This article posted on the Luxury Daily website discusses whether or not the luxury market is on a rebound, and it includes AARC research on the topic (http://www.luxurydaily.com/25886/).
by Rachel Lamb
Date:Â August 5, 2011
Is luxury back?
Mixed reports on consumer satisfaction and the economy are confusing experts as to whether or not luxury marketers should expect a rebound — and how they should prepare for the future.
Recent reports have been indicating that luxury sales are on the rise and that consumers are spending close to pre-recession levels, but whether or not the industry is rebounding is still up in the air. Experts are still trying to decide whether or not this is a lucky streak or if the economy is still in danger of double-dipping.
“I think luxury retailers appear to be back only in comparison to the rest of the retail sector,†said Pam Danziger, president of Unity Marketing, Stephens, PA.
“Yes, there are people who can and will pay $1,500 for a pair of shoes, but their numbers are small relative to the population as a whole,†she said.
Confidence confusion
Indeed, analyses and articles have been reporting confusing statistics about whether or not the affluent are truly back to spending.
This uncertainty is making experts uneasy about which way to sway.
For instance, the New York Times released an article reporting that the affluent are back to spending again.
The article mentions that luxury department stores such as Neiman Marcus and Saks Fifth Avenue have been running out of luxury goods because of high demand and luxury car companies have been reporting their best months in years.
While this is true, there has been much tension in the past few weeks as Washington officials have been butting heads in the debt-ceiling debate.
Luxury brands have had an impressive second quarter, but the dip in consumer confidence is putting a damper on spending.
“Most of the aspirational or mass affluent in the U.S. are still out of the market,†said Ron Kurtz, president of American Affluence Research Center, Atlanta.
“The true luxury consumers are still holding back because they lack confidence in the strength of the economy and the outlook for the stock market, which is an important determinant of their mood,†he said.
Indeed, a report from Women’s Wear Daily claimed that the S&P Retail Index fell 3.8 percent Aug. 2 as the Dow Jones Industrial Average lost 2.2 percent.
Additionally, gold prices shot up to a new high of $1,664.20 an ounce.
Luxury retailers such as Nordstrom and Tiffany & Co. were also down that day, according to WWD.
Looking ahead
These mixed reports pose a problem for some luxury brands that may not know how to prepare for the future.
A recent study by Epsilon claimed that luxury marketers looking to make the most of their holiday campaigns are advised to start early and keep pushing post-holiday season.
However, this could waste a lot of energy and money if consumers are not spending as early and as quickly as in previous years.
“Ninety-eight percent of the households in the country are on hold, sitting tight and watching all their spending,†Unity’s Ms. Danziger said.
Other occasions on the horizon, such as summer spending and back-to-school campaigns, have already begun.
“It is very challenging as environmental factors, such as economic conditions and job compensation and factors affecting wealth — such as the stock market and home values — have the most influence on luxury consumption,†American Affluence’s Mr. Kurtz said.
“The best any luxury marketer can do is to keep offering new products at an attractive value and with excellent service and communicate this effectively to the target market,†he said.