Articles and News
FLASH SALES WHET CONSUMER APPETITE FOR LUXURY GOODS February 16, 2012 (0 comments)
New York, NY—Online spending growth for full-price luxury goods has outpaced that of flash-sale sites, says new research from American Express Business Insights and reported on Luxury Daily.
Online spending for full-price luxury goods grew 25% last year, compared to 2010 figures. But spending for online luxury flash sales grew only 21% compared to the previous year, suggesting that as the recession fades and disposable income rises, consumers are willing to shell out for luxury brands—perhaps after being introduced to them via the flash-sale concept.
Ed Jay, senior vice president at American Express Business Insights, told Luxury Daily that the flash sales sparked consumers’ luxury appetite with reduced-price goods that were both appealing and attainable. Flash-sale spending jumped 92% from 2009 to 2010, but consumers now seem willing to pay full price for brands they grew to love at a discount.
Several factors that helped ignite the 92% jump in flash-sale spending between 2009 and 2010 have changed: in addition to the end of the recession and renewed growth in consumers’ disposable income, there simply are fewer luxury goods to unload onto flash sites. When consumers collectively slammed their wallets closed in 2008, retailers were left with an abundance of high-priced merchandise that had to be moved. Hence the fire sale discounts seen during that holiday season, and the tremendous popularity of flash sales shortly thereafter. But retailers have grown much tighter in controlling their inventory, leaving much less to languish or unload at season’s end.
American Express’s research also shows Millennials starting to have a more profound effect on the luxury industry, says Luxury Daily’s report. Gen-Y spending on premium luxury fashion grew 33% in 2011 over 2010, and their spending on luxury retail overall grew 31%. While still the smallest group of luxury consumers, comprising only 3% of the total market, Millennials’ rate of spending growth outpaced both Gen-X and Boomers, suggesting what most marketers already know: that as these consumers mature they present an outstanding opportunity, especially because they’re willing to experiment with new brands.