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© 2011 American Express Travel Related Services Company, Inc. All rights reserved.

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2011 Spend Sights Special Report Global Luxury Fashion Spending

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© 2011 American Express Travel Related Services Company, Inc. All rights reserved.

Global Luxury Fashion Spending Highlights

2011 Spend Sights Special Report: Global Luxury Fashion Spending Overview

This Spend Sights Special Report focuses on US and global spending for the luxury apparel & accessories category during the first half of 2011, and draws comparison against the same period of 2010.

Since the recession, a group of “fashion enthusiasts” – those making up the top 5% of spend on apparel & accessories – have led spend growth across all categories of luxury fashion retail globally. In 2011, however, the remaining “average” consumers are making notable spend increases while the enthusiast group pulls back, revealing a compelling catch-up trend.

In fact, average men in the US spent 156% more on premium luxury fashion in 1H 2011 over last year, followed by women at 125%, whereas male fashion enthusiasts spent 11% less, and their

female counterparts had no change for the same period in the same category. Globally, enthusiasts decreased spend on high-end luxury apparel & accessories across key fashion capitals, including in the UK by 14%; in France by 10%; in Japan by 22%; in Australia by 14%; and in Hong Kong by 1%. In contrast, their average consumer counterparts increased luxury fashion spend by 27%; 13%; 26%; 1% and 3%, respectively.

The following pages include additional insights about how enthusiasts and average fashion consumers are changing spend in the US and globally.

The Spend Sights Reports are based on aggregated information that is not specific to individual cardmembers or merchants, and do not contain any personally identifiable information.

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© 2011 American Express Travel Related Services Company, Inc. All rights reserved.

2011 Spend Sights Special Report: Definition of Terms

Fashion Enthusiasts

Consumers making up the top 5% of annual spend in fashion, or apparel & accessories, regardless of age, gender or wealth level

Average Fashion Consumers

All other consumers, regard-less of age, gender or wealth level

Generation Y (Gen Y)

Consumers between the ages of 18 and 29

Generation X (Gen X)

Consumers between the ages of 30 and 45

Boomers

Consumers between the ages of 46 and 66

Seniors

Consumers over 66 years old.

In order to standardize the global data comparisons within this report, all spending scales considered are based on the US Dollar equivalent.

Types of Luxury Merchants

Premium

Types of Online-Only Luxury Merchants

Types of Mid-Tier / Non-Luxury Merchants

Full-price Discount & Flash Sale Websites

Mainstream

Affordable

The Spenders The Merchants

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© 2011 American Express Travel Related Services Company, Inc. All rights reserved.

Both US fashion enthusiasts and average consumers alike are embracing the many opportunities for online shopping, increasing spend across all online fashion categories in the first half of 2011 compared to the same period in 2010. While consumers show that they value a good deal, with fashion enthusiasts and average consumers increasing spend on discount & flash sale fashion by 17% and 48%, respectively, both groups also splurge on full-price luxury items online. Fashion enthusiasts

US Consumers Load Their Virtual Shopping Bags

2011 Spend Sights Special Report: Luxury Fashion Online Spending Trends

Fashion Enthusiasts

Change in US Online Spend: Fashion Enthusiasts & Average Consumers (1H 2011 vs 1H 2010)

4%17% 21%

Average Consumers

9%

48%33%

Discount & Flash Sale Mainstream Full-Price Luxury

increased spending in the full-price online luxury category by 21% and average consumers increased spending by an impressive 33%, while increasing spend on online mainstream fashion by much more modest amounts.

Other Online Fashion Spend Highlights

The older generations showed a strong interest in online discount •shopping, with average boomers increasing spend on discount & flash sale fashion by 25% and average seniors increasing by a dramatic 124% in the first half of 2011, compared to the same period in 2010.

Average male consumers increased spending in online discount •& flash sales by 48%, slightly more than their female counterparts, who increased spend by 46% in the same category. Enthusiasts followed this same trend as males increased spend by 20%, edging out females who posted an 18% increase in online discount & flash sale spending.

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Despite triple-digit growth in years past, average Gen Y consumers in the US are shying away from online discount & flash sale spending in 1H 2011, while online discount shopping becomes popular with the older generations. Gen X increased spending in this category by 60% in the first half of 2011, compared to the same period in 2010. Seniors, however, led spend growth in this category over all others, increasing spend by an astounding 124%, proving that online luxury discount shopping is not just for early-adopting youth.

As average consumers overall have taken an interest in the growing

Seniors Get Online for Luxury Flash Sales

2011 Spend Sights Special Report: Global Luxury Fashion Generation Spending Trends

Average US Consumer Online Discount & Flash Sale Spend(1H 2011 vs 1H 2010)

Gen Y

Gen X

Boomers

Seniors

Average Consumers

60%13%

25%124%

number of luxury discount flash sale sites, spending increases by fashion enthusiasts across all age groups in this same category remained a bit more restrained, with Gen X and boomers increasing spend by 18% each, and Gen Y posting a modest 6% gain.

Other Generation Spend Highlights

Gen Y and Gen X fashion enthusiasts in the US decreased in-store •spending on premium luxury fashion in 2011, while the younger average consumer groups proved willing to splurge. Average Gen Y consumers increased spending on premium luxury fashion by 100% in the first half of 2011, when compared to the same period in 2010, and average Gen X consumers increased spending by 142%.

