Study: Affluents changing consumption patterns

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Study: Affluents changing consumption patterns

LCI index improves, but wealthy still cutting spending

April 27, 2009

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Stevens, Pa.--A new survey from Unity Marketing reveals that while the recession may be moderating among the affluent, there has yet to be a return to previous levels of luxury spending.

Among the findings of the in-depth survey, conducted from April 3-8, 2009, and polling 1,034 affluents (average income $207,000) on their financial situation, luxury lifestyle, purchases and spending in the past three months, affluents are beginning to feel less badly about their personal financial situation now as compared with three months ago.

The survey also reveals that affluents feel the country as a whole is moving in a more positive direction, and that they are beginning to feel somewhat more optimistic about their future financial situation in the coming 12 months.

In addition, after hitting a historic low in the third quarter of 2008, Unity Marketing's Luxury Consumption Index (LCI) has improved somewhat, increasing by 1.5 points over this latest quarterly survey.

Despite these positive indications, however, the survey also shows evidence that affluent consumers are changing their patterns of consumption, and these changes might outlast any economic downturn.

According to Unity Marketing President Pam Danziger, the findings show that more than 40 percent of all the affluents surveyed said they plan to cut their spending on luxuries in the next 12 months.

"So we are seeing a long, slow crawl to higher levels of affluent consumer confidence," Danziger said in a media release. "At the same time, there continues to be trouble ahead for luxury marketers, as the affluents are holding back on their expectations about spending more on luxuries for the remainder of the year."

As for the luxury market's prospects after the recession, Unity Marketing said it remains cautious in its outlook.

"It is likely that there will be an uptick in luxury consumer spending once the recession has played its course, as some affluents will relieve pent-up demand for luxury goods as a vehicle of lifestyle aspiration and expression," Unity Marketing Chief Economist Tom Bodenberg said in the release. "At the same time, the media's focus on 'recession chic' personal expression that deliberately excludes luxury goods may leave a lingering distaste for conspicuous consumption and parading luxury labels."

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