Luxury Is Hot Even Though Economy Is Not

By Rieva Lesonsky

A tough economy isn’t cutting into overall luxury fashion and accessories spending; in fact, it’s bringing some new consumers into the luxury fold, according to the latest 2011 Spend Sights Special Report: Global Luxury Fashion Spending from American Express Business Insights.

According to the report, while traditional, high-end luxury shoppers worldwide are slowing their spending, “average” consumers are picking up the slack. And both seniors and younger consumers are showing renewed interest in luxury products.

American Express identified the consumers who make up the top 5 percent of annual spending on luxury products. Dubbed “fashion enthusiasts,” this group’s spending patterns were compared to “average” luxury fashion consumers in the U.S., U.K., France, Japan, Hong Kong and Australia. Here’s what the survey found:

• Average Consumers in the Lead – Compared to the same time period in 2010, average consumers are leading luxury fashion spending, outpacing “fashion enthusiasts” in the U.S., Europe and Asia. Non-enthusiast men in the U.S. spent 156 percent more on premium luxury fashion in 2011 compared to last year, and non-enthusiast women spent 125 percent more. In contrast, male enthusiasts in the U.S. spent 11 percent less, and female enthusiasts’ spend remained stagnant.
• Seniors Get Into Flash Sales – Younger consumers may have been early adopters of flash sales (a limited-time, online sale frequently used for luxury products), but now seniors are getting into the game—and not just traditional fashion enthusiasts, either. Now, the average U.S. senior is getting in on the game. Non-enthusiast U.S. seniors’ spending on discount and flash sale websites increased by 124 percent in the first half of 2011 compared to the same period last year.
• Average Gen Y and Gen X Go Premium – In comparison to discount luxury spending such as flash sales, premium luxury means paying full price. Surprisingly in a tough economy, the survey showed that more non-enthusiast Gen Y and Gen X consumers are making luxury brand fashion purchases. Average Gen Y consumers’ premium luxury spending increased by 100 percent during the first half of 2011 compared to the same period in 2010. Average Gen X consumers’ premium luxury spending increased by 142 percent during the same period. In comparison, premium luxury spending by both Gen Y and Gen X fashion enthusiasts decreased during that time period.

What does it mean if your business relies on luxury products? More luxury retailers are looking to woo slow-spending traditional enthusiast consumers by adding discounts such as flash sales. Along the way, they seem to be attracting average consumers who get hooked on luxury—even if it’s not at a discount.

Image by Flickr user UggBoyUggGirl [PHOTO//WORLD//TRAVEL] (Creative Commons)

This entry was posted on Friday, October 14th, 2011 at 6:00 am and is filed under Business Development, Marketing, Sales Process, sales process, Small Business, small business. You can follow any responses to this entry through the RSS 2.0 feed.


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