Spending on luxury goods during the peak holiday shopping weeks of 2010 rose 8.5% compared to the year before. Jewelry sales were up even higher, rising 10.4%.
We’ve been told that as luxury spending has increased, it’s the wealthy consumers who are doing most of the spending at Tiffany, Neiman Marcus, and the like. The AP reported:
Upper-income shoppers splurged, particularly during the last week before Christmas, a Gallup poll showed. Average daily spending reported by upper-income shoppers rose 45% to $183 during the week ending Dec. 26. For all shoppers, the figure rose only 18% to $85 that week. Luxury sales were helped by many well-heeled customers buying gifts for themselves, analysts said.
Another study, cited by The Wealth Report’s Robert Frank, gives reason to believe that it’s not only the rich who are scooping up all those Coach bags and Louis Vuitton belts, however. There’s a new group of consumers who are not remotely rich but who nonetheless are heading to high-end retailers in significant numbers. The study, from American Express Business Insights, calls this new group the Newcomers:
They’re called newcomers because they didn’t buy luxury before the recession. And they’re not all that rich. According to the study, the Newcomers fall into the bottom 90% of spenders. About a third of them are Gen Xers, another third are Boomers and about 10% are Gen Y. Most of the Newcomers are women.
“What’s interesting is that there are people who are spending on luxury today who weren’t spending before the recession,” said Ed Jay, a senior vice president, American Express Business Insights. He also noted that the shift in spending away from older wealthier consumers to younger, less wealthy ones is likely to endure.
This jibes with another study from American Express (the January Spend & Save Report), which divides survey results into two groups: Affluents (incomes over $100K) and Young Professionals (under 30, with a college degree and household income of at least $50K). In the survey, 33% of Young Professionals say they expect to spend more in 2011, compared to just 13% of the Affluents. For that matter, the average consumer surveyed here—not necessarily the average American consumer, who is less well-off than the average of those participating in this survey—anticipates saving less this year.
The graphic below reveals the steep dropoff in savings goals, from $14K in 2010 to a mere $2,600 in 2011.
OK, so people are apt to splurge more and save less nowadays, and it’s the younger, less wealthy among us who are more likely to dispose of a much higher proportion of their disposable income. But here’s where things get weird: Across the board, those surveyed named “Save More Money” as their top priority in 2011. In fact, a higher portion of supposedly spendthrift Young Professionals (68% vs. 49% of Affluents) said saving more money was a goal this year. A higher percentage of Young Professionals also describe their mindset this year as “Optimistic” (44% vs. 37%) and as “Frugal” (28% vs. 24%).
Survey data can be tweaked and twisted from a million different angles, and using the info to describe a huge swath of a population always involves too broad a brush. These numbers will never give a clear picture of the financial habits of any one individual.
But you don’t need numbers to realize that different people have different priorities—and different definitions of terms such as “frugal.” And the idea that you can spend more money this year while reaching your goal to save more money this year? Well, if nothing else, that’s certainly optimistic.
MORE ON LUXURY:
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