Luxury consumer confidence as measured by Unity Marketing‘s Luxury Consumption Index continued its downward trajectory in the third quarter 2008. The LCI dropped 10.7 points to reach an historic low of 40.3 points, the lowest level ever since Unity started measuring affluent consumer confidence at the end of 2003.
“Unity Marketing’s most recent survey of luxury consumers, conducted Oct. 3-8 following the bailout and during the recent stock market upheaval, shows that affluent consumers’ negative feelings about the economic situation are translating into changes in their shopping behavior,” said Pam Danziger, president of Unity Marketing, a consumer insights firm that specializes in the luxury consumer mindset.
“Since the middle of 2007, the LCI has been in free fall, dropping more than half of its value to reach an all time low of 40.3 points at the end of third quarter 2008,” Danziger added. “But what is of more importance to luxury marketers than the decline in the LCI is that luxury consumers are taking action in response to the current economic crisis.”
Findings in this survey of 1,161 affluent consumers (average income $210,700; age 43 years; 34 percent male and 66 percent female), include:
* Some 56 percent are spending less on luxury now as compared with twelve months ago.
* Fifty-four percent expect to spending less on luxury in the next twelve months.
“Among the changes in their shopping behavior, luxury consumers are shopping more strategically by looking for sales,” Danziger said. “They are trading down to less premium brands. In fine dining, they are choosing less premium restaurants and dining out less often. And they are simply staying out of the stores to resist temptation. The latest survey shows affluent shoppers are being prudent and careful with their money. They are still indulging in luxuries, but they are being more selective in what they choose to indulge.”
LCI predicts a challenging 4Q2008 for luxury marketers and retailers
Thomas Bodenberg, Unity Marketing’s chief consumer economist, added, “In taking the pulse of the luxury consumer’s mindset, we don’t yet see a turnaround emerging shortly. Their confidence continues to slide, especially among the over 40-year-old affluents who make up the largest segment of the luxury consumer market.
“For this holiday season, we see affluent shoppers turning more frequently to mass-market retailers with a high-quality, value-driven image, like Target, as well as to outlet shopping where luxury brands can be had for less. The Internet is going to be a vital tool for affluent shoppers this season, as it supports comparison shopping across the widest range of retailers in the most efficient manner possible.”
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 visitFollow JCK on Instagram: @jckmagazine
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