Affluents Remain Cautious about Indulgence Spending Going into the Third & Fourth Quarters

Unity Marketing’s Luxury Consumption Index (LCI) stalls at 78.3 points as affluent consumers respond to mixed signals in the economy

Stevens, PA  July 21, 2010  –  Luxury marketers have enjoyed a few brief quarters of spending patterns that seemed to be returning to a pre-recession ‘normal,’ but it is too soon to be singing “Happy Days Are Here Again.”  Unity Marketing’s exclusive Luxury Consumption Index (LCI) has stalled at 78.3 points in July 2010 as affluent consumers reflect uncertainty about prospects for the economy in the next three months.  Because the LCI has proven a reliable predictor of consumer behavior, this stalling is reason for concern.

In one of the five key measures that make up the index, significantly more luxury consumers (36 percent) say the country as a whole is worse off now as compared with three months ago; that reflects a rise from only 31 percent who said the same in March 2010.  This according to a survey of 1,349 luxury consumers conducted from July 3-8, 2010 (Average income $306.7k and net worth $15.2 million; 44.8 years; 45 percent male and 55 percent female).

Value positioning key for luxury success through third and fourth quarters 2010

Commenting on what the latest findings from Unity Marketing’s Luxury Tracking Study project for the luxury market through the end of the year, Pam Danziger, president of Unity Marketing said, “Without a doubt the luxury consumer market is in a much better place today than it was a year or so ago, but the latest survey warns marketers not to ease up or be over-confident that the recession’s effect on the luxury market are over.

“Nearly three out of four luxury consumers surveyed believe that the recession continues, which in turn impacts spending on luxury goods and services.  Marketers are advised to continue to position luxury as a value proposition, by keeping luxury connotations and image up front in advertising, packaging and service, but communicating in a very subtle, almost one-on-one way, affordable pricing,” Danziger explains.

Among the findings in the latest Luxury Tracking Study:

• Spending on luxury rose a modest 7.7 percent quarter-to-quarter. Luxury consumer spending, however, rose dramatically year-over-year, up nearly 60 percent from $19,952 on average to $31,665. Unity expects the same trends toward modest quarter-to-quarter spending increases to continue throughout 2010.  Luxury marketers must remain vigilant to rising competition coming from mass and premium brands that offer increasingly high-quality goods at price points significantly less than the upper-tier luxury brands command.  For example, Ann Taylor Loft, the company’s “upper-moderate” priced brand, tops the list of fashion boutique destinations for ultra-affluent shoppers (22 percent) in the second quarter, way ahead of higher-priced Ann Taylor brand (12 percent).
• Trending categories that attracted higher levels of spending among luxury consumers in the second quarter included:
  • Luxury beauty and cosmetics, especially perfumes, sun care and skin care products;
  • High-end cook’s tools, notably small kitchen appliances;
  • Luxury clothing and apparel, with men continuing to up their game in fashion;
  • Luxury fashion accessories, as men’s brief cases, lap top cases, carryalls and wallets posted strong growth in spending;
  • Home electronics, as promotionally-priced high-tech televisions attracted more buyers; and
  • Travel, which exceeded quarterly expenditures throughout 2009 and first quarter 2010.

For a full list of what’s hot and what’s not this quarter in luxury click this link.

• Aspirational affluents (incomes $100,000-$249,999) started to trade up once again to luxury. Aspirationals increased luxury spending by nearly 30 percent in the current quarter, posting their highest levels of spending seen throughout 2009.  In particular they indulged in more personal luxuries, such as high-end clothing, fashion accessories, personal electronics, wine and spirits and beauty products.  While the typical aspirational consumer spends only one-fourth to one-third of what an ultra-affluent consumer spends on luxury, the fact that there are about ten aspirational households to each ultra-affluent means that their aggregate spending is critical to boosting the performance of premium, as opposed to top-tier luxury brands, and retailers that target a wider range of price points.

Pace of growth in luxury consumer spending to remain modest over the next two quarters

On the latest survey results, Tom Bodenberg, Unity Marketing’s chief consumer economist, said, “As we look to luxury consumer spending in the second half of 2010, affluent consumers’ pent-up demand for luxury indulgences after doing without through 2008 and 2009 has crested.  We expect the pace of growth in luxury consumer spending to remain modest over the next two quarters.  Affluents still have a lot of uncertainty about the economy which dictates caution when it comes to spending on luxuries.  We don’t expect to see moderation on this cautious attitude until the beginning of 2011.  As marketers and retailers plan for the critical fourth quarter, they will need to keep promotions in play, as consumers will continue to hold back without the extra incentive of discounts or added-value deals that sweeten the pot.”

