According to Unity Marketing, spending in the past two quarters initially gave some hope that patterns were returning to those experienced before the recession hit, but with many of the established global markets now looking uncertain again, earlier predictions of a rosier outlook for 2010 are now being reconsidered.
Luxury beauty and cosmetics and in particular perfumes, sun care and skin care products were amongst the best performing categories in the luxury market in the last two quarters, but the prospects of that rebound being sustained now seem to be fading.
The market researcher reported that its Luxury Consumption Index stalled at 78.3 points in July, which it says reflects the fact that more affluent consumers are growing concerned over uncertainty for the US economy in particular.
Fewer consumers are confident about the economic outlook
According to the most recent index findings, compared to the previous month, 36 percent more luxury consumers interviewed said that the US was now in a worse economic state than it was three months ago. Indeed, an opinion that was held by more than three out of four people that were surveyed.
“Without a doubt the luxury consumer market is in a much better place today than it was a year or so ago, but the latest survey warns marketers not to ease up or be over-confident that the recession's effects on the luxury market are over,” said Pam Danziger, president of Unity marketing.
The advice to makers and marketers of luxury goods is simple. Unity Marketing says companies should continue to position luxury as a value proposition to consumers.
Communicate brand's affordability
This can be done by keeping the image of the brand up front in advertising, packaging and service, while also communicating in a very subtle way about the affordable pricing, the market researcher advises.
"As we look to luxury consumer spending in the second half of 2010, affluent consumers' pent-up demand for luxury indulgences after doing without through 2008 and 2009 has crested,” said Tom Bodenberg, Unity Marketing's chief consumer economist.
As marketers and retailers plan for the critical fourth quarter, they will need to keep promotions in play, as consumers will continue to hold back without the extra incentive of discounts or added-value deals that sweeten the pot," he added.