Unity Marketing’s latest measure of affluent consumer confidence, the Luxury Consumption Index (LCI), shows that their expectations for future spending rose in July. The top 20% are by far the biggest spenders in the consumer economy, accounting for more than 40% of all consumer spending.
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 8 to 15.
“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. 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,” says Pam Danziger, president of Unity Marketing and lead researcher on the quarterly Luxury Tracking Study.
Spending on Accessories to Rise
Key to an upturn in affluent consumer confidence is growing 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. Furthermore, there was a sharp increase in the percentage of affluents that report spending more on luxury (27%), as compared with last quarter (23%).
“Not only is their more positive outlook measured in greater spending on high-end and luxury goods 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 says. “These findings point to a strong back-to-school shopping season, as well as good results for the holiday season.
Categories posting particularly strong quarter-over-quarter growth in affluent consumer spending in the last Luxury Tracking survey includ
•High-end or Luxury linens, fabrics and soft goods, including curtains, sheets, towels, other bed and table linens, up 51.1%;
•Fashion accessories, notably women’s handbags and shoes, men’s accessories, luggage and briefcases, up 37.8%;
•Personal electronics, such as cell phones and notepads, up 29.6%; and
•Furniture, lamps and floor coverings, up 26.3%.
Looking ahead, the LCI shows affluents have a strong likelihood to buy these over the next three months: new luxury experiences; more high-end purchases for the home; new purchases of clothing are also planned by affluents over the next three months.
Commenting on the results of the latest survey, Tom Bodenberg, chief consumer economist for Unity Marketing, explains: “The luxurygoods segment has recently ‘smoothed out,’ specifically, it is not as volatile as it has been in the previous 18 months. Whether it continues its slow upward trend to pre-2008 levels is a matter of speculation, but overall, it is a fairly good omen. There are some signs that the economy is thawing—and this forecast takes into account the expectations of the luxury consumer for the next three months.”