Each morning's news cycle brings more bad tidings from the world of luxury, Bloomberg Gadfly recently reported the 'lipstick effect' is enforce, whereby consumers forgo high ticket luxury expenditures (eg handbags, jewelry, apparel) for little luxury indulgences like lipstick or wine.

Case in point: LVMH's 1H16 revenue growth was driven by its perfumes & cosmetics (+8.2%) and wine & spirits (6.5%) businesses, while pricier leather and fashion goods dropped nearly 1% over previous year.

Other luxe brands reported weak sales this year include Tiffany, Kate Spade, Ralph Lauren and Michael Kors, which Fast Company investigated in a piece entitled "The Decline of Premium American Fashion Brands." Milton Pedraza, The Luxury Institute, claims the sad state of the luxury market is due to a reported 20% drop in luxury retail traffic, both from American affluents and tourists.

Fewer shoppers, in turn, will bring on more store closing. For example, Hugo Boss just announced it will shutter 20 of its 443 stores worldwide. So far this year, Zegna, Gucci, Givenchy, Loro Piana and Bottega Veneta are among the brands in the luxury sector which have cut the most stores. And Prada and Richemont are said to be studying their global retail footprint. More luxe brands will likely follow suit.

To assess the health of the American affluent shopper, Unity Marketing just completed its Affluent Consumer Tracking Study (ACTS) survey, measuring demand and overall luxury spending across the two key segments of the U.S. luxury market - HENRYs (high-earners-not-rich-yet, $100k-$249.9k) and Ultra-affluents ($250k+). The results: Mixed.

Results latest Affluent Consumer Tracking Study

Affluents spent nearly 15% more on luxury in the three-month study period, as compared with 2015, yet far fewer feel they are better off financially now (25%) than did in the previous study (31%).

"The Luxury Consumption Index (LCI) also dropped a few points this quarter, which signals a cautious attitude on the part of affluent consumers toward future luxury spending," notes Pam Danziger, president of Unity Marketing who explains the LCI is a forward-looking indicator of affluent consumer confidence.

Most troubling is the outlook for future luxury spending, with more affluents expecting to spend less on luxury over the next twelve months than those who expect to spend more.

"This outlook on future luxury spending signals caution for luxury brands that are banking on more generous consumer spending to propel growth for the end of 2016 and into 2017," Danziger explains.

When will affluent consumers' cautious mindset change?

The biggest drag on affluent consumer confidence and their propensity to spend is their view of the country's financial state. Some 36% of the affluents surveyed feel the economy is worse off now, as compared to the previous three month period. Not since 2011 has such a large percentage of affluents seen the economy overall in worse shape.

Clearly the affluents' current view of the nation's economy is challenged at best. Whether or not the election will turn the tide is also a big question, as Unity Marketing's research into the effect of presidential elections on retail sales finds that retail sales are actually depressed the year after an election, not the year of the election.

"So if the past is a good predictor of the future, we can expect a challenging retail environment in 2017 as well," Danziger explains.

"The current climate for luxury calls on brands to invest more in understanding their customers, to learn more about what their brand of luxury means to them, and then discover how best to communicate their luxury value proposition to consumers who, frankly, are skeptical about paying so much more for luxury goods which may not be all that better than less-expensive brands," Danziger concludes.

Order your copy of the executive summary report today to get the latest insights from Unity Marketing's Affluent Consumer Tracking Study and ideas about how to grow market share in today's more careful luxury consumer market.

About Pam Danziger and Unity Marketing
Speaker, author, and market researcher Pamela N. Danziger is internationally recognized for her expertise on the world's most influential consumers: the American Affluent. Her latest book, Shops that POP! 7 Steps to Extraordinary Retail Success, reveals the secrets to crafting a retail shopping experience that's irresistible to high-value shoppers.

As founder of Unity Marketing in 1992, Pam leads with research to provide brands with actionable insights into the minds of their most profitable customers.

Pam received the Global Luxury Award for top luxury industry achievers from Harper's Bazaar. She was named to Luxury Daily's Luxury Women to Watch in 2013. She is a member of Jim Blasingame: The Small Business Advocate's Brain Trust and a contributing columnist to The Robin Report.

She is the author of five books including her recent mini-book, What Do HENRYs Want?, which explores the changing face of America's consumer marketplace. Pam is frequently called on to share new insights with audiences and business leaders all over the world.