A key to success for luxury product marketers in the remaining months of 2011 will be in targeting high-net-worth (HNW) consumers, according to Pam Danziger, president of market research firm Unity Marketing. This segment (those with $1 million or more of investible assets) are feeling far more confident and have much higher spending plans than lower net worth affluent consumers.
In the second quarter of 2011 the Luxury Consumption Index (LCI) took the steepest quarterly plunge since the depths of the recession. Unity Marketing, which issues the report, said the last tie it saw a steeper drop in the index was between fourth quarter 2007 and first quarter 2008.
The LCI dropped from 82.8 points in 1Q 2011 to 66.0 points in 2Q 2011, putting it close to the level attained at the onset of the 2007-2008 recession.
"Consumer confidence among the affluent - the economy's heavy lifter segment which account for only 20% of households but over 40% of spending - has fallen sharply since the beginning of 2011. Not since the middle of 2009 has it been so low," said Pam Danziger, president of the market research firm.
The LCI is designed to be a leading indicator of economic activity among the most well to do in the United States.
"If those at the top income levels feel stressed and unwilling to spend, imagine what it says about people living in middle-income households," Danziger said. She warned that the nation could move closer to a double-dip recession without a rebound in affluent consumer confidence.
The report is based on July 6-13, 2011 survey of 1,272 affluent luxury consumers (avg. income $301.8k; net wealth $856k (median); avg. age 45.3 years; male 46%/female 54%).
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