Press Release

The U.S. Luxury Market Continues to Boom
New report on state of the luxury market published by Unity Marketing

Stevens, PA May 24, 2006 — The international luxury market continues to generate dynamic revenue growth for the leading marketers. The aggregate results of the 25+ leading global luxury marketers in 2005 show average revenue growth of 10.9 percent. This follows average growth of 14.5 percent in 2004, according to a new study on the luxury market from Unity Marketing. The fastest growing luxury companies in Unity.s benchmark study include Orient Express Hotels, Compagnie Financière Richemont, Coach and Polo Ralph Lauren, all reporting growth of 18 percent or higher in 2005.

U.S. luxury market reaches $1 trillion in 2005

The luxury market in the U.S. was equally strong last year. Unity Marketing estimates the total luxury market to have reached $1,002.2 billion in 2005, up 11.6 percent from $898 billion in 2004. This includes luxury purchases by affluent consumers in the four luxury categories Unity tracks - home luxuries; personal luxuries, like fashion, jewelry, wine and spirits, pets; automobiles and luxury experiences, such as travel, dining, entertainment.

"The key metric Unity Marketing uses to track the U.S. luxury consumer market is the average amount spent by affluent households buying what they perceive of as 'luxuries,'" Pam Danziger, president of Unity Marketing and author of Let Them Eat Cake: Marketing Luxury to the Masses - as well as the Classes explains. "In 2005 the typical luxury consumer spent $52,588 buying luxuries, up 3.8 percent over the average amount spent in 2004 of $50,640.

"But that is only one value that we use to measure of the total size of the luxury market. We also factor in the overall percentage of affluent households buying luxuries and the total number of affluent households which numbers 30.2 million, including the near-affluent consumers (incomes $75,000-$99,999) who occasionally trade up to luxury," Danziger says.

Key trend in luxury — Shift to experiences

In 2005 the dominant trend in the luxury market was a shift in spending more — significantly more — on experiential luxuries; in other words, the things people do rather than material goods one has or one owns. The typical luxury consumer spent $22,746 on experiences in 2005, that is nearly double what they spent in 2004. Luxury consumers also spent nearly 20 percent more buying luxury automobiles, a highly experiential luxury good.

While spending on experiences and automobiles went up, luxury consumers spent less overall on home luxuries, down 4.6 percent to $19,990. Out of the nine product categories classified under home luxuries, only three posted an increase in average spending. They were luxury kitchen appliances and kitchen and bathroom fixtures; kitchenware, cookware and cook's tools; and garden and outdoor luxuries. "In keeping with the experiential trend in luxury, the only home categories where luxury consumers are spending more are the ones that are experiential in that they function and are used in the home, not the purely decorative home categories," Danziger explains.

Spending on personal luxuries like luxury apparel, fashion accessories, jewelry andwatches, wine and spirits, pet luxuries and pens and desk accessories, rose 5.6 percent to $10,007 in 2005. A moderating factor in the growth of personal luxuries is that the super-affluent households (incomes $150,000 and above) didn.t hold up their high 2004 spending levels, while spending on personal luxuries among the near-affluent ($75,000 to $99,999) and the affluent ($100,000 to $149,999) increased at a significant rate.

Luxury goods hold less allure to the affluent — Life-changing experiences is what they crave

Unity predicts the trend toward experiences will continue to grow as luxury consumers spend more on life-changing experiences, while their need for more luxury goods wanes. "Today's luxury market is less about ostentation and materialism and more about a search for meaning and emotional fulfillment," Danziger says. "While luxury consumers live a very comfortable and materially enriched life, they are well aware that buying more stuff isn.t going to give them the real fulfillment they desire."

This is particularly prominent among the baby boom generation (which makes up 57 percent of all households with incomes of $100,000 or more), the leading edge of which turns 60 this year. At that life stage, they have already acquired the material trappings of luxury, so buying another mink coat, diamond necklace or designer handbag just doesn't have the same appeal. But even the GenXer luxury consumers, who are at a more materialistic life stage and who spend proportionately more on luxury goods than boomers, also exhibit an equally strong passion for experiences.