Following the trend of the younger enthusiast generations in the •US, Gen Y and Gen X fashion enthusiasts in Japan decreased spending on luxury fashion by 13% and 23%, respectively. Australia followed suit, as Gen Y decreased spending on luxury fashion by 12%, and Gen X decreased spending by 15% in the same category.

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In general, average US female consumers increased in-store spending on fashion much more than their enthusiast counterparts in the first half of 2011. In fact, the former group increased spending on premium fashion by 125% over last year, while the latter showed no increase in spend for this period. Men, too, exhibited a similar pattern; average US males increased spend by 156% on premium luxury fashion, while enthusiasts dropped spend by 11% in 1H 2011.

Average Men and Women Consumers Battle for Fashion Crown

2011 Spend Sights Special Report: Global Luxury Fashion Gender Spending Trends

In France and Hong Kong, roughly half of fashion enthusiasts are •male (56% and 44%, respectively). In the UK and Japan, 60% of enthusiasts are male. Australia has the smallest proportion of male fashion enthusiasts, with 36%.

US male fashion enthusiasts are shying away from luxury fashion •spending in 2011, and this trend holds true across the globe as well. This group decreased spending by 22% in Australia and 24% in Japan. Male fashion enthusiasts in the UK and France posted the most dramatic declines in the luxury fashion category, down by 31% and 57%, respectively.

Average Consumers

Luxury Fashion Spend by Average US Consumers & US Enthusiasts(1H 2011 vs 1H 2010)

Men Women

156%Fashion Enthusiasts

0%

125%

-11%

While average US male and female consumers posted triple-digit spend growth on in-store premium fashion, increases were much more moderate online, indicating this group might prefer shopping in stores. Average US male consumers increased spending in the online premium full-price category by 41%, while average females followed close behind with a 32% increase in spend in the same category.

Other Gender Spend Highlights

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Following strong spending increases in 2010, fashion enthusiasts across Australia, Hong Kong and Japan decreased spending on luxury fashion in the first half of 2011. Fashion enthusiasts in Japan decreased spend on luxury fashion by 22%, but Japanese consumers overall did not refrain from spending on high-end fashion altogether, as average consumers in the country increased spending by a significant 26% in this same category.

Average Consumers Become Fashionistas in Asia Pacific

2011 Spend Sights Special Report: Asia Pacific Luxury Fashion Spending Trends

Fashion enthusiasts also cut back on mainstream fashion •spending in the first half of 2011, decreasing spend by 20% in both Australia and Japan, and by 2% in Hong Kong. Average consumers showed a healthy appetite for mainstream fashion, however, increasing spend by 1% in Australia, 5% in Japan and an impressive 18% in Hong Kong.

In Japan, approximately 60% of fashion enthusiasts are male, •a trend echoed in Hong Kong, where roughly half of fashion enthusiasts are male. Australia, however, has the lowest concentration of masculine fashion enthusiasts, totaling 36% of this consumer group.

Australia

Premium Luxury Fashion Spend by International Enthusiasts & Average Consumers (1H 2011 vs 1H 2010)

Fashion Enthusiasts Average Consumers

1%

Hong Kong

3%

Japan26%

-14% -22%

-1%

Although Japan showed the most dramatic spread between fashion enthusiasts and average consumers’ spend growth, this same trend was evident in the luxury category across Australia and Hong Kong as well.

Other Asia Pacific Spending Highlights

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Europe’s consumers are renowned worldwide for their love of fashion, and in 2010, fashion enthusiasts in both the UK and France continued to increase spend on luxury fashion significantly, while average consumers shied away from the high ticket category in favor of mainstream fashion.

In 2011, however, fashion enthusiasts in these two countries held back, decreasing spend on luxury fashion by 14% in the UK and 10%

Europe’s Average Consumers Play Catch-up to Enthusiasts

Males in the UK seem a bit more keen on fashion than those in •France, comprising 60% of the fashion enthusiast group. In France, the masculine fashion enthusiast group makes up 56% of total shoppers.

In both the UK and France, mainstream fashion spending growth •followed the luxury spending trend, with average consumers overshadowing the fashion enthusiast groups, increasing spend by 2% in the UK and 7% in France. Fashion enthusiasts in the UK and France decreased spending on mainstream fashion by 17% and 9%, respectively.

2011 Spend Sights Special Report: UK and France Luxury Fashion Spending Trends

UK Luxury

Premium Luxury Fashion Spend by Enthusiasts & Average Consumers(1H 2011 vs 1H 2010)

France Luxury

13%

27%

Fashion Enthusiasts Average Consumers

-14% -10%

in France in the first half of 2011, compared to the same period in 2010. Average consumers showed a new passion for high fashion, outpacing their enthusiast counterparts with spend increases of 27% in the UK and 13% in France.

Other UK and France Spend Highlights

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American Express Business Insights produces in-depth quarterly reports for the Airline, Car Rental, Cruise, Lodging, Restaurant, Entertainment and various Luxury Retail categories, as well as sector-specific geographic reports. These full-length Industry IQ reports are available for purchase at www.americanexpress.com/businessinsights.

About the 2011 Spend Sights Special Report from American Express Business Insights

The data shown in the 2011 Spend Sights Special Report: Global Luxury Fashion Spending report are derived from transactions on the American Express payment network projected to reflect the general population in the consumer segments shown. The data do not represent American Express’s own performance in the industry segments shown and do not represent the spending behavior of American Express Cardmembers overall or in any particular cardmember segment.