By  on June 6, 2007

Fashion consumers in the U.S. traded up to purchase apparel and footwear luxuries last year at about twice the rate consumers traded down to buy apparel and footwear thought to represent the best value at the best price.

That finding, by the Boston Consulting Group, is based on trade-ups to buy premium fashion goods worth $45 billion, 13 percent more than the $40 billion they spent on such things in 2005. Trade-downs for the fashion items — purchases on which money can be saved for other, pricier things — increased by 7 percent, to $75 billion from $70 billion in 2005.

"Fundamentally, there is extraordinary prosperity," said Michael Silverstein, a senior partner of Boston Consulting Group, speaking of the rising discretionary income in affluent households. "In the last couple of years, there has also been a slowing of growth in real income. The bottom 40 percent of households are struggling economically," he noted. "So the trade-offs for categories [of things] people do and don't care about…is alive and well, and is likely to continue over the next five years."

In the realm of apparel, Silverstein said, consumers have been willing to trade up for things that are "sexy and glamorous" and "give emotional satisfaction." As a result, fashion accessories, lingerie and sleepwear have been hot.

Spending on eight kinds of goods and services, including home goods, automotive and dining out, as well as fashion, resulted in a 7 percent increase in trade-up purchases last year, to $720 billion, and a 6 percent increase in trade-downs to expenditures of $1.17 billion.

The growth in spending on premium goods has "slowed a little bit," Silverstein said, compared with a few years ago. He pointed to the cool housing market — and resulting slump in demand for various products — as a dampening influence. "I would categorize it as temporary and expect it to come back in the next year or two," Silverstein projected. "It's a surprise to us."

— V.S.

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