According to new data, affluent consumers spent more in the third quarter of 2009 than they did in the second quarter. However, it is important to note that there is a dramatic difference in attitude toward luxury between ultra-affluent consumers with the highest household incomes and affluents with a lower income level, according to the articles posted by www.diamonds.net and www.israelidiamond.co.il. These new findings further confirm that the post-recession luxury market will be quite different from its predecessor.
Most psychologists that study consumer behavior believe that changes in consumer behavior stem from changes in attitude. In this year’s third quarter this theory proved true among luxury consumers. Last quarter affluent consumers showed the largest historic increase in consumer confidence measured in Unity Marketing's Luxury Consumption Index (LCI). During the current quarter they followed suit by increasing their spending on luxury at record levels.
Overall spending on luxury goods and services increased by 29.4% from the second quarter to this year’s third quarter. In all but three of the 22 product and service categories included in Unity Marketing's latest Luxury Tracking Survey, they spent more from quarter to quarter.
Nevertheless, Pam Danziger, President of Unity Marketing, warns luxury marketers that this quarter's recovery might just be a sign that consumers were releasing pent-up demand and such strong spending on luxury items may not carry over to subsequent quarters. Danziger commented: "No question that this quarter's increase in spending on luxury is good news for luxury marketers. Many affluent consumers released pent-up demand in the third quarter, particularly in the area of home luxury goods and experiential luxuries, like travel and dining."
Danziger continued, "When digging deeper into the data, the results show that the sharp rise in luxury spending was driven primarily by increased spending and participation in the luxury market by those at the highest-income levels ($250,000 and above). Affluent consumers at the lowest-income level ($100,000-$149,999) were reluctant to trade up to the luxury level. So this quarter's luxury tracking study was heavily weighted toward those in the upper-income levels."
Further results in this quarter's luxury tracking indicate a modest gain in overall luxury consumer confidence as measured by Unity Marketing's exclusive Luxury Consumption Index (LCI). For the third quarter of 2009 the LCI only rose 1.6 points.
Commenting on the latest survey, Tom Bodenberg, Unity Marketing's Chief Economist noted: "The Luxury Consumption Index for the third quarter of 2009 was 75.9, which is a very slight increase from second quarter’s index of 74.3, thus ending a three-quarters-long pattern of substantial improvement. In the latest data we find that the downward spiral in the LCI that began in mid-2007 has bottomed out, and there are signs of a long, slow, but steady haul upward."
