There’s not much hope in sight for the luxury market, according to a new study.
Spending among U.S. luxury consumers has reached a record low because of the economic outlook, and designer apparel and fine jewelry are among the categories taking a hit, the American Affluence Research Center said in a report released Thursday.
In six of 17 product categories surveyed, half or more than half of the respondents plan to spend less during the next 12 months. The six are: designer apparel; fine jewelry and watches; dining in upscale restaurants; cameras and photographic equipment; antiques, art or wine collectibles, and political contributions.
For the remaining 11 categories, which include dining in casual and family restaurants, entertainment (concerts), major home appliances and home furniture, more than 25 percent plan to spend less.
The study found that more than two-thirds of high-end consumers have no plans to make any of eight major expenditures in the next 12 months: motor vehicles; cruises; boats; major remodeling; building or purchasing a primary home, and building or purchasing a vacation residence. Acquisition plans for all eight major items are equal to or at historic lows.
“The outlook among luxury consumers for an improvement in the economy and their willingness to spend are at all-time lows for our studies,” said Ron Kurtz, founder of the research center based in Alpharetta, Ga. “This signals continued weakness in the luxury market.
“Their concerns are underlined by the emphasis placed on preservation of financial assets, which contrasts with attitudes from prior years, when respondents said their primary objective was capital appreciation and growth,” he said.
Eighty-one percent of the respondents said they reduced overall expenditures during the past 12 months and/or will do so during the next 12 months. More than half plan to take fewer or no domestic vacation trips during the next 12 months, and almost three in 10 respondents will stay in less expensive accommodations.
Vehicle purchases have declined 30 percent from 2008. Home remodeling plans are only half of what they were a year ago. And plans to acquire either a primary residence or a vacation home have declined to record lows.
The Affluent Market Tracking Study, conducted twice a year by the AARC, focuses on the luxury market and the 11.2 million households representing the wealthiest 10 percent of all U.S. households, as determined by the Federal Reserve Board, based on net worth. The study included more than 640 participants for the survey, who have an average annual household income of $290,000, average primary residence value of $1.2 million, average net worth of $3.1 million and average investable assets of $1.4 million.