Stevens, PA—In its annual report on the state of the luxury market released today, Unity Marketing found that the actual number of consumers of luxurygoods and services declined sharply from 2007 to 2009 with little sign that they will return anytime soon.
According to Unity’s “Luxury Report 2010: The Ultimate Guide to the Luxury Consumer Market,” while the average spending by luxury consumers increased nearly 30% in 2009, “those increases were driven by a much smaller, ultra-affluent segment with household incomes of $250,000 and above.”
Any future growth in the luxury market will require luxurygoods brands and services to attract a much more demanding and elusive affluent consumer.
Pam Danziger, president of Unity Marketing and lead analyst for the study, says, “While there are many positive signs that the stranglehold the recession had on luxury consumer spending is easing, the luxury market has largely lost the aspirational consumer segments (household incomes of $100,000 to $249,000) due to the recession.”
The Luxury Report 2010 surveyed 4,739 luxury consumers in 2009 with an average income of about $220,200. The research tracks consumer purchases in 22 categories. Among the findings in the study include:
•The 30% increase in spending included more than 50% increase in spending on home and personal luxuries and 20% increase in buying cars.
•Spending on experiences declined 8% from 2008. However, the average number of trips actually increased, suggesting that affluent consumers took advantage of heavy discounts in the travel sector.
•Only 49% of luxury consumers bought any personal luxury, down from 54% in 2006.
•Categories showing the greatest decline in luxury spending included: fine dining, luxury clothing and apparel and luxury travel purchases—only cars, kitchen appliances bath and building products remained stable.
A Challenge for Luxury Marketers
While initial results show luxury goods spending is slowing increasing this year, luxurygoods marketers will have to reevaluate and target toward the ultra-affluents. Danziger says the aspirational consumers, which make up some 21 million households, are holding back on spending, behaving more like middle-class rather than luxury consume must better target the ultra-affluent in the coming months.
“For 2010 and beyond, providing superior quality and good value will remains the most powerful way for luxury brands to connect with their ultra-affluent customers,” Danziger says. Unitmarketingonline.com