There have been a flood of reports lately on the increase of spending and of the return of the rich. To reiterate what Daniel Gross of Slate said, “The truly rich never went away…” “The corridors of wealth and finance are alive with new optimism” says New York Times columnist Rob Cox. Stock prices doubled in the past year for Whole Foods; high-end real estate is also recovering: the number of homes sold over $2 million in 2010 was higher in its first quarter when compared with figures in 2005. And Tiffany’s global sales went up 22 percent, with Saks up 6.1 percent and Nordstrom up 12 percent. Jason Notte from Mainstream noted some of the things sold this past month.
…a 7.64-carat blue diamond sold for more than $8 million, a 48,000-square-foot home in Bel Air, Calif., went for $50 million and Picasso’s “Nude, Green Leaves and Bust” painting brought in $106.5 million.
I have already talked about the Picasso painting in an earlier post of mine. Notte also alludes to the American Express report about people buying because they are happy (which I’ve also covered). Notte says that spending has become increasingly hobby-orientated, with 14% of affluent car lovers making up for more than 40% of automotive spending, 9% accounting for 39% of high-end clothing and the 9% crediting 42% of all travel spending.
We’re also seeing a rise in luxury e-commerce. According to Ben Klayman at Reuters, May saw luxury items, jewellery and products as the fastest-growing sales categories in the U.S retail sector, though sales in apparel and electronics suffered. Consumers are enjoying and valuing their money more but also expecting more.
The Luxury Marketing Council has found that high-end US consumers are largely disenchanted with the level of service provided within the luxury sector.
Complaints range from understaffing to insufficient knowledge of products and their advantages over competing items — increasingly important as wealthy and affluent customers become connoisseurs of their categories of choice and perform increasing amounts of research.
Gregory Furman, chairman of the Luxury Marketing Council says that there is a “great sense of relief among the high-end consumer that the worst is over.” While consumers may be feeling more leisurely towards luxury spending, Gross points out that it ‘may take another year to two of solid growth, market gains, and healthy bonuses before they start to party like it’s 2007.’