A new post-recession consumer demographic is bringing “luxury” back. They are the “Luxury Newcomer.” They are younger and less wealthy, but they now comprise 61% of all luxury consumers and more than a third of total spending, according to a new American Express Business Insights (AEBI) survey.
The sales of luxury goods are up between 10%-12% from last year, while retail sales across the board rose just 6%, CNN.com reported, citing figures from the retail equity research firm Telsey Advisory group.
AEBI identified three pre-recession shopper demographics. The “active luxury spender,” most likely to be a Baby Boomer, was responsible for 68% of all luxury spending. When the recession hit, a quarter of these consumers stopped spending. The “occasional luxury shopper” represented 20% of all luxury shoppers. Forty-three percent of this customers stopped spending when the recession hit. The “aspirational luxury shopper” was responsible for 12% of luxury spending. While this group comprised 70% of the total universe of luxury spenders, they did not spend as much as the active or occasional luxury spender. Sixty-six percent of these customers stopped spending after the recession began.
Who is the Luxury Newcomer? A third is Generation X, 32% are Baby Boomers, and 10% are Generation Y-ers, or Millenials. Today, they account for 61% of all luxury consumers and 36% of total spending. “What’s interesting is that there are people who are spending on luxury today who weren’t spending before the recession, Ed Jay, AEBI senior-vice president, told Time magazine.
Our research shows that households with a net worth of between $100,000 and $1 million (not including primary residence) endeavored in the wake of the recession to reduce their debt and to save more in such conservative holdings as savings accounts and CDs. This new luxury spending, though, is not quite at odds with these actions. The Luxury Newcomer is willing to splurge, but they are value conscious. They are more comfortable doing research and shopping on the Internet and are thus a savvier, more informed consumer. They buy fewer, but more expensive items and are also on the lookout for the best deals on designer brands.