Stevens, PA—While recent second quarter earnings reports from many large retailers shows a slowdown in discretionary spending, things are starting to look up among the nation’s most important consumer segment–the affluent top 20% which are the by far the biggest spenders in the consumer economy.
According to Unity Marketing, a consumer research firm, affluents account for more than 40% of all consumers spending, yet make up only 20% of the nation’s 121 million households.
Unity Marketing’s latest measure of affluent consumer confidence, the Luxury Consumption Index (LCI), shows that their expectations for future spending rose in July. This bodes well for the important back-to-school and holiday shopping seasons ahead.
Wealthy Spending More on Luxury
“We have seen plenty of minor spikes in affluent consumer confidence since 2010, but the latest one at the start of the third quarter 2013 feels different that the others,” said Pam Danziger, president of Unity and lead researcher for the quarterly LCI. “It has all the markings of a sustainable recovery that will give affluents the confidence to spend more freely through the end of the year.”
This more positive outlook of affluent consumers’ financial status corresponded to a 15.9% uptick from last quarter in their spending on luxury and high-end goods and services. These results are based upon the most recent luxury tracking survey conducted by Unity Marketing among 1,189 affluent consumers (average income $273,200) from July 9 to 15.
Danziger said one key to the upswing in affluent consumer confidence is increased confidence in the financial direction of the country. Some 32% of those surveyed believe the country as a whole is better off financially now, as compared to 27% at the start of the second quarter. Further, there was a sharp increase in the percentage of affluents that report spending more on luxury (27%), as compared with last quarter (23%).
“These factors taken together, along with an improved perspective on affluents’ personal financial status, give a bright prospect for continued spending by these most important of the nation’s consumers. Not only is their more positive outlook measured in greater spending on high-end and luxurygoods and services, the government’s Retail Census also shows a strong 3.8% increase in retail and food service revenues for the first five months of 2013, as compared with same period previous year. The affluent are behind much of the growth in retail and food service spending, since for every dollar a middle-class household spends at retail, the affluent spend $2,” Danziger said. “These findings point to a strong back-to-school shopping season, as well as good results for the holiday season.”