For more information about the Luxury Consumption Index (LCI) and the results of Unity Marketing’s latest survey of affluent consumer spending, call Pam Danziger at 717-336-1600 or click this link

Special Investigation:  Luxury Consumers & Major Home Projects

As each wave of tracking studies is fielded, special topics of interest to luxury marketers are researched in more depth and published in a separate trend report.  In the second quarter 2010 Unity Marketing’s Luxury Tracking Study investigated the luxury home market.  The results of this investigation will be compared with results of a similar survey conducted in 2Q2008.

The special investigation questions were designed to help luxury home marketers and brands understand their affluent customers better, included:

• Luxury lifestyle, i.e. do you choose most often the good, better, best option or is luxury just not a part of your lifestyle?
• Involvement in major home projects, including remodeling, redecorating, buying new home, buying second home, in past year or plans for next year;
• Amount spent or plan to spend on major home projects;
• Room or rooms in home involved in major home project or planned for major projects;
• Factors that influenced home purchases, such as value, store, internet research, designer/decorator recommendations, etc.;
• Sources for home shopping rated by whether the source is a regular, occasional or infrequent shopping destinations.
  • Sources include department stores, home furnishings stores, discount store, internet, mail order, home improvement store, furniture store, specialty appliance dealer, interior decorator/home design store, mail order or television shopping;
• Use of a decorator or designer, including type of decorator, importance of services, such as access to furnishings not available elsewhere; expertise in combining colors; saves time; saves money, etc.;
• Favorite styles of home decorating; and
• Attitudes about home decorating and home styles.

The results of the current quarter’s survey are compared with similar survey questions presented in the 2Q2008 luxury tracking study.  This provides ability for marketers to track trends in the market for luxury home decorating and remodeling.

In addition, a psychographic analysis of the personalities in the luxury home decorating market are presented based upon different attitudes and motivations driving luxury consumers in their home decorating projects.

To learn more about the home luxury study, click this link

About Unity Marketing’s Luxury Tracking Study
Launched in January 2004, and every three months thereafter, Unity Marketing has measured the pulse of the affluent consumers in a longitudinal survey of 1,200+ affluent consumer households. Each quarter the Luxury Consumer Tracking Study reports what luxuries they bought during the past quarter, how much they spent, where they bought, the luxury brands they became aware of and used, and how they felt about their current and prospective financial status.  A total of 22 major categories of luxury goods and services are included in the poll, including clothing, fashion accessories, home luxuries, travel, dining and jewelry.

For media:  Danziger available for interviews.  Charts, tables and graphs detailing major findings in the report also are available.

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.  Unity Marketing is the voice of the luxury consumer for such clients as PPR, Diageo, Tempur-Pedic, Google, Swarovski, Constellation Wines, Luxottica, Orient-Express Hotels, Italian Trade Commission, Marie Claire magazine, The World Gold Council, and The Conference Board.

She is currently working on a new book, Putting the Luxe Back in Luxury, to be published in late 2010 by Paramount Market Publishing.  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).

Unity Marketing’s new Home Luxury Report details major changes in purchase of home luxuries and how marketers should respond

Stevens, PA  July 14, 2010 –  In the category of home luxuries –  items for one’s home, like art and antiques, garden and outdoor items, and linens and bedding — 2009 was a rocky year.  Far fewer affluent consumers purchased items from this category, finds the new Home Luxury Report 2010 from Unity Marketing. However, those who made purchases spent on average 50 percent more than they spent on luxuries for their home in 2008.

The latest report is based upon surveys among 4,739 luxury consumers with an average income of about $220,200.  This sample is representative of the approximately 22 million affluent households in the country.

“The contraction in the percentage of affluents buying home luxuries — from 52 percent in 2006 to 41 percent in 2009 — is a cause for concern for marketers,” says Pam Danziger, president of Unity Marketing and author of the report.  “However, significantly higher levels of spending from affluents who did make a home luxury purchase should have a moderating effect for marketers.”

