American Express Publishing

Research reveals luxury consumption to rise despite recession

Isaac Mostovicz writes that luxury consumers are spending more and getting smarter about it...

American Express Publishing recently released a some new research on luxury consumers around the world. They surveyed people with an average consumer income of $520,000 to look at the impact of the recession on luxury consumer consciousness.

The research predicts that luxury consumption will rise by $28 billion over the next year because of a number of factors, including decreasing guilt over luxury spending (a drop from 54% to 45% was reported) and an increase in the mean incomes of the affluent with 400,000 new households joining the ranks of the wealthy for the first time since 2007. The percentage of luxury consumers saying they like the recognition of being wealthy has also increased by 12%.

The report goes on to say that this is due to the fact that consumer interests and attitudes towards luxury goods have also changed hand in hand with people’s need to adapt financially during the recession. The success of such an endeavor is reflected in this rise of consumer confidence. Dr. Jim Taylor, vice Chairman of the Harrison Group says:

“Interest in luxury is trending up, but this interest is qualitatively different from the unbridled enthusiasm that characterized the ‘glutonomy’ of the mid-2000s.  People take pride in the way they have managed their finances and family through the recession.” Dr. Taylor explained, adding, “we are decidedly not seeing the return of the old economy.”

This trend in value and quality can be seen in previous blogs of mine on finding value and watches.

In addition to this, more and more people are buying because they are happy than in order to be happy. Consumers are also becoming more immune to persuasive marketing strategies and are instead doing their own research. This not only shows us the continued importance for value and quality but also another facet to this new breed of luxury consumer, that of a connoisseur consumer.

Today it’s more about “what I need or what my family needs.”  It is no longer about keeping up with the Jones.  In a sense, today’s affluent have become pioneers of the new “Econo-Me.” They feel they’re in complete control and can’t be convinced to buy what they don’t want or need.  Their decisions will be their decisions, based on sound reasoning.

Gone are the past-times of retail therapy and gone is the pre-recession breed of the ‘gluttonous’ consumer. Emerging now is a stronger, more dynamic and smarter breed of luxury consumer. A blog by Deidre Woollard on Luxist recommends luxury brands to follow this trend and shift their digital conversations away from price and more into emotion. This will certainly be a good move as the report calls this recession an ‘Emotional Recession’ and these signs as a potential ‘Emotional [road to] Recovery.’  However, marketing to these connoisseur consumers are harder than ever, as Woollard highlights:

Customers want what is classic, quality and a known quantity. And yet, they want to be surprised, they want to be dazzled, they want thrills. They want choice, but not too much choice, deals but not discounts. It’s all a bit confusing for brands trying to maintain consistency while creating the excitement luxury consumers need to see.

It then becomes more important than ever for luxury brands to pay attention to the Theta and Lambda personas, because while luxury consumers may evolve and marketing strategies may change, Thetas and Lambdas alike will always remain as they are, albeit just more specialized than ever in knowing what they want.

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