The Internet’s Impact on Indulgence

The Internet has brought the luxury market into the average consumer’s living room by presenting a showroom for high-end items, such as designer tableware, 800-thread-count sheets, precious art and antiques, that aren’t normally found at a local discount retailer. While offline consumers flood malls looking for the lowest prices, other consumers are going online to research and identify luxury items, according to surveys conducted by Unity Marketing that analyze shopping trends.

According to Unity Marketing, the Internet was named by 44 percent of luxury consumers as very or somewhat important, with editorial matter following at 42 percent. Traditional advertising lags behind with newspaper ads (31 percent); television programs and commercials (28 percent); and magazine advertising (24 percent).

“Today’s luxury market is not defined by high income or extraordinary wealth. The luxury market is you and me, and everyone from people living in trailer parks, suburban tract houses, to ‘McMansions,’ on up to estates. After all, Wal-Mart is the nation’s leading retailer of jewelry, the epitome of a luxury product,” said Pam Danziger, president of Unity Marketing.

In 2001, Unity Marketing identified Wal-Mart as the number one jewelry retailer in the U.S. with estimated jewelry and watch sales of $2.3 billion, followed by Zales Corporation, with sales of $2.1 billion.

Danziger believes that there will be significant generational market shifts over the next decade or two, with baby-boomers and “empty-nesters” creating new demand for luxury items.

“Empty-nesting consumers are at their peak in earnings while they no longer have to stretch the family budget across the demands of growing children. That means they have lots of discretionary money to spend on personal luxuries so the prospects for marketers of luxury automobiles, jewelry, apparel, beauty products, sporting goods, among others, and luxury service providers, like spas, cosmetic and beauty treatments, travel, and landscaping to name a few, are particularly bright,” commented Danziger.

The popularity of gardening and luxury gardening items might be a result of the 76 million Americans in the 39-to-58 age range — a population that is experiencing empty-nest syndrome and is enjoying more leisure time. Unity Marketing also credits consumer drive to reconnect with the natural world for the $40.7 billion in retail garden spending in 2001 — up 12.1 percent from $36.3 billion in 2000.

The average U.S. household spent $444 on lawn and garden goods in 2001, which included “hardware” as the fastest growing category — accessories, products, furniture, tools and equipment — and “software” — plants, seeds, shrubs, trees and other plant material.

Did you purchase or influence
the purchase of any of these
luxury products or services
in 2002?
Electronics 51%
Garden 45%
Fragrances, beauty 44%
Apparel, accessories 41%
Furniture, floor coverings 35%
Travel 35%
Linens, bedding 34%
Jewelry, watches 32%
Fabrics, wall coverings, window treatments 29%
Kitchen appliances 29%
Kitchenware, cookware 29%
Automobiles 25%
Housecleaning 23%
Entertainment 20%
Spa, massage, beauty 20%
Art, antiques 19%
Landscaper 18%
Home decorator 13%
Catering 10%
Tabletop 8%
Recreational vehicles 8%
Base: Households over $50,000 yearly income
Source: Unity Marketing

Despite all the luxury spending, Unity Marketing measured an increase in basic items in February 2003. Retail and food service sales totaled $304.1 billion — up 2.6 percent over the previous year — with the fastest growing retail channel being gasoline, which posted a 24 percent gain over February 2002.

Decreased spending was noticed in home furnishings, sporting goods, books and music, cars, consumer electronics, and appliances. Retail sales among non-store retailers — like the Internet — increased 8.4 percent from February 2002, and food and drinking establishments posted a 4.2 percent gain from last year.

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