A new report says Millennials like to spend money, and lots of it.
Looking for customers willing to spend? (Who isn’t?) A new survey suggests you focus on Generation Y.
An American Express Business Insights report found that before the recession, "traditional" luxury consumers (translation: old money) made up just 10 percent of the luxury market but did 70 percent of the spending. During the recession, a quarter of those people stopped splashing the cash, and they haven’t returned to their old habits. They now do just 40 percent of the luxury spending, and Generation X and Generation Y shoppers are doing all the rest.
"I’m not going to tell you that luxury is back because it never really left," Peter Niessen, vice president of American Express Business Insights, told the Luxury Daily. "But the nature of who that luxury consumer is has fundamentally changed. There is a whole set of new luxury consumers that we have to acknowledge, recognize and market to."
An earlier American Express report found that men cut their spending more than women, with middle aged and older men cutting costs the most sharply and not returning to previous spending habits. During the recession, young consumers carried on having "spender benders," with young affluent women outpacing all other groups.
The newest report found that since 2010 global luxury spending has increased across all industries, and that the luxury fashion market was the least hit by the recession. Spending in the industry actually grew in 2008 and all through 2009 and 2010, particularly in the U.S. Since the recession ended in June 2009, luxury fashion spending has been twice that of mainstream fashion, says the report.
"The reason why you see the growth in fashion is the nature of who is doing the spending has changed a lot, and to me this is the biggest surprise,” Niessen said.
Luxury travel spending grew rapidly in 2010 in Asia, and is slowly increasing in the U.S. and Europe. Spending on fine dining dipped in Europe and the U.S. (though not in Brazil, Russia, India, or China) during the recession, but also began recovering in 2010.
Inc. contributing editor COURTNEY RUBIN was for five years a London-based staff writer for People magazine. Rubin, a former senior writer for Washingtonian magazine, has written for the New York Times magazine, Time, Marie Claire, and other publications. She is the author of The Weight-Loss Diaries.