Spending on Luxury Goods Decelerating
Luxury consumers are looking to save more, travel more and spend less on luxury goods.
That’s according to the latest Saks Luxury Pulse, revealed Wednesday. It points to “a deceleration in spending on luxury goods as consumers focus more on savings and travel.”
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Saks’ Luxury Pulse is a quarterly online survey of luxury consumers’ attitudes toward shopping, spending and fashion trends. It is based on responses from 3,744 U.S.-based respondents over age 18 and was most recently fielded between April 28 and May 1.
Among the key findings: 53 percent of the respondents are planning to spend the same or more on luxury in the next three months compared to the previous three months, which means 47 percent of those surveyed will spend less.
By comparison, the previous Saks Luxury Pulse, fielded in late January, indicated that 62 percent of the respondents would spend the same or more on luxury, meaning 38 percent would spend less.
The findings are further evidence of a slowdown in the U.S. luxury market, which also has been highlighted by all the major European luxury houses as they reported their financial results over the last month. While still increasing, most of the groups — from LVMH Moët Hennessy Louis Vuitton to Chanel, Hermès and Compagnie Financière Richemont — have said their U.S. sales have substantially decelerated over the last few months even as China has picked up after pandemic-related lockdowns were eased.
Saks, which operates the Saks.com luxury website, concluded that luxury consumers are feeling increasingly concerned about the overall economy. But Saks also concluded that 67 percent remain optimistic about their personal financial situation.
“In line with our strategy and expectations for the year, the luxury consumer is responding to the economic environment and tapering their spending on luxury items,” Marc Metrick, chief executive officer of Saks, said in a statement. “As we have taken steps to ensure Saks is best positioned to navigate the rest of the year, the latest Saks Luxury Pulse findings reinforce our confidence in our strategy. We are pleased to see that even as they reprioritize their spending, consumers still have an appetite for luxury goods. Given the luxury consumer’s history of resilience, we anticipate their spending will be reinvigorated when the economic environment begins to improve.”
Emily Essner, Saks’ chief marketing officer, added, “Insights from the Saks Luxury Pulse help us optimize our content, whether through our curated arrays on Saks.com, our social media content or our personalized customer communications, so it’s most relevant to our customers and reflects their interests. Our customers have indicated that they have a desire to update their wardrobes, which serves as an opportunity for us to provide them with more fashion discovery as their personal style continues to evolve.”
Asked what steps Saks has taken to navigate the rest of this year, Essner told WWD via email, “This year, we have an increased focus on driving scale and efficiency at Saks, and a key part of that is using advanced data analytics and personalization to optimize our interactions with customers. Using machine-learning algorithms powered by first-party data from across the Saks Fifth Avenue ecosystem, 90 percent of our customer emails currently feature personalized messaging, helping drive engagement with customers, which is important given the current environment.
“We’re also strategically emphasizing our use of Saks Live, our live commerce platform, again as an efficient and scalable mechanism for driving customer engagement. In [the first quarter], we presented 40 Saks Lives and AOV for this initiative was 60 percent higher than that of the site.”
Asked if luxury shoppers tend to spend more freely while traveling for vacation, Essner said, “Our business benefits when consumers go out and travel as they seek out new fashion for these occasions. In the latest Saks Luxury Pulse survey, 77 percent of respondents said they are planning to or have already booked a trip in the near future and, of those, 74 percent said they plan to buy luxury items in preparation for their trips. We also received a few anecdotal responses in the survey, with respondents sharing that they buy more when they travel and that shopping is part of their travel itinerary, reinforcing the idea that shopping and traveling go hand-in-hand.”
Forty-nine percent of those surveyed felt their wardrobe is outdated and needs a refresh, and many continue to embrace “the quiet luxury trend and invest in timeless and comfortable pieces.”
In other findings from the latest Saks Luxury Pulse suggesting less inclination to spend on luxury, 57 percent of respondents with an income of $200,000 or more plan to spend the same or more on luxury in the next three months, down from 68 percent in the January survey.
Also, 57 percent of Millennial respondents plan to spend the same or more on luxury in the next three months, down from 64 percent in the January survey.
Asked what would motivate greater shopping for luxury, 43 percent of those respondents who plan to spend less said they would need to see improvement in the overall economy.
Fifty-four percent of those who plan to spend less said that they would be enticed by a sale or promotional event “reinforcing an ongoing interest in shopping for luxury,” Saks indicated.
Eighty-two percent of respondents plan to prioritize saving the same or more in the next three months compared to the last three months.
Seventy-seven of respondents are planning to or have already booked a trip in the near future. Of those, 74 percent said they plan to buy luxury items in preparation for their trips.
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