Consumers Treating Themselves to Little Luxuries
When the recession hit in 2008, it forced many consumers to cut back on luxuries like gourmet coffee, lingerie and services like indoor tanning. That may be changing, reports USA Today, as Americans are beginning to increase their spending on affordable luxuries:
Research firm ShopperTrak bumped up its holiday sales growth forecast to 3.2% from 2.9% after a solid start in November. Store owners were encouraged to see more holiday shoppers buying something extra for themselves over Thanksgiving weekend, a practice that had evaporated in the recession.
“People didn’t feel good about having little indulgences,” says investment analyst David Palmer, speaking of recent years. In the article, he suggests that people have become tired of cutting back on their spending.
While this is great news, the article warns that this rise in consumer spending is not enough to create a widespread recovery:
These small splurges are unlikely to spark a broader recovery. Starbucks or Whole Foods binges set shoppers back just a few dollars. You’d have to see sales of bigger-ticket items like automobiles, designer handbags and extravagant vacations rebounding — and see people racking up credit-card debt again — to say Americans’ frugality has ended, says Kenneth Goldstein, an economist at the Conference Board.
“Even if we’re not on the verge of a full economic recovery, these increases in luxury spending mean that some customers are ready to splurge and spoil themselves with little things that make them feel good; things like a tanning session,” says Chris Cummings, Smart Tan’s Marketing and Communications Director.
