Consumers Return to Small Luxuries

March 11, 2011

stores-luxury-mar-20111.JPGConsumers are starting to return to pre-recession levels of discretionary spending on small personal luxuries, according to a new survey from Stores Magazine and BIGResearch. Data from the survey indicates that dinner at a casual sit-down restaurant, a haircut/coloring, and a daily cup of gourmet coffee were all considered “untouchable” by similar percentages of consumers in December 2010 as they were in December 2008.

Discretionary Spend Rebounds from ’09 Slump

The percentage of consumers considering all three of these discretionary spending items dropped from December 2008 to December 2009 before recovering in December 2010. Most notably, the percentage considering a daily cup of gourmet coffee untouchable declined about 13.5% year-over-year.

The percentage considering a haircut/color untouchable has actually climbed about 5% from 2008 (from 40% to 42.1%), while dinner and gourmet coffee remain at percentages well above 2009 but still slightly less than 2008. Although most economists pinpoint the start of the recession as December 2007, 2009 represented what has been the lowest point of it so far, with moderate recovery occurring in 2010.

Mobile Devices Increasingly Untouchable

stores-mobile-mar-2011.JPGAs far as upgraded mobile devices are concerned, nearly twice as many people in 2010 than in 2008 (22.9% compared to 12.3%) said their cell phones, smartphones, tablets and eReaders were untouchable. Almost two-thirds (64.4%) said basic mobile/cell phone service is untouchable, while a much smaller but significant (31.2%) said mobile services such as text and browsing are untouchable.

The survey also found eight in 10 (81.5%) in 2010 said their internet service is untouchable, consistent with what the survey found in both 2009 and 2008.

Apparel Shopping Rises in Importance

In addition, department and discount store shopping for apparel have also become increasingly important for consumers. In 2010, one-quarter (25.2%) of respondents said department store shopping is untouchable, up close to 20% from the 21.4% who said so in 2009. The survey also found that consumers really aren’t willing to sacrifice a new pair of jeans these days (24% said new jeans are untouchable in 2010, up almost 20% from 20.6% in 2009).

Men Less Concerned with Texting, Fine Dining

When examining gender differences, stark variations exist between the sexes. According to the survey, more men than women in 2010 (33.5% compared to 29.9% respectively) said they cut back on upgraded mobile/cell phone service, which includes text, video and internet. Also not as high on their priority list are fine dining (62% cut back compared to 58.4%) and internet service (12.9% compared to 10%.)

Items men were likely to consider untouchable than women include cable/satellite TV (28.5% of men compared 25.3% of women), clubs or social memberships (11.1% compared to 8.3%) and extra-curricular leagues (20.1% compared to 12.5%.)

Gallup: Spending Up Slightly in Feb.

Overall self-reported daily US consumer spending in stores, restaurants, gas stations, and online averaged $61 per day in February 2010, according to results of a recent Gallup poll. That is up slightly from $58 in January and $59 in February 2010, but still in the 2009-2010 “new normal” spending range and 42% below the $106 average of February 2008.

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