Affluent consumers poised to spend big on Thanksgiving weekend
Peter Finocchiaro / Luxury Daily
All sign are pointing towards a profitable Thanksgiving weekend for luxury brands as affluent consumers appear likely to open their purse strings and spend more on Black Friday and Cyber Monday than last year.
Upscale consumers seem likely to bounce back and spend after what had been an arguably disastrous couple of years economically for luxury brands. Both online and bricks-and-mortar sales seem poised to grow in the sector on the strength of the stock market.
“One of the things we’re noticing as we begin to slowly recover from this recession, as it relates to retail sales, is that the strongest categories are value on one end of the barbell, beginning now, luxury on the other end of the barbell,” said Jeff Green, president and CEO of Jeff Green Partners, Phoenix.
“Part of why this is occurring, in terms of the luxury segment gaining momentum, is the fact that the stock market has been doing better,” he said. “The fact that the stock market is doing better has little effect on anybody but the luxury segment.
“If you really look at the number of Americans that have investments in Wall Street, it’s actually fairly small, but it is the more affluent whose spending patterns are dictated by the value of their portfolios.”
In line versus online
Much of the holiday spending this year looks to be online, as 87 percent of shoppers with annual household incomes of more than $100,000 say they will spend the same or more online as compared to last year, according to Forrester.
Furthermore, PriceGrabber’s Winter Holiday Consumer Survey predicts that while 57 percent of all consumer holiday purchases would be made online – up 4 points from last year – the top 13 percent of consumers would still account for 50 percent of all dollars spent online.
That finding coincides with research from BDO that found that ecommerce should focus on ecommerce sales on Thanksgiving weekend.
Mr. Green said that affluent consumers would have a significant impact on luxury brands’ Thanksgiving weekend, but that they would not be the ones waking up in the middle of the night to arrive at retailers at opening time.
Still, he expects in-store sales to Black Friday and in-store sales to be of greater significance than ecommerce sales, because luxury consumers tend to be older and less open to purchases via the Internet.
“I think younger luxury consumers are going to be later to the table, which makes me think that Black Friday is going to have a bigger impact on luxury sales than Cyber Monday,” Mr. Green said. “You think about the older luxury customers and they aren’t Internet shoppers to any great extent.
“The one thing about luxury shopping is there is a lot of touch and feel,” he said.
Likes and dislikes
The most popular luxury gifts this year will be gift cards, according to several sources.
Ron Kurtz of the American Affluence Research Center said that luxury brands should push gift cards because consumers are looking for greater utility out of gifts this year.
Research back up that assertion, showing increased consumer interest in gift cards.
Thirty-four percent of consumers in PriceGrabber’s Winter Holiday Consumer Survey said they plan to buy gift cards to non-practical places such as clothing stores.
The second most popular category is jewelry, as 27 percent of consumers expressed interest in buying it as a gift.
Fifteen percent of consumers said they plan to purchase designer clothing as a gift, while only 7 percent said they intend to purchase designer handbags for friends or family.
Only 6 percent gave the nod to designer shoes.
Still, to fully grasp the bounce back, consumers should look at how retailers have faired recently, according to Mr. Green.
“Take a look at some of the higher-end department stores,” Mr. Green said. “See how their sales have increased pretty significantly.
“Nordstrom has increased sales significantly, and Neiman Marcus and Saks Fifth Avenue are certainly seeing an increase too,” he said.