Affluents Conservative In Spending
They may not be
struggling to gas up the Lexus, but even affluents are losing their
economic nerve, according to a new study, with 70% of them believing
the U.S. economy is on the skids.
Marketing�s Luxury Consumption Index fell to 54.4 points�its lowest
ever�with 41% of luxury consumers reporting that they plan to spend
less on luxury goods in the year ahead.
Unity, a firm
specializing in marketing to affluent consumers, says the latest
drop of 9.1 points this quarter follows a steep decline (23.8
points) at the close of the fourth-quarter 2007. While the
confidence index first began to tick downward last March, evidence
of plans to curtail spending didn�t crop-up until later in the year.
Now, the company says in its study, �we expect luxury consumers to
be conservative in their spending at least until the Presidential
election, when new leadership may provide an emotional lift.�
What that means
for marketers is that these consumers are going to be more resistant
to luxury messages. While 41% of luxury consumers say they expect to
spend less on luxury in the next twelve months, only 13% expect to
spend more. And 71% say the overall financial health of the country
is worse now than it was three months ago.
While the good
news is that the index detected an uptick in home luxury good
spending, which it says may indicate that the decline in confidence
is bottoming out, there are other signs that those catering to the
affluent are feeling a little pain. An AP report says that Blake W.
Nordstrom, president of Nordstrom, which has been one of the
strongest performing luxury chains, took a 36% cut in compensation
the trick is providing luxury goods so compelling that well-shod
consumers just can�t say no.
recently introduced LuxeConcepts, for example, which combines a
personal-shopping twist with its web offerings, personally
introducing a prospective buyer to the specific vendor, whether it�s
a $220,000 yacht charter to the Greek Islands or a $6,500 handmade
handbag from a world-renowned designer.
The site has
about 500,000 unique visitors, and Gilbert Gautereaux, president of
LuxeMont, a vertical media company with a community of upscale web
sites, including JustLuxe, says he expects revenues to increase 40%
study focuses on consumers earning $100,000 plus per year (with an
average income of $173,400 and age of 45.9 years) Gautereaux says
he�s seeing signs that the really rich�the 1% or so of the
population earning $1 million or more per year�are also feeling
constrained, but in different ways.
millionaires are delaying their purchases, he notes. �That seems
particularly true if much of their wealth is based in real estate,�
he says, adding that people don�t seem that nervous about the stock
market�s volatility. �I think at this level, people really
understand the ebb and flow of markets, and their portfolios are
pretty well balanced.� At JustLuxe.com, for example, travel
continues to be the most searched and purchased area, followed by
yacht charters, and private aircraft.
And even among
the very rich, with $15 million or more, he says that while spending
isn�t down, people are tending to behave a little more
conservatively around their splurges, perhaps as much due to the
green movement as the economy. Private jets are repositioning
themselves as tools, not toys�appealing to consumers on the time
versus money equation.