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Luxury Is Hot Even Though Economy Is Not

October 14th, 2011 :: Rieva Lesonsky

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)

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Tags: economy, recession, small business marketing
Posted in Business Development, Marketing, Sales Process, sales process, Small Business, small business | No Comments »

What Do Women Want? To Stop Worrying

September 30th, 2011 :: Rieva Lesonsky

By Rieva Lesonsky

Are you marketing to women? Then take note: A surprising new study by the Boston Consulting Group and reported in Marketing Daily found that women are more worried about their financial situation today than they were even at the height (or should I say depths?) of the Great Recession.

When asked what their biggest concern is, 57% of women surveyed said it was managing household finances. (By comparison, in 2009 their biggest concern was lack of time.) Women were 21% more likely than men to say they are anxious about the future, and 44% more likely to say they face a great deal of stress.

No wonder: Nearly three-fourths (73 percent) say they have been personally affected by the global economic downturn. Just 13 percent feel “very” financially secure, but one-third don’t feel financially secure at all.

As a result, more than half (57%) are cutting back on spending in areas such as buying private-label brands, buying less food, getting their hair cut less often and wearing old clothes instead of buying new ones.

Although men are more likely to have lost their jobs than women are (men account for about 85 percent of layoffs, Michael J. Silverstein, senior partner at The Boston Consulting Group, told Marketing Daily), women whose spouses or partners are laid off or fear being laid off are more worried about family finances.

If your business involves life insurance, investment/financial advice or banking, be especially wary: The survey found these are the top three categories where women say marketers don’t understand their needs.

So what does it take to market to worried women? First, keep in mind that women are cutting back, but they don’t want to look like they’re cutting back and they want to keep up appearances of the same lifestyle. Silverstein cites the following core issues:

Create value packages. Add features to deliver more value instead of “stripping things out,” Silverstein advise.
Be innovative. Women want to feel smart when they’re making a purchase and innovative products help them do so.
Show you understand her time concerns. With more than 90 percent of working women saying they’re still responsible for all of the household chores and child care, time pressures aren’t going away any time soon. Even in a down economy, women will still pay extra if it will buy them precious time.

Image by Flickr user Alan Cleaver (Creative Commons)

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Tags: marketing to women, recession, small business marketing
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Will Small Business Optimism Ever Recover?

September 6th, 2011 :: Karen Axelton

By Karen Axelton

American Express OPEN recently celebrated the 10^th anniversary of its semi-annual Small Business Monitor surveys by releasing a retrospective report that analyzed the results of the surveys over the past 10 years. The results have some sobering data for small businesses.

The study found that before the “Great Recession” of 2008, small business owners nationwide were typically optimistic, no matter what their gender, industry or size of their business. Since the recession, however, entrepreneurs have not yet recovered their “sunny disposition,” according to the American Express OPEN® Small Business Monitor Optimism Review.

The study looked at small business owner responses to two positive and two negative statements about the economy and subtracted the negative responses from the positive to come up with a “net optimism score.” In fall 2002, for example, 64% of entrepreneurs had a positive outlook about their business’s future, while 29% had a negative view, for a net optimism score of +35. In the spring of 2011, 49% had a positive view, while 48% held a negative view, for a net optimism score of just +1.

Here are some more findings:

Between late 2002 and late 2007, optimism was high among virtually all small business owners, peaking in mid-2005. However, between late 2007 and early 2008, optimism took a nosedive and since then, hasn’t recovered for any business owner, regardless of geographic region, company size, industry or sex of the owner.

Business owners in the South and West were the most optimistic in the country before 2008. But in the past four years, businesses have become more volatile in their outlook depending on what part of the country they are in. In the most recent Small Business Monitor survey (spring 2011), net optimism scores by region are:

Northeast (+15)
West (+4)
South (+3)
North Central (-19)

Before 2008, there was little difference in optimism by firm size. Since then, larger small companies have shown more volatility in their outlook, with the biggest decline in optimism among those with 20 to 49 employees and those with $500,000 to $999,999 in annual sales.

Who’s the “canary in the coal mine” for small business optimism? Small retailers are the bellwether industry group. When business optimism plummets, their pessimism leads the way.

