Luxury consumers in the United States became nervous about their financial status, causing a drop in Unity Marketing's Luxury Consumption Index (LCI) and a decrease in luxury spending.
The report said luxury consumers reduced their level of luxury spending in the second quarter (April through June 2012) by 8.2% from first quarter. Luxury spending in 2Q 2012 was down 26.9% from 2Q 2011.
"The up and down trajectory of the LCI that we've seen over the past year measures continued uncertainty among affluent consumers," says Pam Danziger, president of Unity Marketing. "Looking back at over the past three years, we find that the luxury consumers, particularly the ultra-affluents, unleashed pent up demand for luxury indulgences during 2010, but since then affluent confidence, and their willingness to spend on luxury, has been constrained."
2Q 2012 spending by ultra-affluents - in the top 2% of U.S. households - dropped to the lowest level seen since 2008.
"As for the next six months, Unity Marketing continues to expect challenges for luxury brands to encourage the affluent to trade up to their high-end brands, especially the lower-income HENRYs (High Earners Not Rich Yet with HHI $100k-$249.9k), who have taken a hit to their wealth and earning potential as a result of the recession and ongoing weakness in the U.S. economy," Danziger said.
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