The luxury market is back, and with a new influential consumer base, according to American Express Business Insights data. Spending in the luxury market is growing steadily in all industries world wide. However, the consumer demographic which is spending in these markets has changed.
“Luxury is back, American Express data shows you that,” said Peter Niessen, vice president of American Express Business Insights. “But there is a new constituent who is driving that spending,” he said.
“We need to speak to both traditional consumers, and the new Gen X and Gen Y consumers in a way that lets us continue that growth.”
American Express found that since 2010 global luxury spending has increased across all industries. Surprisingly, it also found that the luxury fashion market saw the least impact from the recession.
Here is what American Express found by category:
In terms of luxury travel, the recession hit hard globally in 2009 and there was a decrease worldwide in luxury travel. In 2010, however, there was a rapid growth in luxury travel spending in Asia. It slowly but steadily increased in the United States and Europe. In the fine-dining industry, broadly speaking, there was a decline in spending across Europe and the United States. Spending in BRIC — Brazil, Russia, India and Chine — fine-dining markets saw little change.
Fine-dining spending began recovering in 2010, and has since seen steady growth in all markets.Luxury fashion spending experienced strong growth in 2008, and continued to grow throughout 2009 and in 2010, particularly in the U.S.
Since the recession ended in June 2009, the growth rate for luxury fashion has been twice that of mainstream fashion, according to the data. “The reason why you see the growth in fashion is the nature of who is doing the spending has changed a lot, and to me this is the biggest surprise,” Mr. Niessen said.
While spending has increased in luxury markets, consumers are now seeking out deals before high-price purchases. According to Mr. Niessen, this has a lot to do with a new consumer base that is younger and less affluent than the traditional luxury consumer.
Before the recession, the traditional luxury consumers accounted for 10 percent of the market headcount, but they did 70 percent of the spending. During the recession about 25 percent of those traditional consumers stopped spending, and they have not returned to their luxury habits.
Traditional consumers now make up only 40 percent of the luxury market, and Generations X and Y makes up the rest. Brands, particularly those in the fashion and technology industries, need to focus their marketing strategies towards these new, optimistic, always-connected luxury consumers, per Mr. Niessen.
I’m not going to tell you that luxury is back because it never really left,” Mr. Niessen said. “But the nature of who that luxury consumer is has fundamentally changed,” he said. “There is a whole set of new luxury consumers that we have to acknowledge, recognize and market to.”
from LuxuryDaily.Com and American Express
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