Pamela Danziger is the founder of the market research firm Unity Marketing, in Stevens, Pennsylvania. She has authored three books about consumer psychology and her work has been referenced in the Wall Street Journal, the New York Times, Businessweek, Forbes and CNN, among other publications and media. Pamela Danziger shares her point of view about the luxury market and the American consumer.
Everyone has his or her own definition, which is mostly personal. And the American consumer does not refer to an expert or a specific designer’s name or a brand to decide whether a product is luxurious or not. This trend is characteristic of our mentality and desire for independence. In this sense, American consumers are very different from Asian consumers, who typically refer to an external authority to define luxury.
When they think “luxury”, Americans are looking for superior quality, in terms of artisanship and material. There are status brands, but this dimension is generally not as important here as it is within other cultures. However, in terms of watches, some brands are clearly related to specific expectations. And the tradition of the brand, its history, or even where the product comes from plays a role as well. This explains why the concept of Swiss Made is very important here. Some manufacturers of luxury products tend to forget that where something is made can confer added value to the US consumer. Some pieces are, therefore, not advertised or positioned on the market in the most efficient manner.
I study general trends, and not so much submarkets. Therefore, it is somewhat difficult to answer this question. It is true that the United States is a very diverse country. However, the American public is influenced by the same media, the same internet advertisements, and the same TV series. Therefore, differences are essentially related to distribution rather than products and, typically, distributors of luxury brands stay in big cities.
In terms of consumer behavior, the similarities are much more striking than the differences. Whether the public is French, Italian, British or American, the differences in consumer psychology are minor. The world has become very small, which translates into the unification of the consumers’ wishes and expectations. However, China might be the exception, since it is a developing rather than a developed country. The country is still lacking middle class and reminds me a little of the United States in the 50’s.
It is a difference of degree, not of kind. The product remains global, but it is sold differently from one market to the other, and the way the product is presented varies from one region to another. Typically, in the UK, department stores are still important distributors of luxury watches, whereas in the United States consumers prefer specialty stores or high-end boutiques. But again, these differences are related to presentation and, therefore, they remain relatively superficial.
Everyone would like to know the answer to this question. Sales of luxury products and high-end watches remained steady in 2007. The country is facing a crisis, but the luxury market has not really been hit – for the time being, at least.
Luxury watches weather the storm
In one of its recent surveys, Unity Marketing observes that affluent* consumers are buying fewer luxury products. Their shopping behavior confirms the downward trend in sales of luxury products in evidence on the American market since the middle of last year. Consumer spending in the luxury segment fell 5.3% in the second quarter 2008 compared with the previous quarter and 19.7% compared with the same period last year.
Compared with other luxury products, sales of high-end watches and jewelry have, however, remained stable. Yet as Pamela Danziger makes clear, in times of economic uncertainty the situation can turn around very quickly, and the consumer mindset suddenly change. For example, while consumers are still shopping for jewelry, their demand is becoming increasingly specific, focusing more on colored precious or semi-precious stones and less on diamonds. Furthermore, as the founder of Unity Marketing points out, in a difficult economic climate, luxury specialists must focus on what makes them unique and in particular on winning customers’ loyalty to their brand.
*Respondents have an average annual income of US$ 205,000 and an average age of 45. 36% of respondents were men and 64% were women.