"When we ask luxury consumers about the source of their greatest luxury satisfaction, consistently the majority says that experiences give them the most pleasure. Luxury goods just don't provide the same luxurious feelings. And the more affluent you are, the more value you place on experiences. Luxury marketers, especially those grounded in the traditional luxury goods business, need to understand this experiential shift and develop strategies to turn their luxury goods into a real experience for their customers," Danziger explains.

About Unity Marketing's Luxury Report 2006

Unity Marketing's Luxury Report 2006 is the definitive study of the luxury consumers' buying and spending preferences, written by Pam Danziger, the nation's leading expert on the 'new luxury' market. This report provides vital market size, growth and demographics for anyone and everyone that sells luxury, from marketers, advertisers, retailers, service providers. The Luxury Report 2006 is an essential tool to understand the dynamics of the luxury market, today and into the future.

This important new study of the luxury market provides the results of a four-year longitudinal research study of the luxury market, which combines qualitative and quantitative methodologies. This report is compiled from detailed statistics collected in eight waves of Unity's quarterly Luxury Tracking surveys during 2004 and 2005. In 2005 over 4,000 luxury consumers were surveyed. The average income of respondents in 2005 was $139,075 and the gender distribution was 65 percent female and 35 percent male. The average age of respondents was 42.9 years, with 47 percent of respondents being Baby Boomers and 38 percent being GenXers.

More details about products and brands included in Luxury Report 2006

Details about what these luxury consumers bought, how much they spent, where they made their purchases, and in certain categories the luxury brands they patronized are reported in four major categories of luxury. Significantly more product categories and more brands were included in the 2005 Luxury Tracking surveys, notably:

• Art and Antiques (Specific data is collected on already-framed reproductions; unframed reproductions; custom-framed art or reproductions; other custom framing; original art; sculpture, statues, 3D art; antique furniture and collectibles; wall decor)
• Electronics and Photography Equipment (Computers; iPods and other MP3 devices; cameras; cellular phones; televisions; DVD/video players; audio equipment; home entertainment systems; PDA's)
• Furniture, Lamps and Floor Coverings (Lamps and lighting; upholstered furniture; wooden furniture; rugs and floor coverings)
• Garden and Outdoor (Patio furniture; grills; lighting accents; fencing; power gardening equipment; decorative pots; garden statues; chimeneas and outdoor stoves; garden shelters; water gardens; porch and patio decorative accents)
• Home Decorating Fabrics, Wall and Window Coverings (Wall coverings, such as wall paper; ready-made curtains, drapes; window coverings, such as blinds, shades; home decorating fabrics for custom upholstery, curtains, drapes, etc.)
• Kitchen Appliances, Bathroom Equipment and Building Products (Kitchen appliances, such as stoves, ovens, refrigerators; bathroom equipment, such as tubs, showers, toilets, fixtures; kitchen equipment, such as cabinets, countertops; air conditioning/filtration systems; water systems)
• Kitchenware, Cookware, Housewares (Small appliances; cookware; bakeware; cutlery; storage and organization; barware)
• Linens and Beddings (Sheets and pillowcases; comforters, spreads; pillows and pillow accents; bath linens; mattresses and box springs; duvets and shams; feather beds and mattress covers; table linens)
• Tabletop, Dinnerware, Stemware, Flatware (Dinnerware, including fine china, ceramic or stoneware, serving ware and decorative accents; crystal and glassware decoratives, stem ware, serving pieces, barware; flatware, including sterling silver flatware, serving pieces, decorative accents and other flatware)

Personal Luxuries

• Clothing and Apparel (Women's casual, dress/business, formal/evening, outerwear; men's casual, dress/business, formal/evening, outerwear; teen's clothing; children's clothing; baby clothing)
• Cosmetics, Fragrance and Beauty Products (Fragrances, perfumes; bath and body lotions; face care; hair care; cosmetics and makeup; sun and tanning products)
• Fashion Accessories (Women's handbags, shoes, brief cases, and fashion accessories, such as scarves, belts; men's wallets, brief cases and men's fashion accessories, including shoes, belts, etc.; luggage for men and women)
• Jewelry (Women's and men's jewelry by type, including necklaces, earrings, bracelets, rings, bridal/wedding, pins and brooches; women's and men's jewelry by material, including 14k and above gold, sterling silver, platinum, gold plate or vermeil, costume jewelry; and women's and men's jewelry by stone, including diamonds, other precious gemstones, semi-precious gemstones, pearl, faux or man-made, no gemstone content)
• Watches (Women's and men's watches by style, including formal/dress or casual/sports)
• Wine, Liquor and Spirits (Wine, champagne, vodka, whiskey, rum, scotch, cognac, bourbon, sherry/port)
• Pens, Writing Instruments and Desk Accessories
• Pet Products

