Press Release

In the Luxury Market "Trading Down" Is the Norm,
according to new research from Unity Marketing

Stevens, PA May 27, 2005 - There is a common misconception about the luxury consumer, that he or she is like a "shopaholic on steroids," looking to spend whatever it takes to achieve one’s ultimate luxury satisfaction. But new research from Unity Marketing (www.unitymarketingonline.com) about the luxury consumers (household incomes $150,000 and above) finds that a majority of affluent consumers are trading down each and every day in most of the categories in which they shop.

"So much attention has been given to the 'trading up' phenomenon — where people with upper-middle incomes of $50,000 to $75,000 stretch to luxury — that the converse trend toward 'trading down' has been largely ignored," says Pam Danziger, president of Unity Marketing and author of Let Them Eat Cake: Marketing Luxury to the Masses — as well as the Classes. "'Trading down' is where the affluent consumer with means to buy just about any luxury they want at full-price, opts instead to select a less luxurious, but more affordable substitute for the 'real thing.'"

The latest issue of Luxury Business: The Luxury Marketer’s Report reveals that even among shoppers in the top 5 percent of households based upon income, luxury consumers are cautious with their money and strongly motivated to get maximum value for the money they spend.

Even Among the Top 5% of Households, Luxury Is Only an Occasional Indulgence, Not an Everyday Affair

In Unity's most recent luxury tracking study among 700+ luxury consumers, they were asked to what extent they selected the more luxurious item or service, rather than the ordinary, everyday item or service when they shop. The results show that in all three categories of luxury — luxuries for the home; personal luxuries like fashion, jewelry, cosmetics and cars; and experiential luxuries, like travel, dining and personal services — about half of the luxury consumers say they only occasionally, rarely or never select the more luxurious offerings and opt instead for the ordinary, everyday brands.

Just over one-third of the luxury consumers often select luxury in the three major categories, while the remaining 15 percent or so are the highly indulgent consumers who always or almost always go first-class.

Within each of the major luxury categories, a higher percentage of luxury consumers go luxury for specific things. For example, more luxury consumers are likely to always or almost always select the more luxurious option in electronics (30 percent); automobiles (21 percent); fragrance and cosmetics (20 percent); jewelry (18 percent); watches (17 percent); and travel (21 percent).

For everything else, such as linens and bedding, tabletop, furniture, fashion accessories, apparel, dining and home services, about 15 percent or less of luxury consumers almost always go luxury, while the majority often or mostly trade down to the ordinary, everyday offerings.

"Luxury marketers realize they target a slim 5 percent segment of the total market, but even in their target market (i.e. consumers with household incomes of $150,000 and above) the real opportunity exists only among an even thinner slice of high-income consumers who have a propensity to buy luxury," Danziger explains.

"The majority of affluent consumers in America today only indulge in luxury on an occasional basis across most product categories. That means half of the high income shoppers browsing Saks Fifth Avenue or Neiman Marcus today aren’t likely to buy anything but items on the sale rack or the more affordable brands that these retailers carry presumably for the lower-income consumers. Trading down, not up, is the norm among luxury consumers today."

More about the Luxury Business newsletter

Luxury Business: The Luxury Marketers Report is presented six times per year Pam Danziger to provide the latest research-based insights and understandings about the luxury market. Today's luxury market, defined as the top 20 percent of U.S. households with incomes of $85,000 and above, presents compelling new challenges for luxury marketers. Through research, Unity discovers how luxury marketers can establish deeper connections with their affluent customers and anticipate change in their luxury shopping patterns and priorities.

Order a copy of this issue of Luxury Business and the next six over the course of the year.

Get a FREE Copy of New White Paper -
The Eight Things Every Marketer Needs to Know About the New Luxury Market

Pam Danziger has prepared a 2,000 word white paper describing the "Eight Things Every Marketer Needs to Know about the New Luxury Market." It is free to download.

For media: Sample issues and graphs and charts are available upon request.