“This indicates a trend toward a smaller group of high-spending consumers that must be carefully targeted in order for marketers’ companies to remain healthy,” explains Pam Danziger, president of Unity Marketing and author of the Personal Luxury Report 2010 released this week.
The research shows that the consumer market of high-income individuals willing to pay a premium for personal luxury products has dropped sharply from the levels reached in 2006.
Last year just 44% of affluent consumers (average household income $220,000) bought any personal luxuries, down 10 percentage points from 2006, Unity’s luxury surveys found.
But despite lower purchase levels, “the affluents who bought personal luxuries last year spent nearly 50% more on their purchases than they did in 2008,” Danziger notes.
A key trend in the market for luxury clothing and apparel is that department stores lost share of affluents’ clothing purchases, while patronage among luxury branded boutiques increased over 2008 levels.
Shifts in Luxury Accessories Spending
The study also found that department stores lose share of affluents’ fashion accessories spending, while discount, outlet and warehouse clubs doubled their take in accessories over 2008 levels. In specific product classifications, affluents were more likely to trade down to mass brands in women’s shoes.
Growth in purchases of women’s jewelry was modest, about 6.5% above 2008 levels. Interestingly, Danziger points out, sales of men’s jewelry fared better with spending more than double 2008 levels. Men’s jewelry now accounts for about 20% of the luxury consumers’ jewelry expenditures, a substantial increase over the 10 percent in 2007. Moreover, the study found affluents bought more watches in 2009 in all categories including men’s and women’s casual and dress styles.
“As these key findings show, the personal luxuries market has changed by more than just who is buying and how much they are spending,” Danziger added. “Affluent consumers are also buying a different basket of personal luxury items from a different slate of distribution channels. unnitymarketingonline.com