Transaction Size Boosts Luxury Jewelry, Fashion, Dept. Store Spend

September 6, 2011

amex-jewelry-q2-11-sep-2011.JPGDespite shrinking transaction volume, growing transaction size increased year-over-year spend in the luxury jewelry, apparel/accessories, and department store sectors during Q2 2011, according to [pdf] the American Express Business Insights Q2 2011 Spend Sights Report. In addition, spending dipped in the furniture/home furnishings sector.

Jewelry Shines for Consumers

Overall spending on luxury jewelry increased by 8.4% in Q2 2011 compared to Q2 2010, the most of any retail category tracked by American Express when compared to the same quarter last year. Average transaction size increased by 16.6% as transaction volume decreased by 7.1%. Average consumers increased spend on jewelry slightly more, 8.4%, than their ultra-affluent counterparts, 7.6%.

June proved to be the popular month of the quarter for spending on jewelry as overall spending increased by 14.5%, while May followed close behind with a 7.9% increase. Spending increased by a more modest 2.9% in April. In addition, June marked the fifth straight month of spending increases in the luxury jewelry category.

Luxury Apparel/Accessories Transaction Size Grows 10%

amex-fashion-q2-11-sep-20111.JPGOverall consumer spending in the luxury apparel/accessories category increased by 3.3% in Q2 2011 compared to the prior year. Given that transaction volume decreased by 6.2%, this uptick is a direct result of a 10.1% spike in average transaction size, indicating that while consumers are cutting back on frequent purchases, they are still splurging on occasional big ticket items.

American Express data shows that 50.5% of average consumers had less than three transactions on apparel & accessories, while 40.6% of ultra-affluent consumers were in this less frequent spending group. In another sign that the “spend more, less frequently” theme resonates across all demographic groups, ultra-affluent and average consumers increased overall category spend by almost the same amount, 3.2% and 3.3%, respectively, as a result of increased transaction size despite decreased transaction volume.

June also proved to be the most popular month to shop in the luxury apparel/accessories sector as overall spending on apparel & accessories increased by 6.7%, followed by spending increases of 2.4% in April and just 1.5% in May.

Luxury Dept. Store Shoppers Favor Big Ticket Items

amex-luxury-q2-11-sep-2011.JPGLuxury department stores experienced similar consumer spending patterns as the apparel & accessories and jewelry categories in that transaction volume decreased in Q2 by 1.1%, and average transaction size rose by 4.2%, resulting in an overall spend increase of 3.1%. Average consumers increased category spend by 3.3% in Q2, slightly more than their ultra-affluent counterparts, who increased spending by 2.6% at luxury department stores.

Despite transaction volume decreasing by 1.1% overall, American Express data indicates 76.1% of ultra-affluent consumers spent in three or more transactions during Q2, while 67.4% of average consumers followed the same trend.

In contrast to monthly sales trends in the luxury jewelry and apparel/accessories sectors, April proved to be the most popular month to shop luxury department stores as spending increased by 4.1%, compared to increases of 2.6% in May and 2.5% in June.

Housing Market Hurts Home Retailers

amex-furnishings-q2-11-sep-2011.JPGAs the housing market struggles, so are retailers catering to home decorators. Consumers continued to shy away from spending in the furniture & home furnishings category in Q2, marking the seventh straight month of decreased spending in this category. Overall spending
decreased by 7% in April, 3.9% in May and 4.9% in June, and spend has decreased in 11 of the past 12 months.

Overall furniture/home furnishings spend decreased by 5.2% in Q2, as average transaction size decreased by 0.9% and transaction volume decreased by 4.4%, compared to Q2 last year. Ultra-affluent consumers decreased spending by 9%, while average consumers decreased spending by a more modest 5.3%.

In addition, large business spending decreased by 6% in Q2, and small business spending followed closely behind, posting a 4.8% decrease.

BIGresearch: More Consumers Plan TV, Jewelry Purchases

The percentages of consumers planning to purchase TVs and jewelry in the next six months are up compared to August 2010, according to the August 2011 BIGresearch Consumer Intentions and Actions survey. Slightly more than 10% of US adults 18 and older intend to buy a TV in the next six months, compared to slightly less than 10% last year. The percentage of consumers intending to buy jewelry/watches has also risen by a percentage point or two, although the total is still less than 5%. Other big ticket items with slight (less than one percentage point) year-over-year increases in planned purchases include cars/trucks, furniture, houses, mobile devices, and digital cameras.

About the Data: American Express Business Insights examined US consumer and business spending patterns at tens of thousands of luxury retail merchants in the US. The data shown are derived from transactions on the American Express payment network projected to reflect the general population in the industry, consumer and business segments shown. The data do not represent American Express’s own performance in the industry segments shown and do not represent the spending behavior of American Express cardmembers overall or in any particular cardmember segment.

Average consumers are all consumers regardless of spend living in the US, while ultra-affluent are the highest spending US consumers.

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