Young and trendy members of Generation Y are outspending older Canadians in the luxury markets for fashion, travel and fine dining, according to a report released Tuesday.
The American Express Business Insights report, based on spending data collected from 2009 to 2011, found that Canada’s luxury segment has been more resilient to economic uncertainty than markets in Europe and the U.S., dominated by demand from younger people.
“Optimism amongst Canadians appears to be on the rise as luxury spending increased,” the credit card company said in a release.
“What has proven most surprising is that in a soft job market, younger Canadians are dominating Canadian luxury spend growth in the core areas of fashion, travel and fine dining.”
Luxury spending among young people has increased in recent years even as they face piles of debt from more schooling than prior generations, weak job prospects and an unemployment rate that is about twice the national average.
The findings also suggest the Canadian luxury segment was less impacted during the height of the economic downturn and recovered more quickly than in the U.S. and Europe, which have yet to return to pre-recessionary spending levels in the market.
Canada’s luxury segment was down about nine per cent in 2009, compared to a 14 per cent decline in the U.S. and 10 per cent drop in Europe.
“What we’ve seen in Canada is that, even during economic uncertainty, consumers are not shying away from luxury spending,” said Colin Temple, vice-president and general manager of merchant services at American Express Canada.
Canadian luxury spending has increased since 2009 and younger Canadians have ramped up spending faster during the survey period than their older counterparts.
“The luxury market is turning its eye to the younger generation,” Temple said.
“This demographic set has become integral to business growth as older generations start to exit the market.”
Gen Y members, which the report identified as those born in 1983 or later, spent 33 per cent more on luxury fashion from 2009 to 2011, increased travel spending by 74 per cent and dropped 102 per cent more on fine dining.
Meanwhile, older generations which once dominated the luxury market showed a slowdown in spending growth over the same period.
Gen X, those born from 1965 to 1982, increased spend on luxury fashion by 33 per cent, travel by 15 per cent, and fine dining by 31 per cent, the report found.
Boomers, Canadians born from 1946 to 1964, increased spending on luxury fashion by 24 per cent, travel by six per cent, and fine dining by 15 per cent, while seniors increased spending on luxury fashion by two per cent, decreased in travel by three per cent and decreased in fine dining by one per cent.Report Typo/Error