Amex Reports on the Changing Nature of Luxury Consumers
Recessions (and their recoveries) have a habit of forging new behaviours amongst consumers and new trends in markets.As a prime example of this, 2 new trends in the travel, tourism and hospitality industry have been identified in research by American Express into UK spending patterns in 2011.The first trend is the emergence of an entirely new group of luxury consumers - 'Luxury Newcomers' . This group is just as the title suggests - a group of individuals who made ‘no luxury purchases in any category before the global financial crisis in 2008 but has shown a clear attraction to luxury purchases over the past year.'According to the report, 'Luxury Newcomers' don't look or act like the traditional luxury consumer - they tend to be younger and less affluent but they have confidence in their spending power. They're certainly a significant segment for luxury marketers to be aware of as Amex estimate these newcomers made up 15% of all luxury spending in 2011.The other trend unearthed by Amex's research was the increase in the importance of 'Generation Y' consumers (aged 18-29) in 2011 - whose spending increased at a 'robust rate' in the year.Whilst Amex's findings admitted that 'Gen Y' currently contributed a relatively small proportion of overall spending, they identifed that this group had an appetite for spending, particularly on luxury goods and services, which made them a key group for luxury marketers to watch in the future.For example, when it came to travel, 'Gen Yers' spent substantially more on hotels in 2011 than in 2010 and more than 1/2 stayed at an upscale or luxury hotel this year. They were also responsible for driving the growth in the fine dining sector - their spending not only grew substantially in 2011, but outstripped any other demographic studied by Amex in absolute terms.What's driving this increased spend when times are reported to be tough for this generation? Well much of this spend is aspirational - that is, GenY are exhibiting the spending habits of premium consumers despite their lower incomes. But Gen Yers are more focused on spending rather than saving than the other generation cohorts and with less financial commitments, may well be suffering less of a squeeze on their incomes.Whether these trends will continue into 2012 or merely be the swallows that didn't make a summer is a moot point. However, what the research demonstrates is that the attitudes and behaviours of consumers are changing both rapidly and marketedly. Relying on the old assumptions is not enough for premium and luxury marketers - understanding the luxury consumers of 2011 and their differing reactions to changing economic circumstances has never been more important to maintaining the success of luxury brands.