Luxury Consumer Confidence Bounces Back as Affluent Consumers Spend More

Furniture World Magazine

Luxury consumers' confidence rebounded in the first quarter of 2007, rising two points to reach 100.2, up from its lowest level in 2006 at the close of the fourth quarter. This is good news for companies that market and sell luxuries, as well as for those who invest in these companies. Renewed confidence in the first quarter encouraged affluent consumers to spend more buying luxury goods and services. Luxury consumers spent on average $14,024 on luxury goods and services, an increase of 8 percent over the average amount spent in the fourth quarter 2006. Increased spending on home luxuries, especially kitchen appliances and cookware, accounted for much of this quarter's increase. These findings are based upon Unity Marketing's Luxury Tracking survey of 1,003 affluent consumers conducted at the close of the first quarter 2007 (average income $159,000 and average age 46.4 years). Commenting on the first quarter results, Pam Danziger, president of Unity Marketing and author of Shopping: Why We Love It and How Retailers Can Create the Ultimate Shopping Experience says, "I advise my luxury clients to remain cautiously optimistic about the positive trend in the index and spending. The fact is luxury consumer confidence at the end of first quarter 2007 lags far behind where it was at the end of the first quarter last year, when it reached its historic high of 113.2 points. "Corresponding with luxury consumers’ optimism last year, luxury consumers spent on average $14,800 in 1Q2006, which was 5.5 percent more than this year. By contrast, I would have expected luxury consumer spending to rise even higher this year, since the average income of our survey respondents was 9 percent greater in 1Q2007. So while there is a positive trend in affluent consumers' confidence and spending, we still have a long way to go to get back to where we were in early 2006," Danziger explains. Commenting on the Luxury Consumption Index, Thomas Bodenberg, Unity Marketing's economic forecaster, said, "Luxury consumers, who are the movers and shakers in our society, continue to be pessimistic about the financial direction of the country. Some 42 percent of affluent consumers feel the country is worse off now compared with three months ago. Only 13 percent feel the country is in a better position. At the same time, nearly 60 percent of luxury consumers feel their financial status will improve in the next twelve months, which gave a boost to this quarter's Luxury Consumption Index." 1Q2007 Special Investigation: Luxury Consumers & the Loyalty Factor This quarter's special investigation was into the role of loyalty and reward programs and how much they influence luxury consumers in their brand choices and purchases. The research included whether or not the affluent consumers were members of the following: Airline Frequent Flyer Program Credit Card Rewards or Loyalty Program Hotel Points Program Retailers Rewards/Points Program Nearly 80 percent of all affluent consumers surveyed -- and an even higher percentage of the super-affluents with household incomes of $150,000 or more -- were found to be members of one or more programs. Members of each program were asked to what extent their membership influences the brand choices they make. The answers provide a powerful reason for luxury marketers in all sectors to evaluate a loyalty program for their best customers. Not only do rewards and loyalty programs encourage the affluent to buy your brand again and again, members of loyalty programs also spent in excess of 50 percent more on luxury in the study period. Another key finding from this research: Loyalty programs are even more influential among the young affluents -- the emerging market of affluent consumers 40 years and younger. Membership-holding young affluents spent nearly twice as much as the over forty year old affluent consumers on luxuries in the study period. To learn more about the young affluent generation and how they will impact the global luxury market, click here to receive a FREE copy of Pam Danziger's presentation, The Ascent of the Young Affluents: The Future of the Global Luxury Market, given at the Global Luxury Forum, April 20, 2007 in London. About Unity Marketing's Luxury Consumer Tracking Study These findings are based upon Unity Marketing's quarterly luxury tracking study which surveyed 1,003 luxury consumers (average income $159,000 and age 46.4 years). Every quarter Unity Marketing conducts a Luxury Consumer Tracking Study among 1,000+ luxury consumers. Year-end 2006 statistics compiled from the four 2006 tracking studies will be published in Unity Marketing's Luxury Report 2007 - Who Buys Luxury, What They Buy, Why They Buy. In the tracking study detail purchase information is collected on these categories of luxury: Home Luxuries: - Art, Wall Décor & Antiques - Electronics and Photography, such as computers, televisions, home entertainment centers, cameras, PDAs, etc. - Home Decorating Fabrics, Window & Wall Coverings - Furniture, Lighting and Lamps, and/or Floor Coverings, including rugs - Outdoor, Lawn, Patio & Garden Products, such as lawn furniture, patio accessories, plants, grills, etc. - Kitchenware, Cookware & Housewares - Kitchen Appliances and Bath & Building Products, such as cabinets, bathtubs, etc. for home remodeling - Linens & Bedding - Tabletop, Dinnerware, Flatware, Servingware, Decorative Accents Personal Luxuries: - Automobiles and/or recreational vehicles, such as boats, RVs, etc. - Clothes & Fashion Apparel - Fashion Accessories, such as handbags, wallets, suitcases, shoes, etc. - Fragrance, Cosmetics and/or Beauty Products and Skin Care regimes - Jewelry -Watches - Wine & Spirits Experiential and Luxury Services: - Travel and vacations - Dining and restaurants - Entertainment - Personal and health services, such as beauty treatments, spa, massage and cosmetic procedures, health club, country club, etc.; - Home services, such as landscape, housecleaning, home remodeling, home decorating, party planning and catering, etc. - Luxury brands & magazines Also included in the tracking study are measures of luxury brand awareness and usage as well as magazines luxury consumers purchase. This page provides a listing of brands. Special Luxury Research: Luxury Consumers and the Loyalty Factor Each quarter a topic of special interest to luxury marketers is researched. In the 1Q2007 study, luxury consumers and their use of membership loyalty and rewards programs were investigated. How to Subscribe This is a semi-custom research service with subscribers adding specific product categories and their brands and the brands of five key competitors to the survey. In addition, subscribers can add up to six personal questions to the survey through the year. Use this link for more information about subscribing to luxury tracking or call Pam Danziger at 717-336-1600.