Affluents' Consumer Confidence Grows, Which Encourages Them to Spend More Freely, Unity Marketing Reports

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The tide has finally turned and affluent consumers are gaining confidence and spending more as a result. This predicts a strong holiday selling season.

Pamela N. Danziger, Unity Marketing

Unity Marketing's latest measure of affluent consumer confidence, the Luxury Consumption Index (LCI), shows that their expectations for future spending rose in the latest survey. This bodes well for the important holiday shopping seasons ahead.

Things are starting to look up among the nation's most important consumer segment - the affluent top 20 percent which are the by far the biggest spenders in the consumer economy. The affluent account for over 40 percent of all consumer spending, yet make up only 20 percent 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 the latest survey. This bodes well for the important holiday shopping seasons ahead.

This more positive outlook of affluent consumers' financial status corresponded to a 15.9 percent 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 $273.2k) from July 9-15, 2013.

"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.

Affluents feel more confident about the financial direction of the country as a whole.

Key to an upturn in affluent consumer confidence is growing confidence in the financial direction of the country. Some 32 percent of those surveyed believe the country as a whole is better off financially now, as compared to 27 percent 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 percent), as compared with last quarter (23 percent).    

"These factors taken together, along with an improved perspective on affluent's 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 luxury goods and services, the government's Retail Census also shows a strong 3.8 percent 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."

Commenting on the results of the latest survey, Tom Bodenberg, chief consumer economist for Unity Marketing, explains, "The luxury goods 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."

Webinar scheduled to review the LCI and the results from the Luxury Tracking Survey

Unity Marketing will host a 45 minute webinar at noon Thursday September 5 e.d.t. to review the results of the latest Luxury Tracking Survey and what the Luxury Consumption Index projects for the next six months. In the webinar reviewing Unity Marketing's latest luxury tracking survey, Pam Danziger, president of Unity Marketing and author of Putting the Luxe Back in Luxury will announce:

  • The latest LCI and what it predicts for the rest of 2013?
  • What sectors in the luxury market are trending up? What sectors are facing a headwind that may depress sales?
  • Key trends in luxury consumer spending and purchases in the 21 luxury categories included in the luxury tracking survey, specifically:
  • Home Luxuries (furniture, art, linens, tabletop, home electronics and more)
  • Personal Luxuries (fashion, fashion accessories, beauty, wine & spirits, jewelry & watches)
  • Experiences, such as travel, dining, spa services and physician services
  • Automobiles; and
  • What's hot, what's not in luxury today in affluents customers' preferences for products, brands, stores, shopping destinations?

About Pam Danziger and Unity Marketing

Pamela N. Danziger is an internationally recognized expert specializing in consumer insights for marketers targeting the affluent consumer. She is president of Unity Marketing, a marketing consulting firm she founded in 1992. Pam received the 2007 Global Luxury Award for top luxury industry achievers presented at the Global Luxury Forum by Harper's Bazaar. Luxury Daily named Pam to its list of "Women to Watch in 2013."

Pam gives luxury marketers "All Access" to the mind of the luxury consumer. She uses qualitative and quantitative market research to learn about their brand preferences, shopping habits, and attitudes about their luxury lifestyles, then turns these insights into actionable strategies for marketers to use to reach these high spending consumers.

Pam's latest book is Putting the Luxe Back in Luxury: How new consumer values are redefining the way we market luxury (Paramount Market Publishing, 2011). Her other books include Shopping: Why We Love It and How Retailers Can Create the Ultimate Customer Experience, published by Kaplan Publishing in October 2006; Let Them Eat Cake: Marketing Luxury to the Masses-as well as the Classes, (Dearborn Trade Publishing, $27, hardcover) and Why People Buy Things They Don't Need: Understanding and Predicting Consumer Behavior (Chicago: Dearborn Trade Publishing, 2004).

Click this link to register for the webinar.

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