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Luxury Consumer Confidence Bounces Back as Affluent Consumers Spend More on Luxury Indulgences

Luxury consumption index up 2 points as affluent consumers feel more confident about their financial status, but spending is not yet as strong as one year ago

Stevens, PA April 27, 2007 -- Luxury consumers' confidence rebounded in the first quarter of 2007, rising two points to reach 100.2, up from its lowest level in 2006 at the close of the fourth quarter. This is good news for companies that market and sell luxuries, as well as for those who invest in these companies.

Renewed confidence in the first quarter encouraged affluent consumers to spend more buying luxury goods and services. Luxury consumers spent on average $14,024 on luxury goods and services, an increase of 8 percent over the average amount spent in the fourth quarter 2006. Increased spending on home luxuries, especially kitchen appliances and cookware, accounted for much of this quarter's increase.

These findings are based upon Unity Marketing's Luxury Tracking survey of 1,003 affluent consumers conducted at the close of the first quarter 2007 (average income $159,000 and average age 46.4 years).

Commenting on the first quarter results, Pam Danziger, president of Unity Marketing and author of Shopping: Why We Love It and How Retailers Can Create the Ultimate Shopping Experience says, "I advise my luxury clients to remain cautiously optimistic about the positive trend in the index and spending. The fact is luxury consumer confidence at the end of first quarter 2007 lags far behind where it was at the end of the first quarter last year, when it reached its historic high of 113.2 points.

"Luxury spending last year in the same period was 5.5 percent higher than this year. So while there is a positive trend in affluent consumers' confidence and spending, we still have a long way to go to get back to where we were in early 2006."

Commenting on the Luxury Consumption Index, Thomas Bodenberg, Unity Marketing's economic forecaster, said, "Luxury consumers, who are the movers and shakers in our society, continue to be pessimistic about the financial direction of the country. Some 42 percent of affluent consumers feel the country is worse off now compared with three months ago. Only 13 percent feel the country is in a better position. At the same time, nearly 60 percent of luxury consumers feel their financial status will improve in the next twelve months, which gave a boost to this quarter's Luxury Consumption Index."

1Q2007 Special Investigation: Luxury Consumers & the Loyalty Factor
This quarter's special investigation was into the role of loyalty and reward programs and how much they influence luxury consumers in their brand choices and purchases. The research included whether or not the affluent consumers were members of an airline, credit card, hotel and/or retailer rewards or points program.

Nearly 80 percent of all affluent consumers surveyed -- and an even higher percentage of the super-affluents with household incomes of $150,000 or more -- were found to be members of one or more programs. The results of the survey provide a powerful reason for luxury marketers to evaluate a loyalty program for their best customers.

Not only do rewards and loyalty programs encourage the affluent to buy your brand again and again, members of loyalty programs also spent in excess of 50 percent more on luxury in the study period.

Another key finding from this research: Loyalty programs are even more influential among the young affluents -- the emerging market of affluent consumers 40 years and younger. Membership-holding young affluents spent nearly twice as much as the over forty year old affluent consumers on luxuries in the study period.

To learn more about the young affluents and how they will impact the global luxury market, use this link http://www.unitymarketingonline.com/cms_luxury/luxury/insights_study/Request_Form.php to receive a FREE copy of Pam Danziger's presentation, The Ascent of the Young Affluents: The Future of the Global Luxury Market, given at the Global Luxury Forum, April 20, 2007 in London.

About Unity Marketing's Luxury Consumer Tracking Study
These findings are based upon Unity Marketing's quarterly luxury tracking study which surveyed 1,003 luxury consumers (average income $159,000 and age 46.4 years). Each quarter Unity Marketing surveys affluent consumers about their purchases, spending, store and brand preferences in four major categories of luxury goods and services, including home luxuries (art and antiques, electronics, furniture, lamps and floor coverings, garden/outdoor, home decor fabrics, wall and window coverings, kitchen appliance, bath and building products, kitchenware and cooks� tools, linens and bedding, tabletop); personal luxuries (clothing, fashion accessories, jewelry, watches, cosmetics, wine and spirits, pet luxuries, and pens); automobiles; and experiences (dining, travel, home services, spas/beauty services, and entertainment).

For more information visit http://www.unitymarketingonline.com/cms_luxury/

For media: Charts, tables and graphs are available on request.

About Pam Danziger and Unity Marketing
Pamela N. Danziger is an internationally recognized expert in understanding the mind of the consumer. She founded Unity Marketing in 1992 as a marketing consulting firm that specializes in consumer insights, especially for marketers and retailers that sell luxury goods and experiences to the masses or the �classes.�

Advising such clients as Cartier, PPR, Diageo, Waterford/Wedgwood, Stearns & Foster, Prudential Fine Homes, Ritz Carlton, Orient-Express Hotels, The World Gold Council, The Conference Board and American Express, Danziger taps consumer psychology to help clients navigate and master the changing consumer marketplace.

In recognition of her ground-breaking work in the luxury consumer market, Pam received the Global Luxury Award presented by Harper�s Bazaar for top luxury industry achievers in 2007.

Her latest book is Shopping: Why We Love It and How Retailers Can Create the Ultimate Customer Experience, published by Kaplan Publishing in October 2006. Her other books include Let Them Eat Cake: Marketing Luxury to the Masses�as well as the Classes, (Dearborn Trade Publishing, $27, hardcover) and Why People Buy Things They Don't Need: Understanding and Predicting Consumer Behavior (Chicago: Dearborn Trade Publishing, 2004).

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