Regardless of economic conditions, consumers still need to shop for basic necessities and consumer packaged goods (CPG). They’ve been trading down from brand names to less-expensive store brands but in the luxury goods market, consumers are behaving a bit differently. Astute marketers will recognize the new patterns being exhibited and target shoppers with campaigns designed to make them buy.
This year, the new pattern seen in the luxury goods retail market is all about spending less often. But when they do buy, consumers will splurge on a big item. Getting the marketing right in these conditions puts even more pressure on advertisers because each purchase event is increasingly valuable and important.
Some categories are faring better than others. For example, both average and ultra-affluent consumers are spending more on apparel and accessories this year. Sales are up over 3% in 2011 in this category. However, while the average transaction size is up 10.1%, the transaction volume is down 6.2%. The American Express Business Insights report has even better news for jewelry retailers where total spending is up more than 8.4%. Again, the average transaction size is higher than last year while the volume is down about 7%. Department stores that sell these items have also noted similar spending patterns.
The news isn’t good for all retail categories though. Consumers are still stinging from the devalued housing market and have pulled back on spending for furniture and home furnishings. And ultra-affluent consumers, have cut their outlay by 9% in this category while other consumers have lowered their demand by 5.3%. American Express analysts note that spending has been down for most of the past year in this category. Consumer attention to their homes may not pick up until they feel the housing market is in recovery.
For now, marketers need to focus on getting the message right to convince shoppers to purchase from them.[Source: Q2 2011 Spend Sights Report Luxury Retail. American Express.com. 2011. Web. 14 Sept. 2011]