 36% in August last year and 45% in August 2009.
Discounting Luxury Brands?
Which luxury sectors stand to gain by these wealthy consumers? The report says wealthy consumers indicated two top categories: travel (18%) and technology (16%). Other categories with notable turnarounds include automobiles (11%) and private jet travel (12%).
Although there appears to be a spending “retrenchment” among affluent shoppers, jewelry, apparel and accessories categories may be the first victims of any future spending cutbacks. “Jewelry (39%), antiques (37%), custom apparel (34%), art (34%), handbags (33%) and watches (33%) top the list of likely areas for cutbacks,” the survey found. Indeed, about half of the respondents said they would spend “more practically” on luxury items.
The report also found that these high income consumers have a more favorable opinion of the luxury industry than they have had in two years.
“On questions of craftsmanship to customer service and the commoditization of luxury, wealth shoppers entertain a more charitable view than they did in 2009 or 2010.” Their chief complaint? 64% says luxury brands’ prices are too high for the value they deliver.
On the subject of discounting on luxury goods, 25% agree that such discount diminish the perceived value of a luxury brand. However, 19% said discounting actually improved their opinions. Another 28% said that heavy discounting boosted their spending while only 12% said they would spend less due to discounting.
Another 16% said they would spend more on discounted luxury items—“far ahead of those 6% who plan to increase spending on full-price luxurgygoods or services.”
About The Luxury Institute
The Luxury Institute, a leading objective and independent global voice of the high net-worth consumer, conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customers experience best practices. In addition, the institute works closely with top-tier luxury brands to transform their organizational cultures into more profitable customer-centric enterprises. The Luxury Institute also operates the LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises. www.LuxuryInstitute.com
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