Survey Shows How Affluent Consumers' Behavior Is Changing after the Bail-Out and the Stock Market Collapse

Furniture World Magazine

Conventional wisdom holds that the affluent consumers -- as well as the luxury marketers that depend upon them -- are immune to the economic woes that beset that middle-classes. In the current economic climate this conventional wisdom is dead wrong! Unity Marketing has conducted its first survey of the luxury consumer mindset since the bail-out and the historic stock market decline that occurred October 3. Based upon the results of the survey, Unity Marketing predicts profound and wide-spread impact on the luxury market. "Few luxury brands are going to weather this global economic crisis with impunity," says Pam Danziger, president of Unity Marketing, a research firm that specializes in understanding the mindset of the luxury consumer and predicting their behavior. "Our latest survey of 1,200 affluent consumers at the top 20 percent of U.S. households (average income $209,500 and fielded October 3-8, 2008) shows that the majority of affluents are changing their shopping behavior in response to the current economic climate. In particular they are shopping less often and shopping more strategically by making lists, comparison shopping and doing their research before venturing into the stores. These new shopping patterns are going to put additional pressure on struggling retailers who traditionally have looked to the upper-income shoppers to bolster their revenues." Unity Marketing's Luxury Tracking Study for 3Q2008 shows that the average amount consumers spent on luxury remained flat from the second to third quarter. However in 15 out of 21 product and service categories studied, luxury consumers spent more on average in the third quarter as compared to the previous quarter. Danziger explains, "The fact that total spending remained flat but luxury consumers spent more on average in 15 different categories indicates that affluents are buying luxuries more selectively and more carefully. They are still spending -- and spending quite generously -- on those choice luxury items they decided to splurge on, but they are splurging on fewer items overall." Advice for worried luxury retailers and brand managers For the coming fourth quarter, Danziger advises, "Because affluent shoppers are staying out of stores to resist temptation, retailers must offer shoppers new in-store experiences they simply can't ignore, like the cash-back gift card sale going on now at Bergdorf Goodman. "Further luxury brands need to look strategically at their product assortments and price ranges, since affluents are widely choosing to buy less premium brands in order to save money. So a luxury brand that offers more accessibly priced alternatives, like Vera Wang Lavender Label or the Akris Punto brand, can keep their customers from trading-down to another company's brand. Brand managers also need to boost the value messaging in their marketing efforts to help justify the expense of paying a premium for their brands. For today's resistant affluent shopper, luxury brands that focus their marketing messages on quality and value, rather than on image or status, will attract careful shoppers. In other words, luxury brands need to sell the 'steak' once again, not just the sizzle." For more information on what the latest Unity Marketing Luxury Tracking survey found for the third quarter and what it predicts for the vital fourth quarter holiday season, call Pam Danziger at 717-336-1600 or request more infomation through this link.