Affluent consumers spent 6.4 percent less on luxuries in the fourth quarter of 2008 than they did in the third quarter, according to a survey by consumer insights firm Unity Marketing.
The segments of the luxury market experiencing the steepest declines in consumer spending were luxury fashion accessories, kitchenware, electronics, and upscale home furnishings, according to the quarterly survey of 1,166 affluent consumers (defined as having an average annual income of $199,200).
“(The) latest survey of luxury consumer purchasing continues to measure weakness in affluent consumer confidence that is causing even the richest Americans to hold off on discretionary purchases,” says Pam Danziger (pictured), president of Unity Marketing, Stevens, Pa., which specializes on “Specific changes they are making to their lifestyle according to our latest survey are reducing the times they dine out and shopping less frequently. Affluent shoppers are showing a new frugality that may well become a habit once this recession ends.”
Unity Marketing’s Luxury Consumption Index, which measures affluent consumer confidence, stands at 41.7 points in the beginning of 2009, which isn’t substantially changed from its historic low of 40.3 points reached at the close of third quarter 2008.
“The slight improvement measured in the LCI at the end of the fourth quarter 2008 measures a small uptick in affluents’ feelings about their current financial situation and their expectations for the country in the next 12 months,” Danziger said. “This may well be a result of the Obama inauguration and hopefulness that the new administration will be effective tackling the problems in the economy.”
She added, “On the other hand while affluents feel slightly more confident about the economy at large and their personal financial situation, they continue to decline in their expectations of future luxury spending. Further, the affluent also expect to save/invest more in the coming 12 months, so that extra cash that they once would have spent, they are more likely to save in the coming 12 months. By these measures, we feel the luxury sector of the economy will continue to falter throughout 2009 and be slower to recover than the mid-market as the recession eases.”