International research and consulting firm YouGov is predicting that luxury spending in 2016 will fall by 0.9 percent.
The Affluent Perspective Global Study, which surveyed 5,196 affluent respondents in 12 countries covers all affluent groups with the exception of Millennials and America’s 400,000 wealthiest households. The latter two are expected to increase their spending by 8 and 10 percent, respectively. Of the 5,196 surveyed, 2,515 are based in the U.S.
The U.S.-based respondents were categorized as base affluent with household income between $150,000 and $199,000; middle affluent between $200,000 and $349,000 and upper affluent at $350,000 plus in annual income. The 400,000 wealthiest Americans as a group is a subcategory of the upper affluent.
Those in the base affluent group are expected to decrease their spending by 0.7 percent to $94 billion; middle affluent by 1.4 percent to $87 billion, and upper affluent by 0.4 percent to $97 billion.
The survey also noted that discretionary spending across nine categories is expected to reach $277 billion, down $2 billion from 2015. Travel and fine dining are the two categories expected to see some gains. Spending on apparel, accessories, handbags, items for the home, fine jewelry and watches are forecasted to see a cumulative 11 percent decline in spending to $117 billion from $132 billion last year.
The survey results suggested that “America’s affluent families are motivated by a need to protect their own personal economy,” YouGov said. It noted that 38 percent of all respondents believe that the U.S. is heading toward another recession.
The Study also surveyed when individuals are first introduced to luxury, finding that the introduction is beginning at an earlier age mostly due to gifting. Ninety percent of affluent Millennials had their initial introduction to luxury by the age of 37, the same age stated by 72 percent of Gen Xers; 61 percent of Boomers, and just 55 percent of those in the Mature group, or those older than the Boomers. The Study also found that the early adoption among Millennials into the luxury lifestyle is mostly due to their parents, the Boomers, who gave the first luxury item or experience as a gift.
Cara David, a managing partner at YouGov, said that Millennials cite price as the number-one indicator of luxury. She said that luxury brands would need to educate these consumers so they can evolve from a “relatively immature consumer to one that will come to appreciate the true value of luxury, including the artistry and craftsmanship of the product or experience.”