Luxury Consumption Index Reaches Its Lowest Point Ever at End of Third Quarter

STEVENS, Pa.--Nov. 8, 2005--Luxury consumers' confidence plummeted during the third quarter 2005, according to Unity Marketing's exclusive Luxury Consumption Index. In its sharpest drop since the index began in 2004, the Luxury Consumption Index reached 94.4 points. The index measures luxury consumer feelings about their personal financial status and the prospects for the country as a whole.

"The drop in luxury consumer confidence at the end of the third quarter came on the heels of the greatest increase in the Luxury Consumption Index at the end of the second quarter when it topped out at 104.7," said Pam Danziger, president of Unity Marketing and author of Let Them Eat Cake: Marketing Luxury to the Masses -- as well as the Classes. "While luxury consumers were in a funk in terms of the attitudes the index measures, they actually spent more money buying luxuries during the third quarter. Luxury consumers spent an average of $14,534 on luxuries in the third quarter, up 24 percent over average spending of $11,714 during the second quarter."

In a survey of 1,171 luxury consumers (average income $142.4k and age 42.9 years) conducted in association with Unity Marketing's quarterly luxury consumer tracking study, the average amount luxury consumers spent on personal luxuries, such as apparel, fashion accessories, jewelry and watches, wine and spirits, was up 18.9 percent and home luxuries, such as electronics, linens, appliances, art, antiques, furniture and tabletop, rose 12.5 percent. By comparison luxury consumers' spending on experiential luxuries, such as travel, dining, entertainment and home services, declined in the third quarter by 19.5 percent.

"Over the seven quarters of luxury tracking, we have seen an inverse relationship between spending on home and experiential luxuries," Danziger said, "Consistently when home spending goes up, experiential spending goes down, and vice versa. This quarter is no exception with luxury consumers investing significantly more buying luxuries for their home, in particular art and antiques, garden/outdoor, upscale kitchen appliances and luxury linens and bedding. The ferocious weather much of the country faced last quarter likely contributed to a decline in travel."

Commenting on the rise in this quarter's Luxury Consumption Index, Thomas Bodenberg, economic forecaster for Unity Marketing and former Conference Board executive says, "The Luxury Consumption Index posted a significant drop from the previous quarter's pre-Katrina index of 104.7. The bad news from the Gulf coast hurricanes, rising gas prices and continuing strife in Iraq took their toll this quarter in luxury consumer confidence. But on a positive note, over half of the panel members indicated the next twelve months will be better than current conditions."

Unity Marketing publishes its Luxury Tracking Study quarterly with the next due in January 2006. For more information, visit http://www.unitymarketingonline.com/reports2/luxury/luxury3.html or call Pam Danziger at 717-336-1600.

About Pam Danziger and Unity Marketing

Pamela N. Danziger is a nationally recognized expert specializing in consumer insights for luxury marketers, whether they sell luxury to the masses or the 'classes.' She is president of Unity Marketing, a marketing consulting firm she founded in 1992.

Advising such clients as Lenox, Cartier, Herend, Remy Amerique, Spring Air, Sears, The World Gold Council, The Conference Board and American Express, Danziger taps consumer psychology to help clients navigate and master the changing luxury marketplace. Her latest book, Let Them Eat Cake: Marketing Luxury to the Masses--as well as the Classes, (Dearborn Trade Publishing, $27, hardcover) is in book stores now. She is the author of the recent book, Why People Buy Things They Don't Need: Understanding and Predicting Consumer Behavior (Chicago: Dearborn Trade Publishing, 2004).

She has appeared on CNN's In the Money, NBC's Today Show, CNBC, CNN International, CNNfn, CBS News Sunday Morning, Fox News' Your World with Neil Cavuto, ABC News Now, NPR's Marketplace and is frequently called upon by the Wall Street Journal, New York Times, American Demographics, Women's Wear Daily, Forbes, USA Today, Associated Press, Los Angeles Times, Chicago Tribune for commentary and insight.

For media, Unity Marketing can make tables, charts and graphs available about the luxury market upon request.