The affluent are back, and they’re buying clothes.
Increased confidence about the economy — and their own financial circumstances — led affluent consumers to boost their purchases of apparel in the third quarter, reversing a sharp downward trend earlier in the year, according to data compiled by Unity Marketing. A study by Accenture also showed a growing appetite for luxury goods among the general population.
Unity’s Luxury Consumption Index rose at its highest rate ever in the third quarter, with the $23,116 spent on average 25.8 percent above the second-quarter level of $18,374 and 11.5 percent higher than the year-ago level of $20,729. While substantially improved, the most recent figure is still below the $27,451 and $25,150 recorded in the first and second quarters of 2011, respectively.
While its strength was in many ways tied to second-quarter and year-ago weakness, apparel sales grew faster than any other category tracked, with the $2,686 median 95.2 percent above the $1,376 registered in the April-to-June period and 21.3 percent above the $2,215 logged during the third quarter of 2011. Apparel purchases by the affluent dipped 26 percent between the first and second quarters of this year.
Accessories purchases rose 52.2 percent, to $2,281, in comparisons of the third and second quarters and were up 3.5 percent from their year-ago mark. Fragrance and beauty purchases expanded 75.4 percent, to $1,494, versus second-quarter levels and 37.4 percent from the year-ago quarter.
“The second-quarter numbers were quite weak, but the most recent figures really do reflect a strong comeback in confidence,” said Pam Danziger, president of Stevens, Pa.-based Unity. “I didn’t expect much movement until after the election so this is a surprisingly positive result, a bigger jump than we were anticipating.”
Jewelry didn’t participate in the third-quarter comeback as purchases fell 2.4 percent, to $4,280 from $4,386 in the second quarter, and were off 7.6 percent on a year-over-year basis. “Gold prices are up there, and it could be that people are waiting for prices to come down,” Danziger said. “This probably helped apparel and accessories — the sense that you could get an entire outfit rather than just a single piece of jewelry.”
The quarterly survey includes responses collected between Oct. 9 and 15 among 1,289 luxury consumers with average household incomes of $290,600 and median net worth of $797,000.
The enthusiastic spending coincided with a marked pickup in confidence among respondents. More than half — 52 percent — felt they would be better off financially a year from now, matching the previous high set in the first quarter of 2011. The percentage who felt the U.S. was either somewhat or much better off than it was three months ago rose to 37 percent, versus just 22 percent in the second quarter of 2012 or the previous high of 32 percent in last year’s first quarter.
A separate study from Accenture, covering 2,002 adults, demonstrated the continuing interest of the general population in luxury goods. Exactly half of the respondents indicated they were likely to make a luxury purchase in the next six months, including 48 percent of the sample that intended to buy luxury apparel.
“As consumers show an increasing willingness to splurge on luxury, retailers and brands can build loyalty by offering a strategic selection of smaller-ticket luxury items to complement their more significant products,” said Tom Jacobson, managing director of the Accenture pricing and profit optimization practice. “Consumers want a taste of luxury in their everyday lives and are willing to spend a little extra for the experience, but the emphasis is on small items. They may think twice about purchasing a new handbag but shop for a wallet as an alternative.”
The most popular reason for buying luxury items among those saying they would do so was achieving a mix of higher-end merchandise with more affordable items, chosen by 57 percent of those who intend to purchase, followed by the 44 percent who indicated they wanted items with “enduring style” that would justify their investment. Just over a quarter — 26 percent — cited the higher quality of luxury items, while exactly one in five checked off “wearing luxury apparel conveys that I am accomplished and successful.”
Among these aspirational consumers, 58 percent said they would buy their luxury items from department stores, while 36 percent and 29 percent, respectively, selected online-only stores and department store Web sites. Twenty percent had engaged in “showrooming,” visiting a store prior to purchasing online, with 61 percent of that group saying they searched for the best price before buying and 40 percent of them indicated they waited until a better price was offered online. Thirty-five percent of Millennials said the likelihood of them making a luxury purchase had increased in the past year, versus just 15 percent of Baby Boomers.