Automobiles (including brands Acura, Audi, BMW, Cadillac, Jaguar, Infiniti, Land Rover, Lexis, Lincoln, Mercedes, Porsche, Saab, Volvo)

Experiential Luxuries

• Dining
• Entertainment
• Home Services
• Spa, Massage, Beauty and Cosmetic Services
• Travel (Foreign and domestic luxury hotels, commercial air, resorts, cruises, group tours, adventure travel, private air travel)

Now you can make critical business decisions based upon facts - not beliefs, assumptions or fantasies.

This report provides the facts and figures you need to develop winning marketing and business strategies. By working with the facts, not fantasies, you have a much better chance of success marketing to the luxury consumers. This report gives you a horizontal view of the luxury market, recognizing that luxury marketers compete not just with companies within their vertical product niche, but across all luxury categories as well.

Within each category of luxury, the key drivers for purchase are studied, such as role of luxury brand in purchase decision; the influence of sales price on purchase; where the shopper bought their last luxury; why they bought luxuries; whether their luxury purchases were made a gifts; and other motivational factors.

Special feature: Find out which of the four different types of luxury consumers are your best customers

A special feature in Unity Marketing's Luxury Report 2006 is a psychographic profile of the four key types of luxury consumers. These include:

· X-Fluents (Extremely Affluent) who spend the most on luxury and are most highly invested in luxury living;

· Butterflies, the most highly evolved luxury consumers who have emerged from their luxury cocoons with a passion to reconnect with the outside world. Powered by a search for meaning and new experiences, the butterflies have the least materialistic orientation among the segments, yet they spend nearly as much as the X-Fluents on luxury;

· Luxury Cocooners who are focused on hearth and home. They spend most of their luxury budgets on home-related purchases;

· Aspirers, those luxury consumers who have not yet achieved the level of luxury to which they aspire. They are highly attuned to brands and believe luxury is best expressed in what they buy and what they own.

(May 2006, 250+ pages)

Pre-publication Price: $2,500 (valid for all orders received through June 30, 2006)

Published Price $2,995

Now the Luxury Report is available in special editions containing subsets of the data.

Luxury Report 2006: Home Edition - $2,250

Luxury Report 2006: Personal Luxury & Automobile Edition - $2,250

Luxury Report 2006: Experiential Edition - $1,995

About Pam Danziger and Unity Marketing
Pamela N. Danziger is a nationally recognized expert specializing in consumer insights for luxury marketers, whether they sell luxury to the masses or the 'classes.' She is president of Unity Marketing, a marketing consulting firm she founded in 1992.

Advising such clients as Lenox, Cartier, Herend, Rémy Amerique, Stearns & Foster, Prudential Fine Homes, Baccarat, The World Gold Council, The Conference Board and American Express, Danziger taps consumer psychology to help clients navigate and master the changing luxury marketplace. Her latest book, Let Them Eat Cake: Marketing Luxury to the Masses-as well as the Classes, (Dearborn Trade Publishing, $27, hardcover) is in book stores now. She is the author of the recent book, Why People Buy Things They Don't Need: Understanding and Predicting Consumer Behavior (Chicago: Dearborn Trade Publishing, 2004). She is working on her next book, Shops That Pop! Predicting the Future of Shopping set for publication in Fall 2006.

She has appeared on CNN's In the Money, NBC's Today Show, CNBC, CNN International, CNNfn, CBS News Sunday Morning, Fox News' Your World with Neil Cavuto, ABC News Now, NPR's Marketplace and is frequently called upon by the Wall Street Journal, New York Times, American Demographics, Women's Wear Daily, Forbes, USA Today, Associated Press, Los Angeles Times, Chicago Tribune for commentary and insight.

For media, Unity Marketing can make tables, charts and graphs available about the luxury market upon request.

Contact: Pam Danziger, 717-336-1600

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