Trends in the market for home luxuries

Key findings on the market for home luxuries include:

• In art and antiques, the big story is original art.  Affluents want — and are willing to pay for — that one-of-a-kind piece.
• In home electronics, televisions were the big mover.  In electronics brands, both for home and personal electronics purchases, it is no surprise that Apple is luxury consumers’ favorite brand.  Bose is another popular electronics brand, especially among the most affluent shoppers.
• For home decorating fabrics, window and wall coverings, interior decorators significantly increased their penetration in this market in 2009, ranking as the second most popular source for these goods.  The Internet too rose in importance for shoppers.
• Affluent home owners invested in lots of new lamps and lighting accents in 2009.  Home improvement stores gained share of affluents’ retail sales in the furniture, light and rug category as a result.
• All things luxury for outdoor living got a boost in 2009.  From outdoor furniture, power equipment, lighting, water features and barbecue grills, luxury consumers invested more in their outdoor living spaces.
• Perhaps in response to less dining out, affluents moved their home cooking up a notch in 2009.  They invested more in cook’s tools such as small kitchen appliances, cookware, cutlery and bakeware.  They also turned to specialty gourmet cooking stores as their #1 destination for their housewares purchases, knocking department stores into second place.  The Internet was the third more popular destination.
• Affluents also invested more in their kitchens by buying luxury kitchen appliances and other kitchen equipment such as cabinets, countertops and sinks.   Specialty appliance dealers benefited strongly from these investments, ranking as the second most popular destination for luxury shoppers after the big-box home improvement stores.
• Affluents slept better in 2009, at least as measured by greater spending on mattresses and box springs and bed linens.
• Affluents who purchased luxury tabletop declined in 2009, but those who bought spent over 50 percent more.   Specialty gourmet stores and the internet picked up market share of affluents’ spending on tabletop, while department stores and specialty home furnishings stores lost share.  For the first year in luxury tracking, Waterford beat out Lenox as the top tabletop brand.

“As we can see from some of the major take-aways from this most recent home luxuries study, those affluents who are still buying home luxuries are spending more, but their spending patterns have shifted to new items, new brands, and new channels of distribution,” says Danziger.  “The home luxuries marketer is charged with navigating new terrain, and this kind of consumer intelligence research can serve as a much-needed road map.”

About the Home Luxury Report 2010

Unity Marketing’s Home Luxury Report 2010 is the ultimate guide to the U.S. market for luxury goods for the home. This report focuses on the buying and spending habits of the nation’s affluent households — the top quintile or 20 percent of U.S. consumer households — of high-end or luxury products and services.

The Home Luxury Report examines consumers’ buying behavior and spending habits related to these key categories of luxury purchases:

• Art & Antiques
• Electronics & Photography Equipment
• Home Decorating Fabrics, Window & Wall Coverings
• Furniture, Lamps, Rugs & Floor Coverings
• Garden, Outdoor, Lawn & Patio
• Kitchenware, Cookware, Cook’s Tools
• Kitchen Appliances, Bath & Building Products
• Linens & Bedding Products
• Tabletop, Dinnerware, Flatware & Servingware

The report contains details on these nine luxury goods categories bought by affluent consumers, including annual spending, where these products were purchased and details of the types of products and services bought.  This years report contains trend data covering 2007 through 2009.

The Home Luxury Report 2010 is written by Pam Danziger, an internationally-recognized expert on the luxury market and is based upon the kind of in-depth consumer research for which Pam Danziger and Unity Marketing are known.

Guides luxury marketers to shifts and changes in their target customers’ attitudes and shopping behavior

This report provides vital data about what luxuries affluents are buying, how much they are spending, where they are making their purchases and what brands they favor.  This report provides invaluable information about the mindset, attitudes and spending habits of the affluent consumers that luxury marketers target.  This is not just report about  people with high incomes, but affluents who buy luxury goods and services.

>> Luxury Marketers:  This is a report about your customers & your target customers

The Home Luxury Report 2010 is a compilation of the quarterly luxury tracking surveys that Unity Marketing conducts every three months with 1,000-1,250 affluent consumers who purchased one or more luxuries in the study period.  Unity’s luxury tracking study is the only longitudinal study of its kind that tracks the luxury consumer market, what they buy, how much they spend.  The survey sample of 4,739 luxury consumers surveyed in 2009 with an average income of about $220,200 is representative of the 22 million affluent households in the country.

More details about products and brands included in Home Luxury Report 2010

Details about what these luxury consumers bought, how much they spent, where they made their purchases, and in certain categories the luxury brands they patronized are reported in four major categories of luxury. Significantly more product categories and more brands were included in the current surveys, notably:

