July 8, 2011
In a flurry of consumers buying gifts for newlyweds and graduates, the luxury and jewelry industries maintained their momentum in June, according to a report from MasterCard Advisors SpendingPulse.
June showed a tremendous amount of growth that complemented the previous month’s continued progress. Indeed, the luxury sector has seen its ninth consecutive month in year-over-year growth.
“Both luxury and jewelry did well, and some of that may have had to do with June being peak season for weddings and graduation,” said Mike Berry, director of industry research for MasterCard Advisors SpendingPulse, Purchase, NY.
“Additionally, these categories closely follow the mood of the capital markets, so growth in June could be attributed to some of the strength we’ve seen in the financial markets during [the first and second quarter],” he said.
SpendingPulse estimates for total United States retail sales across all payment forms including cash and check. It is not a reflection of MasterCard financial performance.
Ecommerce is up 15 percent over June 2010. This is the sector’s 23rd month in positive territory and its eighth straight month of double-digit year-over-year growth.
Online women’s clothing, for instance, grew by 12.2 percent year-over-year.
However, not all sectors had a good month.
For instance, family clothing slipped 0.2 percent year-over-year and even though jewelry did well overall, online jewelry sales were down by 12.9 percent.
The luxury sector was up 8.2 percent, also overtaking the 4.7 percent growth seen last month.
The SpendingPulse luxury category includes sales at high-end luxury restaurants, food stores, department stores and general apparel categories.
Unfavorable weather and high gas prices appear to have helped ecommerce sales, per the study.
On the other hand, broad retail growth continues to be hampered by high gas prices and high unemployment.
“June retail sales continued to show similar trends to the ones we observed in May,” Mr. Berry said.
“Retail sales growth was driven largely by specialty apparel, luxury and jewelry, among other sectors, with weakness in housing related sectors such as furniture and furnishings and large appliances,” he said.
Weathering the storm
There have been various other reports that state June was one of the best months for retail this year.
“There were no real surprises, except for the almost-record precipitation in many parts of the country which may have had a dampening effect on department store, furniture and home improvement sales,” Mr. Berry said.
Likely attributed to the poor weather and increased amount of precipitation in parts of the country, department store patronage was stagnant in June (see story).
Luxury department stores have seen a dip in patronage
The economy and customer spending has been up and down over the course of this year.
Retail sales seemed to have plummeted during March, but saw some improvement in April and May.
It is hard to predict consumer spending habits, and thus how to market products in a slightly unstable economy.
However, luxury is the one sector where spending has continued to improve.
“Luxury and jewelry are both very sensitive to shifts in the economic environment,” Mr. Berry said.
“Further, even at the high end, customer loyalty has to be earned every day,” he said. “Marketers have access to much richer sets of customer data that can be analyzed to create the most tailored offerings for their customers.”
Rachel Lamb, associate reporter on Luxury Daily, New York