American Express Business Insights today released its series of Q2 2011 Business Insights Spend Sights reports, which reveal that while economic uncertainty continues to dampen overall consumer confidence, a new pattern of less frequent but measurable splurging has become evident among customers.
Consumers are spending more, but doing so in fewer transactions, indicating a preference for buying bigger and better even if that means doing so less often.
By analyzing real spending, restaurateurs can gain perspective into both emerging and sustained trends that impact their concepts, and reveal opportunities to reach key customer segments. Specific findings include:
Dining & Entertainment Spend Sights: Shifting consumer spending patterns in the restaurant sector support a prolonged and growing trend toward value dining.
Previously, middle-tier eating establishments had felt the brunt of the “barbell effect,” or the negative impact of consumers choosing the two ends of the spectrum, either quick service or fine dining. However, in Q2, the value category posted the only gain in spend, at 3.5%.
Fine-dining spend decreased slightly, by 0.6%, and casual establishments continued to see a decline, with a 3.2% decrease in Q2.
Travel Spend Sights: Consumers made 3.7% fewer airline purchases in Q2, but spent 5.1% more per transaction, resulting in a 1.2% uptick overall.
Average transaction size for first-class tickets rose 14.5% in Q2. Consumers avoided the high-end route in lodging, however, with ultra-affluent consumers increasing spend by 51.8% on economy accommodations, resulting in overall spend on lodging holding flat.
Despite this shift toward value, the luxury segment didn’t check out completely, as it gained 6.1% in spend during Q2, while upscale and moderate lodging decreased slightly, by 1.6% and 1.5%, respectively.
Regional Spend Sights: Los Angeles’ mature, affluent consumers proved to be fashion plates in Q2, increasing spend by 25% on apparel and accessories. Their New York City counterparts increased spend by just 1% in this category, indicating a significant regional shift in fashion consumption. Miami’s young adult affluents were bitten by the travel bug in Q2, increasing spend on lodging by 51%, compared to the same demographic groups hailing from Los Angeles, 4%; New York City, 16%; and San Francisco, 12%.
“Spending patterns since the recession indicate that value is top of mind for consumers, even among the most affluent customers,” says Ed Jay, senior vice president at American Express Business Insights.
“That said, the occasional ‘splurge’ pattern also shows that while consumers try to practice restraint, the prolonged economic uncertainty still cannot impede them from making a special purchase or two from the luxury brands that they love.”