American Express Business Insights today released its series of Q2 2011 Business Insights Spend Sights reports, which examine spending patterns across several key categories, US cities and demographic groups. Based on actual, aggregated spending data between April 1 and June 30, 2011, the Business Insights Spend Sights reports provide a year-over-year comparison…
American Express Business Insights today released its series of Q2 2011 Business Insights Spend Sights reports, which examine spending patterns across several key categories, US cities and demographic groups. Based on actual, aggregated spending data between April 1 and June 30, 2011, the Business Insights Spend Sights reports provide a year-over-year comparison of consumer and business spending across sectors such as luxury retail, dining and entertainment, and travel.
The latest Business Insights Spend Sights reports highlight the analytical capabilities of American Express Business Insights, which help companies identify trends and changes in spending behavior across a range of industries and consumer groups. By analyzing real spending, businesses can gain perspective into both emerging and sustained trends that impact their industries, and reveal opportunities to reach key customer segments.
Larger, Less Frequent Transactions Show Consumers are Spending Strategically on Big Ticket Items
While economic uncertainty continues to dampen overall consumer confidence, a new pattern of less frequent but measurable splurging has become evident among a range of customer groups in several categories. Consumers are spending more, but doing so in fewer transactions, indicating a preference for buying bigger and better even if that means doing so less often. More specifically:
Luxury Retail Spend Sights:
Amid the recession’s lingering financial lessons, consumers continue to exercise restraint in their luxury apparel and accessories spend, with 50.5% of average consumers and 40.6% of ultra-affluent consumers posting less than three transactions on luxury fashion in Q2. In keeping with the new pattern of occasional splurges, however, consumers spent a surprising 10.1% more per transaction for luxury apparel and accessories in Q2, while making 6.2% fewer purchases, for a net total spending increase of 3.3%. In luxury jewelry spend, this trend was even more pronounced, as a 16.6% jump in average transaction size yielded an overall spending increase of 8.2% for Q2 — despite transaction volume being down 7.1%.
Travel Spend Sights:
Similar to luxury retail, consumers made 3.7% fewer airline purchases in Q2, but spent 5.1% more per transaction, resulting in a 1.2% uptick overall. Interestingly, average transaction size for first-class tickets rose 14.5% in Q2. Consumers avoided the high-end route in lodging, however, with ultra-affluent consumers increasing spend by 51.8% on economy accommodations, resulting in overall spend on lodging holding flat. Despite this shift towards value, the luxury segment didn’t check out completely, as it gained 6.1% in spend during Q2, while upscale and moderate lodging decreased slightly, by 1.6% and 1.5%, respectively.
Value Dining Still Preferred by Most Consumer Groups; Regional Groups Make a Spending Statement in Retail and Lodging
Dining and Entertainment Spend Sights:
Shifting consumer spending patterns in the restaurant sector support a prolonged and growing trend toward value dining. Previously, middle-tier eating establishments had felt the brunt of the "barbell effect," or the negative impact of consumers choosing the two ends of the spectrum — quick service or fine dining. However, in Q2, the value category posted the only gain in spend, at 3.5%. Fine dining spend decreased slightly, by 0.6%, and casual establishments continued to see a decline, with a 3.2% decrease in Q2.
Regional Spend Sights:
Los Angeles’ mature affluent consumers proved to be fashion plates in Q2, increasing spend by 25% on apparel and accessories. Their New York City counterparts increased spend by just 1% in this category, indicating a significant regional shift in fashion consumption. Miami’s young adult affluents were bitten by the travel bug in Q2, increasing spend on lodging by 51%, compared to the same demographic groups hailing from Los Angeles, 4%; New York City, 16%; and San Francisco, 12%.
"Spending patterns since the recession indicate that value is top of mind for consumers, even among the most affluent customers," said Ed Jay, Senior Vice President at American Express Business Insights. "That said, the occasional ‘splurge’ pattern also shows that while consumers try to practice restraint, the prolonged economic uncertainty still cannot impede them from making a special purchase or two from the luxury brands that they love."