After sharply reducing their outlays for luxury fashion products during the fourth quarter of 2012, affluent consumers began the year with lower expectations for their own finances, the country’s economic prospects and their own plans for spending in the year ahead, according to Unity Marketing’s quarterly Luxury Tracking Study.
While the total spent on all luxury goods, including automobiles, rose 7.2 percent during the fourth quarter, to $18,940 from $17,662 in the comparable 2011 period, it dropped 18.1 percent from last year’s fourth quarter, when it rose to $23,116. Taking cars out of the equation, the average spend on luxury goods dropped 1.1 percent to $13,472 from $13,617 in the fourth quarter of 2011 and was down a sharper 12.8 percent from the $15,452 registered in last year’s third quarter.
The drop-offs in fashion products were far more marked. The average spend on luxury apparel was $2,018, 25.4 percent below the $2,705 spent in the fourth quarter of 2011 and 24.9 percent below the $2,686 laid out during last year’s third quarter. Fashion accessories spending was down 39.3 percent year-on-year, to $1,715, and off 24.8 percent sequentially. Jewelry spend was $4,128, a 12.2 percent year-on-year decline that was 3.6 percent below third-quarter levels. Watches drew $3,791, down 15.2 percent year-on-year and 11.9 percent from the previous quarter.
“Affluent consumers are starting 2013 with a dismal view of the overall economy and their personal financial situations,” said Pam Danziger, president of Unity Marketing. “This is bound to have a dampening effect on results for marketers that target luxury consumers specifically and the consumer economy in general.”
If there was a somewhat bright spot in the world of fashion, it was in the beauty sector. Fragrance and beauty purchases averaged $1,217 during last year’s final quarter which, while 18.5 percent lower than in the third quarter, was 0.8 percent above the fourth quarter of 2011. Also, in the category of “experiential luxury,” Unity found that spending on salons, spas, massages and beauty treatments rose 45.2 percent to $2,208 from $1,521 in the final quarter of 2011, 26.5 percent higher than in the third quarter of 2011.
The data came from interviews with 1,369 respondents, 61 percent of them female, with average income of $268,700 and median net wealth of $832,000.
Unity explores both recent purchases and the more forward-looking consumer sentiment among the affluent and in this study, conducted during the second week of January, added a question about “recent changes in the tax code, such as increases in payroll tax and tax increases for high earners.” Although 40 percent said they didn’t expect any change in their spending because of tax changes, nearly as many — 39 percent — said they expected to cut their spending from previous levels, while the remaining 21 percent either didn’t know or weren’t sure how they’d react.
Responses to other questions included in the Unity study indicated a deteriorating view of both personal and national finances. The percentage who said they’d spend less on luxury merchandise during 2013 than they did last year rose to 28 percent from 18 percent during the third quarter, and 9 percent of the overall sample indicated they would spend “much less” than in 2012.
The percentage who felt that the country was worse off than it was just three months ago spiked to 36 percent from 24 percent at the end of the third quarter, with 12 percent saying the country was much worse off. The overall percentage who felt the country was better off fell to 29 percent from 37 percent in the last study.
“While the [29 percent] figure is somewhat higher than seen throughout 2011, when it averaged 25 percent, the affluents aren’t particularly confident that the nation’s leadership is up to the challenge of this slow-growth economy facing a rising tide of debt,” Danziger said.
To counteract rising negativity, according to Tom Bodenberg, Unity’s chief consumer economist, marketers need to emphasize the intrinsic value of their products and “reposition luxury goods as a value proposition.”
“The current cultural climate can’t support showy displays of luxury,” he continued. “People with means want to make smart buying decisions and playing up the quality and value of a brand while downplaying the pure ‘luxury’ of it is key for today.”
Breaking News: @louisvuitton's men's artistic director @mrkimjones is leaving the French fashion house after nearly 7 years. Jones joined Louis Vuitton in 2011, following a three year tenure as creative director of British luxury goods brand Alfred Dunhill. Jones is to exit Louis Vuitton after showing his fall 2018 collection for the brand in Paris on Thursday. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews