But in a follow up to its January 9 to 15 survey of 1,369 luxury consumers (average income $267,800) Unity Marketing found U.S. luxury consumers were less than thrilled with the state of the U.S. economy. In fact, they seem downright depressed about it.
“Affluent consumers are starting 2013 with a dismal view of the overall economy and their personal financial situation. This is bound to have a dampening effect on results for marketers that target the luxury consumers specifically, and the consumer economy in general,” said Pam Danziger, president of Unity Marketing and author of Putting the Luxe Back in Luxury.
This year, the marketing emphasis in luxurygoods ought to be on “quality and value…as the affluent are reluctant to overindulge in extravagant spending.”
“The high-end customers are signaling caution and marketers need to listen. Marketers must recognize the customers’ caution and work to overcome their worries with messages that emphasize high quality, superior workmanship and long-lasting value,” said Danziger.
‘Reposition Luxurygoods as a Value Proposition’
In a report based upon Unity Marketing’s LCI based upon the latest Luxury Tracking Survey and released Thursday, findings are a wake-up call for luxury marketers:
●The United States’ financial status is “on the skids:” In its October’s survey, prior to the election, Unity found some 37% of affluents felt the country as a whole was better off. But by January, the percentage of affluents who felt positive about the economy dropped by 8 percentage points to 29%.
“While the latest figure is somewhat higher than seen throughout 2011, when it averaged 25%, the affluents aren’t particularly confident that the nation’s leadership is up to the challenge of this slow-growth economy facing a rising tide of debt,” Danziger said.
●Affluents’ prospects for luxury spending are on the decline: The latest survey indicates the luxury market will become increasingly competitive as fewer affluents expect their spending on luxurygoods and services to grow over the next twelve months. Over one-fourth (28%) of affluents expect their spending on luxury to decline over the next twelve months; this is compared with only 18% in October who were much more positive about their spending expectations.
The largest share of affluents since the recession believes they will be worse off financially twelve months from now.
“Typically affluents are an optimistic bunch who believe that they have control of their financial situation and can improve their lot over the next year,” Danziger said. “However, in the latest survey nearly one-fourth (22%) predict that they will be worse off in the next twelve months as compared to today. This is the highest we’ve seen this measure since the depths of the recession in 2008. It is another signal for restrained affluent consumer spending for 2013.”
●Given this increasingly cautious affluent consumer concerned about their ability to manage their finances through this difficult economy, what are luxury brands and marketers to do to encourage this critical customer segment to buy?
Tom Bodenberg, Unity Marketing’s chief consumer economist, said: “Marketers need to re-position luxury goods as a value proposition. That means to keep the luxury image and connotations (advertising creative, packaging, media and service), but communicate (in a very implied, almost one-to-one way) affordable pricing. The key is an almost subliminal positioning of value. The current cultural climate can’t support showy displays of luxury. People with means want to make smart buying decisions and playing up the quality and value of a brand while downplaying the pure ‘luxury’ of it is key for today.”
Futhermore, Danziger said the most recent results show there is actually opportunity to capture affluent consumers’ sales. During the fourth quarter, these affluent consumers spend more on art, antiques and other home furnishings than compared with third quarter 2012.
But spending was reduced in fashion and accessories, too. “Luxury consumers spent more on spa/salon beauty services in the fourth quarter, showing they are still willing to invest to keep up appearances,” noted Danziger.