Wealthy consumers and businesses are shopping around for value and trading across categories to find it, according to a spending survey from American Express.
Corporations and affluent households are leading the way in spending in categories such luxury, travel and entertainment. However, they have in some cases scaled down in search of value, according to the latest Business Insights Spend Sights report from American Express’ Global Merchant Services unit. The quarterly survey draws upon transaction data from thousands of merchants to gauge consumer spending trends.
“During the recession we saw consumers seek more value oriented stores, whether it be in mass retail, dining and other categories,” said Ed Jay, SVP of American Express Business Insights. “As the recovery happened, we’ve seen this trend continue.”
Jay said that while Baby Boomers and senior citizens have not returned to their pre-recession spending habits, younger consumers have joined the luxury sector. Consumers are still seeking brand-name products, but at discounted prices, and outlets are seeing rising sales, he said.
Corporations led the increases in spending on travel, dining and entertainment. Businesses increased their travel spending more than consumers in nearly all segments, including air travel, lodging, and dining.
Meanwhile, spending in the luxury retail sector was up modestly, thanks to individual wealthy consumers, who spent on home goods and jewelry. For example, overall spending on home furnishings was up 12% among consumers, but down 2% and 7% among small and large businesses, respectively.
There are spots where consumers and businesses are trimming back slightly. Spending on first-class travel was down 1% overall, dropping among consumers and all but large businesses with more than 100 employees. Meanwhile business-class travel saw double-digit upticks in all categories, as large as 71% and 68% for small and large businesses, respectively. Coach travel was up 7% overall.