NEW YORK — Established high-end and emerging luxury brands might want to up their advertising and marketing spend if they aim to keep the attention of Generation X and Y consumers.
That’s because Gen X and Y are the fastest-growing group of consumers willing to spend full price for luxury items, according to data released Friday by American Express Business Insights.
American Express drilled down on data it aggregated from consumer spending on its American Express cards from 2009 through 2011, and disclosed the highlights as part of a series of events it is hosting during Mercedes-Benz Fashion Week.
Ed Jay, senior vice president at American Express Business Insights, noted, “Gen Y men are among the fastest group growing out of the recession [where a] higher proportion of the wallet [spend] is on luxury fashion.”
In contrast, “Gen X and Gen Y females account for 60 percent of the spend in the aspirational market,” he noted.
The catalyst for the newfound interest in luxury fashion has been the flash sale sites, whereby many premium brands became more affordable during the recession. These consumers are also more tech savvy than those from the other demographic categories. One hurdle is that because they have so many choices, they’re not as loyal to a particular brand as the older consumers.
For luxury brand marketers, Jay advised that the biggest opportunity is among Gen X and Gen Y shoppers.
Gen X consumers, in particular, should be cultivated since their preferences aren’t yet set and in 10 years’ time, the Gen X group will be comparable in size to the Baby Boomers today, Jay explained.
According to Jay, what’s an even more interesting trend is that the growing pool of luxury consumers is gravitating toward full-priced online luxury spending, although they’re “spending less per ticket.”
In general, Jay said American Express data showed that flash sale sites saw a 92 percent jump in spending in 2010 compared with the prior year, but that has now likely “slowed to a single digit.” In contrast, full-priced online luxury spending — such as at sites luxury retailers or the brands themselves operate — is expected to remain the fastest-growing segment in 2012. It was up 25 percent in 2011 on top of a 20 percent gain in 2010.
“Gen Y consumers don’t have much saved, don’t have much to lose and a whole life of earnings ahead of them,” Jay said, explaining that these consumers are value conscious, selective in what and where they spend, and when they do spend, avoid the middle range of price points.
Among Boomers, men are leading the spending in the high-end premium market, possibly because during the recession brands were looking at areas where they could expand and the older male consumer became a targeted market for them, Jay said.
As for seniors, they are now the leaders for online luxury discounting. Their spending growth at luxury flash sale sites was up 28 percent in 2011.