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Generation Y spending more on luxury
June 20, 2012 - 10:10am
Canadian members of Generation Y are living a life of luxury. According to an American Express study of transaction data between 2009 and 2011, members of that generation - those born after 1983 - are spending more on luxury good than ever before.
In many ways this trend is surprising. Debt is high and disposable income is relatively low. Youth unemployment in Canada is almost twice the national rate, according to the Toronto Star, and, the wages of young college graduates have dropped 5.4 percent since 2000, according to the Economic Policy Institute. And still, the younger generation is upping the proportion of their income spent on luxury items. Luxury fashion spending in this demographic is up 33 percent, travel by 74 percent and fine dining by 102 percent, according to the study.
In a time of constrained spending, this demand for luxury among members of Generation Y could be good news for retailers.
"It's very encouraging to see that there is this growing trend," Colin Temple, GM of Merchant Services at American Express Canada, told the Star. "For a lot of retailers it's going to be a question of how do they tap in and take advantage of this trend."
One way is to ensure that merchants' have their pos terminals up to speed. Because income is declining among this demographic, many are likely relying on credit cards for their luxury purchasing needs. As the young consumers continue to desire luxury goods and rely more heavily on plastic, merchants that can accept credit cards will likely find they have a long line of young shoppers.
"You can't blame a generation when they've been told over and over again that they deserve it, they should have it," Laurie Campbell, CEO of Credit Canada Debt Solutions, told the news source.