From Flash Sales to Full Price

The recession fueled an interest in buying premium luxury brands at full price, new research from American Express Business Insights shows.

Image: Louis Vuitton

The allure of flash sales that offer premium fashion brands at deep discounts has had a surprising impact on consumers. Rather than prompting shoppers to buy luxury only on the cheap, the sales have driven a rising number of consumers, particularly young ones, to pay full price online, American Express Business Insights data show.

The research, released today at a press event held at Mercedes Benz Fashion Week in New York, found that while flash sales drove average consumers to luxury brands during the recession, those same consumers, especially the younger ones, are now seeking out premium luxury items online at full price.

“The recession almost acted as a catalyst for online spending,” said Edmond Jay, senior vice president of Amex Business Insights. “During the recession, people felt bad about [overt] luxury spending, but that didn’t mean they felt bad about having boxes show up at their doors.”

The figures, based on aggregated spending data of 90 million Amex credit-card users from 2009 through 2011, showed that while 2010 saw a 92 percent jump in spending on flash sales sites, the gains dropped to 21 percent in 2011. Meanwhile, full-priced online luxury sites saw spending rise 20 percent in 2010 and then 25 percent in 2011.

“Full-price online luxury saw the biggest growth in 2011, and I think we’re going to see that continue in 2012,” Jay said, adding that the full-price consumers are buying online via the likes of Neiman Marcus and Nordstrom and other luxury retailers.

Among the fastest growing luxury-brand consumers are members of Generation Y, particularly men who were exposed to luxury during the recession, and Generation X, Jay said. The baby boomers—still wounded by declines in net worth during the recession—have curbed their spending, and seniors, flocking to online shopping, are now the fastest-growing consumer segment seeking bargains via flash-sales sites, the survey found.

Another trend Jay noted during the session was something he called “barbelling,” or a tendency for younger consumers to either spend big or go discount.

“The mind-set of the consumer is either I want something really special or I want something of value,” Jay said. “What that means is that it’s hard to be in the mass market and grow.”