According to Unity Marketing and one of their recent surveys, the affluent persons have started to obtain a new normal flow where luxury isn’t a lifestyle. According to this data, there is a slowing down in the purchase rates for the high end stuff, which is called the luxury drought. The consumer demographics are the ones generating this shift.
The affluent consumers have started to shift for the worst in 2015 because the five key measures such as health or financial issues, among others, have started to slow down tremendously. In fact, the luxury consumption index has lowered as well, and it’s only 9 points above the absolute minimum.
The problem right now is that the current climate is a lot different when compared to a few years ago. There still is a hit and miss, but on the other hand the recession hit a lot harder than expected and people learned their lesson a lot. The issue is that the new normal seems to be heading away from luxury, which is quite interesting to say the least.
According to numerous studies, it’s the middle class that continually brings in a boom in the industry, (so called HENRY’s: High-earners-not-rich-yet consumers) but they are still far from affording luxuries, as the US only has around 2% of its population being rich and famous, which is really exciting to say the least!
This doesn’t mean that these persons won’t be rich, instead they are the ones that will, soon, be able to purchase luxury items. They just can’t afford them yet and the industry needs to keep an eye on them as they are the ones willing to get the more expensive stuff as time passes.
An interesting thing is that, according to some studies, people tend to reach their peak earning years sometimes between 35 and 55 years of age. This is when they start to pertain towards a specific group, and because of that they tend to be a little different to the Baby boomer generation, the elder persons which are now older and thus have more money to afford luxurious things.
Based on this data, you can immediately see that the Western economy does face a crisis, because many of the luxurious items are simply not destined for the boomers, and the worst part is that the consumer now have lower expectations, so it’s up to the marketers to up the ante and make them convert to paid customers.
The shift in demographics has also inclined our society to make this change as well, not to mention the demographics cliff and other things that lead to this as well. This is why people are more inclined to focus on their day to day needs instead of the luxury market, as it was a lot better and easier for them during the recession time. Millenials might change this, of course, but it will pass some time until this particular thing will happen, that’s for sure! One thing is certain the persons that afford luxury items earn no less than $100,000 per year or more.