Luxury spending in the United States is expected to rise 6.6 percent in the next year, driven in large part by double-digit spending increases among millennials and one-percenters.
According to the 2015 Survey of Affluence and Wealth, produced by Time Inc. and YouGov, discretionary spending among the top 10 percent in the United States is expected to surpass $406 billion. Spending will be highest in categories such as fashion, travel, dining, entertainment and automotive.
Spending on apparel, accessories and handbags is expected to rise 6.9 percent to $37.4 billion, representing 9 percent of discretionary spending. However, spending on jewelry, watches and home decor will drop 5.8 percent.
Millennial spending will increase 11.4 percent on items across the board, including travel, dining out, fashion, apparel, accessories and items for the home. Spending among the one-percenters is estimated to rise 10 percent across all categories, except for fine jewelry and watches.
"The propensity and proven spending for luxury goods and services among millennials confirms their importance in a category that has often been unattainable for this segment," said Caryn Klein, VP of research and insights at Time Inc. "Millennials are a critical group to understand because of the differences in their values, communication and how they shop for luxury. At the same time, we continue to see the significance of the boomers, estimated at 4.1 percent. Boomers carry strength in assets, which give them the distinction of representing the age group with the capacity to purchase the greatest amount of luxury goods, services and travel."
Also noted in the study is that among the top 5 percent, there is a decline in respondents' willingness to identify their favorite brands among retailers. According to Dr. Jim Taylor, senior advisor of the study, consumers are becoming less loyal to brands.
"Single brand loyalists are nearing extinction as people use their digital resources to bring a pocketful of brands to the same marketplace," Taylor said. That is not to say that the brand is obsolete. Consumers are simply more likely to make an informed decision based on comparison shopping via digital means rather than rigid loyalty to a specific brand.
Several luxury retail brands have announced plans to expand their U.S. footprint in 2015. For example, Diane von Furstenberg is looking to expand to 200 stores in the United States and Michael Kors (NYSE:KORS) is on track to open 45 new stores in in 2015.
-See this YouGov press release
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