How does this report jibe with your outlook for your small business?

Image by Flickr user loneymops (Creative Commons)

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Tags: recession, small business outlook
Posted in Small Business, small business | No Comments »

CEOs Are Optimistic About the Economy—Are You?

February 23rd, 2011 :: Rieva Lesonsky

By Rieva Lesonsky

The U.S. economy may still be uncertain, but global confidence among CEOs is rebounding, according to a new PricewaterhouseCoopers survey of 1,201 chief executives in 69 countries. The 14th Annual Global CEO Survey found CEOs are almost as confident of revenue growth in the next 12 months as they were pre-recession.

Some 51 percent said they are “very confident” about their company’s prospects for revenue growth over the next 12 months; 48 percent are “very confident” about prospects for the next three years.

The rise in short-term confidence affects CEOs from all regions of the globe. While the survey acknowledged that “high levels of confidence in light of continued uncertainty in several major economies are surprising,” the confidence was attributed to the fact that companies have become extremely disciplined about costs, so they are ready to profit as soon as global growth returns.

CEO confidence will have a strong positive impact on jobs. Some 56 percent of U.S. company CEOs said they plan to hire in 2011, up sharply from 32 percent a year ago and just 23 percent the year prior. And 24 percent of those planning to hire say they will increase headcount by at least 5 percent.

Hiring plans are also strong globally, with 45 percent of European CEOs, 62 percent of Asian-Pacific CEOs, 60 percent of Middle Eastern CEOs and 50 percent of Latin American CEOs planning to hire in 2011.

Despite the high unemployment rate, two-thirds of CEOs overall say they cannot find enough skilled candidates to fill positions.

Echoing many other economic indicators, the report showed that the industries projecting the most job growth are industrial companies such as automotive, manufacturing and chemicals. Second most likely to hire: the technology sector. Least likely to hire: entertainment and media.

Optimistic hiring outlooks globally are good news for small business owners. Even if your company isn’t quite ready to hire, new jobs mean money flowing into the global economy—and your business.

Image by Flickr user Traci Bunkers (Creative Commons)

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Tags: recession, small business, Workforce
Posted in Small Business, Workforce | No Comments »

Hot Marketing Trend: Selling Stress Relief

January 31st, 2011 :: Rieva Lesonsky

By Rieva Lesonsky

Are you looking for a way to market your product or service effectively? One tactic that has proven to be sure-fire throughout the recession is this: selling stress relief.

Consider this: Despite the downturn in the economy in the past few years, spa services that offered stress relief continued selling strong—even in the depths of the recession. Yes, frivolous treatments like white-chocolate facial masks may have been in decline, but services that promised to increase people’s resilience, relax them and enable them to handle stress more effectively actually saw sales rise.

If selling stress relief can keep a “discretionary” industry like spa services going even as people are cutting back, imagine what can it do for your business. You don’t need to be selling actual massages or relaxation treatments, either. These days, stress is a hot topic for just about everyone—from stay-at-home moms to executives, everyone has something that stresses them out.

To take advantage of the fact that we’re universally stressed, just focus your marketing message on how your product or service helps eliminate, reduce or ease stress. Here are some ideas.

If you’re selling a consumer oriented product or service:

Will it help the consumer be healthier or feel fitter?
Will it help the consumer feel better about himself or herself overall?
Will it give the consumer some “me time”?
Will it help the consumer save money? (Worrying about money is a major source of stress.)
Will it help the consumer get more done in less time?
Will it give the consumer more time to spend with friends and family?

If you’re selling a BtoB product or service:

Will it help the customer look good to his or her boss?
Will it help the customer save time at work?
Will it help the customer get more done with a smaller budget?
Will it help the customer be more efficient?
Will it help the customer deal with difficult people at work?
Will it help the customer be more competitive in his or her job? (If the person making the purchasing decision is stressing about layoffs, this can be a big factor).

You get the idea. Start thinking about what you offer in terms of how it eases stress, and you’ll find it’s pretty easy to create a marketing message that works to sell today’s holy grail: less stress.

Image by Flickr user Dennis Wong (Creative Commons)

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Tags: Marketing, recession
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