Home Luxuries

• Art and Antiques (Specific data is collected on already-framed reproductions; unframed reproductions; custom-framed art or reproductions; other custom framing; original art; sculpture, statues, 3D art; antique furniture and collectibles; wall decor)
• Home Electronics (Home Desktop Computers; televisions; DVD/video players; audio equipment; home entertainment systems)
• Furniture, Lamps and Floor Coverings (Lamps and lighting; upholstered furniture; wooden furniture; rugs and floor coverings)
• Garden and Outdoor (Patio furniture; grills; lighting accents; fencing; power gardening equipment; decorative pots; garden statues; chimeneas and outdoor stoves; garden shelters; water gardens; porch and patio decorative accents)
• Home Decorating Fabrics, Wall and Window Coverings (Wall coverings, such as wall paper; ready-made curtains, drapes; window coverings, such as blinds, shades; home decorating fabrics for custom upholstery, curtains, drapes, etc.)
• Kitchen Appliances, Bathroom Equipment and Building Products (Kitchen appliances, such as stoves, ovens, refrigerators; bathroom equipment, such as tubs, showers, toilets, fixtures; kitchen equipment, such as cabinets, countertops; air conditioning/filtration systems; water systems)
• Kitchenware, Cookware, Housewares (Small appliances; cookware; bakeware; cutlery; storage and organization; barware)
• Linens and Beddings (Sheets and pillowcases; comforters, spreads; pillows and pillow accents; bath linens; mattresses and box springs; duvets and shams; feather beds and mattress covers; table linens)
• Tabletop, Dinnerware, Stemware, Flatware (Dinnerware, including fine china, ceramic or stoneware, serving ware and decorative accents; crystal and glassware decoratives, stem ware, serving pieces, barware; flatware, including sterling silver flatware, serving pieces, decorative accents and other flatware)

Provides marketers with facts and data that support strategic decisions

Now you can make critical business decisions based upon facts — not beliefs, assumptions or fantasies

This report provides the facts and figures you need to develop winning marketing and business strategies. By working with the facts, not fantasies, you have a much better chance of success marketing to the luxury consumers. This report gives you a horizontal view of the luxury market, recognizing that luxury marketers compete not just with companies within their vertical product niche, but across all luxury categories as well.

Within each category of luxury, the key drivers for purchase are studied, such as role of luxury brand in purchase decision; the influence of sales price on purchase; where the shopper bought their last luxury; why they bought luxuries; whether their luxury purchases were made a gifts; and other motivational factors.

This report doesn’t stop with the data — It pushes further to help marketers and retailers put the information to use

Translate the data into information that marketing executives can use to make critical strategic decisions

This market research report helps make the research data and findings accessible and useable.  It provides marketers with three powerful perspectives:  “The What”, “So What” and  “Now What.”  This report is filled with advice and guidance for luxury marketers to take action on the research findings revealed.

Special feature: Find out which of the five different types of luxury consumers are your best customers

A special feature in Unity Marketing’s Home Luxury Report 2010 is a psychographic profile of five key types of luxury consumers. These include:

• X-Fluents (Extremely Affluent) who spend the most on luxury and are most highly invested in luxury living;
• Butterflies, the most highly evolved luxury consumers who have emerged from their luxury cocoons with a passion to reconnect with the outside world. Powered by a search for meaning and new experiences, the butterflies have the least materialistic orientation among the segments, yet they spend nearly as much as the X-Fluents on luxury;
• Luxury Cocooners who are focused on hearth and home. They spend most of their luxury budgets on home-related purchases;
• Aspirers, those luxury consumers who have not yet achieved the level of luxury to which they aspire. They are highly attuned to brands and believe luxury is best expressed in what they buy and what they own.
• Temperate Pragmatist a newly emerged luxury consumer who is not all that involved in the luxury lifestyle.  As their name implies, they are careful spenders and not given to luxury indulgence.

Special investigations into luxury consumer market

Each quarter Unity Marketing’s luxury tracking survey conducts a special investigation into topics of interest to luxury marketers.  Included in the Luxury Report 2010 are results of the following special investigations of interest to home marketers:

• Luxury consumers and their luxurious homes — What they have, what they own, what they buy, plans on remodeling and redecorating.
• Luxury consumers and their charitable giving — Investigates how affluent consuemrs are giving back to make the world a better place for us all.
• Luxury consumers and the current economic crisis –Learn about the changes luxury consumers are making to their luxury lifestyles and their shopping behavior in response to the current economic crisis.
• Luxury consumers and green marketing — What role does the green marketing practices of retailers and brands play on the luxury consumer and their buying behavior.
• Loyalty marketing and the luxury consumer – Research into the participation of luxury consumers into loyalty programs and how marketers can create more effective loyalty programs targeting the luxury consumer.

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.  Unity Marketing is the voice of the luxury consumer for such clients as PPR, Diageo, Tempur-Pedic, Google, Swarovski, Constellation Wines, Luxottica, Orient-Express Hotels, Italian Trade Commission, Marie Claire magazine, The World Gold Council, and The Conference Board.

She is currently working on a new book, Putting the Luxe Back in Luxury, to be published in late 2010 by Paramount Market Publishing.  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).