According to a recent survey by Unity Marketing—a firm specializing in consumer insights that impact marketers and retailers that sell luxury goods and experiences—there is evidence that the recession may be moderating among the affluent. However, the survey also demonstrates that affluent consumers are changing their patterns of consumption, and these changes may outlast any economic downturn.
Unity Marketing's proprietary luxury consumption index (LCI) continues to drag after hitting an historical low in the third quarter 2008. In the survey of 1,034 affluents (average income $207,000), the LCI showed a very slight improvement of 1.5 points. Questions in the survey (conducted April 3–8, 2009 ) explored respondents' financial situation, lifestyle, and luxury purchases and spending in the first quarter of 2009.
Pam Danziger, president of Unity Marketing, noted positive signs, inculding:
- Affluents are beginning to feel "less badly" about their personal financial situation, as compared with the beginning of 2009;
- Likewise, they feel the country as a whole is moving in a more positive direction than they did three months ago;
- Affluents are beginning to feel somewhat more optimistic about their future financial situation in the coming 12 months.
This more positive long term perspective is especially important since one-fourth of the affluents said their personal financial situation had declined significantly, while 39% said their financial situation had declined somewhat in the current economic recession.
"[However], despite these positive indications, more than 40% of all the affluents surveyed said they plan to cut their spending on luxuries in the next 12 months," said Danziger. "So we are seeing a long, slow crawl to higher levels of affluent consumer confidence. 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."
"We remain cautious about the luxury market's prospects after the recession," said Tom Bodenberg, chief economist, Unity Marketing. "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. 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."