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The Fiscal Cliff and what it means for Luxury Spending: This Week In Luxury

The Fiscal Cliff and what it means for Luxury Spending: This Week In Luxury

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Although the start of 2013 brings promises of fresh starts, the new year may not have started the way most marketers would have wanted.

A lackluster start the holiday shopping season continued with a less-than-encouraging finish. Most stores entered same-store sales results that were much softer than anticipated for December shopping.

This was likely because of the impending Fiscal Cliff decision, a move made by the U.S. Government that could dissuade affluent consumers from spending.

President Barack Obama held a press conference yesterday discussing Congress’ plans for the future. In short, taxes are raised for those with individual incomes of more than $450,000, but the deal also comes with a payroll tax increase between 4.2 – 6.2 percent.

Although the top-tier Americans will not likely be affected by the change, various reports say that aspirational consumers will likely be the ones most deterred from spending on luxuries since they are not necessary purchases. That said, luxury brands should think about whether or not they want to seriously engage their core audiences or still spend time on aspirational consumers at this time.

Chow Tai Fook Jewellery GroupInterestingly enough, China’s sales actually spiked this past holiday season. Sales, headed by those in watches and jewelry, increased overall by 9.5 percent from this time last year.

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Experts believe that this is a sign that the country’s affluent is actually spending at home. In addition, tourism increased in 30 percent in November, according to reports.

China’s ongoing recovery is due to active spending, in addition to a stable job market, better financial market situations and wage growth.

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