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Gen Y mixes luxury and cheap
With a taste for luxury developed through flash-sale websites, Gen Y shoppers are increasing their spending at full-price online luxury retailers more than any other age bracket, based on a brand new report.
Gen Y spent 31% more in 2011 compared to year before, followed by Gen X buyers, who paid out 23% more, according to American Express Business Insights data released during Mercedes-Benz Fashion Week. Gen Y is comprised of individuals age 18 to 29.
PHOTOS: PHOTOS: VIDEO: The report analyzed spending data culled from 90 million of the company's cardmembers from 2009 to 2011, said Edmond Jay,[link widoczny dla zalogowanych], senior vice president at American Express Business Insights.
Spending growth on luxury flash-sales sites is now covered with seniors, who clicked their way to 28% spending growth in 2011.
"The recession acted almost as a catalyst for on the internet and online luxury," Jay said.
During this period, flash sales skyrocketed, but sales growth has since slowed as consumers regained a few of their former optimism.
"Now that consumer confidence is certainly going up,[link widoczny dla zalogowanych], and unemployment is certainly going down just a little, I mean, it's still very uncertain, but I think people are starting to go back to that full price,[link widoczny dla zalogowanych]," said John Jannuzzi, a method editor at Lucky Magazine.
"It is OK to buy something when it is this is not on sale or it's not on the flash sale. With that said, I still love a good flash sale."
Jay said men,[link widoczny dla zalogowanych], especially those in Gen Y,[link widoczny dla zalogowanych], are among the fastest growing segments in luxury and they spend a higher proportion of their money on luxury than women.
The current recession has also altered the way that consumers approach spending decisions, said Roseanne Morrison,[link widoczny dla zalogowanych], fashion director in the Doneger Group.
"They used to just purchase a lot - we named it possession obsession," Morrison said. "Now it is called surgical shopping - she shops online. She adopts the shop and is careful."
Calling consumers cautiously optimistic, Maren Hartman,[link widoczny dla zalogowanych], trend analyst at WGSN and director of content operations, echoed this trend. Equipped with fashion knowledge gained from reading blogs and following celebrities, more consumers are seeking out luxury items.
"Even if a person is really a customer who maybe can't afford the handbag, the shoe, she waits until she can afford it,[link widoczny dla zalogowanych]," Morrison said.
While planning these splurge purchases,[link widoczny dla zalogowanych], consumers gravitate to timeless pieces which will fill gaps in their wardrobes.
"It's no longer 'I'll just enter a store and get whatever' - there's a purpose," Hartman said. "Consumers tend to be more mindful of what they're buying into. Therefore, retailers are catering to that require and taking advantage of it."
Many designers also have changed their businesses to reply to a more strategic shopper.
One such designer is Lela Rose.
"I wouldn't say we've shifted the gathering, but we've offered more breadth within the collection of giving more simple silhouettes in only quite interesting fabrics," the designer said.
Consumers often pair splurge items with lower-end items - a tactic that Jenna Bush Hager, former First Daughter and a childhood friend of Rose's, said she employs.
Hager sat front row at Lela Rose's Fall 2012 show at Lincoln Center last Sunday.
"I think what makes a modern women is you're constantly wearing different labels - you realize, this can be a really inexpensive jacket with a nicer dress," Hager said of her outfit.
Although older generations are still brand loyal, young consumers tend to buy from a larger assortment of brands,[link widoczny dla zalogowanych], Jay said.
This younger generation also has a tendency to emphasize value more within their spending decisions - a mindset that produces a spending barbell effect.
When choosing along a spectrum of price, this group tends to spend either hardly any or splurge on clothing or dining. This trend often squeezes middle-market retailers.
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