The Unity Marketing Luxury Consumption Index took its steepest quarterly plunge since the recession began, falling 16.8 points to 66 points in the second quarter. This is significantly lower than the previous quarter’s 82.8 points. The LCI currently stands close to the level attained at the onset of the Great Recession.
Unity Marketing’s LCI is considered to be a leading indicator of the economic activity among affluent households. The survey of 1,272 consumers with an average income of $301,000 and an average net worth of $856,000 was conducted July 6-13.
Corresponding to the decline in luxury consumer confidence, the average amount spent by affluent consumers on luxury goods and services in the second quarter declined by 8.4 percent from the first quarter and dropped 18.4 percent year on year.
However it’s not all doom and gloom for luxury retailers. Some 42 percent of consumers at the peak of the economic pyramid – those with more than $1 million in liquid assets – expect to increase their spending on luxury in the next 12 months. Pam Danziger, president of Unity Marketing, said that targeting these high net worth consumers “will be the key for success for luxury marketers in the second half of 2011.”
Danziger also noted that “Increasingly income alone is not an accurate measure of a household’s spending power. In the current economy many high-earning households are living pay check to pay check just like those in the middle-income brackets. Once the monthly expenses are met, the lower net worth affluents don’t have much left over with which to indulge in luxury.”