NEW YORK — Call it the big drop.
Asked about their spending for apparel as a personal luxury in the first quarter, affluent U.S. consumers said their purchasing fell by more than one-third, or 36 percent, to an average of $1,103 per person from $1,730 a year ago, based on new figures from Stevens, Pa.-based consultant Unity Marketing.
That decline also signaled a drop more than three times steeper than the 11 percent decline in average first-quarter spending of $2,653 on the broader universe of personal luxuries, comprising apparel as well as fashion accessories, fragrances, beauty, jewelry, watches and pet products.
“We have seen a connection between the drop in spending on home luxuries and the increase on experiential luxuries — but we have not seen a connection between the drop in spending on home and an increase in spending on personal luxuries,” observed Pamela N. Danziger, president of Unity Marketing, who said she was surprised by the 36 percent slide in outlays for high-end apparel in the first quarter. “I’d expect people to spend more on apparel when spending for luxury experiences like travel goes up,” she added.
While Danziger declined to forecast near-term luxury apparel purchasing trends, she did project the sector could get a lift, over the next five to 10 years, from Generation X, whose leading edge is just beginning to move into its peak earning years. “Xers, like Boomers, get the greatest satisfaction from experiences, but they are in a life stage that is more materialistic than the Boomers,” Danziger noted.
That trend line is already starting to manifest itself.
Gen Xers spent an average of $3,335 per person on luxury apparel in 2004, which was 20.3 percent more than the $2,773 expended, on average, by Baby Boomers. That differential far exceeded the rate of roughly 9 percent at which Xers outspent Boomers on luxuries overall. Danziger defines Xers as adults whose ages will range from 28 to 40 this year, and Boomers as those 41 through 59.
The only other personal luxury segment in which average spending by affluent Xers exceeded that of their Boomer counterparts by more than 20 percent last year was in fragrance and beauty products, for which Xers shelled out 26.8 percent more than Boomers, or $450 versus $355.
Those findings came by way of Unity Marketing’s new Luxury Report 2005, a survey of spending by 600 luxury consumers in 2004, including 372 women and 228 men, with annual income of at least $75,000, representing the top 25 percent of wage earners. The respondents to Unity’s luxury study, ages 25-65, had average income of $135,000.
Not surprisingly, with many Xers starting families, the group spent more, on average, than Boomers on home luxuries in 2004, as Xers’ purchases averaged $8,675 per capita, versus the $8,313 typically expended by Boomers.
In contrast, Baby Boomers allocated 9 percent more of their funds to experiential luxuries like dining, entertainment and travel, or an average of $12,801 per person, compared with the $11,644 spent by Gen Xers.
Sliced and diced another way, the Unity Marketing Study found average luxury spending by consumers doubles with each of three steps up the income ladder. Thus, a group Danziger dubbed affluents shelled out twice as much as near-affluents, and the superaffluents expended twice as much as the affluents. The near-affluents had annual income of $75,000-$99,999; affluents, income of $100,000-$149,999, and superaffluents, income of at least $150,000.
The strongest increase in rate of average spending by the superaffluent, versus the affluent, came in the realm of personal luxuries, a sector in which the superaffluent spent 3.7 times as much as the affluent. This means in 2004, superaffluents spent an average of $16,758 per capita on personal luxuries, against the $4,537 spent by the affluents.
By comparison, the superaffluents doled out 2.4 times more than the affluents for home luxuries and 2.2 times as much for experiential luxuries.
Average spending on luxe fashion by superaffluents at a rate of 3.2 times that of the affluents translated into purchases by superaffluents of $5,599 and of $1,740 by the affluents.
The highest differential in average spending on personal luxuries by the superaffluent and affluent came in their outlays for fashion accessories, which were 4.4 times greater among superaffluents in 2004, or $3,483, compared with the $798 spent by the affluents.