A rise in affluent consumer spending, especially around Valentine’s Day, is giving the luxury sector a reason to celebrate, even amid widespread economic gloom. Credit card giant American Express discovered as much, when conducting a study on the luxury spending habits of its affluent consumers. The company studied consumers with annual household incomes of $100,000 and up.
Love Is In The Air
One of the most exciting aspects of this study is that the Valentine’s Day spends of luxury consumers is expected to touch $281 million this year. Compare that with the estimated general spend of $196 million. These numbers are likely to cheer even the most pessimistic luxury players in the run-up to Valentine’s Day, especially because the numbers reveal a rise of 18 percent over last year’s Valentine’s Day spends. The rise in general spending is only about 8 percent. The American Express study on luxury spending also predicts an increase in engagements and weddings, which should buoy up the luxury market as well.
According to the American Express study, 57 percent of consumers will be purchasing Valentine’s Day gifts this year. What is even more interesting is that the choice of gift for richer customers is similar to the more budget-strapped ones. Thus, popular Valentine’s Day gift picks include flowers (29 percent), gift cards (19 percent), jewelry (15 percent) and electronics (13 percent). Even their plans for Valentine’s Day are very similar, with 46 percent planning a romantic dinner at a restaurant. Last year, only 39 percent had planned a Valentine’s Day dinner.
Wedding Bells Ring
The romantic holiday may well inspire quite a few wedding proposals this year. The luxury jewelry market is sure to benefit as affluent consumers splurge on engagement rings. Yet, despite all the attention on the big rocks that the likes of Beyonce and Kim Kardashian wear on their dainty fingers, it appears that affluent consumers are less willing to invest obscene amounts on a single ring. Only 11 percent would spend over $10,000 on an engagement ring, while 16 percent would pay between $5,000 to $10,000. Meanwhile, a majority of 59 percent believe that rings priced between $1,000 and $5,000 is appropriate.
Bring Out The Bubbly
Luxury spirits also have much to gain from this sudden rise in Valentine’s Day spending. Apart from being given as Valentine’s day gifts, bottles of champagne are also must-haves on romantic dinner dates on 14 February.
So it is hardly a surprise that luxury champagne brand Moet & Chandon has launched a social video to sell its special Valentine’s Day rose bottles. The pink themed video encourages buyers to “tag your love” with cute customized messages like “I love you”, “Let’s fly to NY” and so on. But Moet & Chandon is savvy enough to recognize that the tag concept can be used for other events as well – whether Mother’s Day, the birth of a baby, graduation or something else entirely.
The optimistic findings of the American Express study should encourage other luxury brands to publicize their wares in new and innovative ways, especially in time for occasions like Valentine’s Day, when gift-giving and luxury spending is the norm.