December 12, 2012
Affluent Consumers: Have Confidence, Will Shop
Money may not buy happiness, but it sure can buy a lot of stuff.
According to Unity Marketing’s latest Luxury Tracking Survey, affluent consumers’ confidence is on the rise, growing at its fastest pace ever. Likewise, spending on luxury goods has increased more than 25 percent over the previous quarter.
While affluent consumers are out buying from a wide variety of luxury categories, they are also doing quite a bit of economic mix and matching. It’s not unusual these days for a consumer to match a shirt from Target or Kohl’s with jeans purchased from a True Religion or 7 For All Mankind.
"They’re shopping at Kohl’s and designer outlet stores," Pam Danzinger of Unity Marketing told the Minneapolis Star Tribune. "They’re just as happy to look for a diamond at Costco as at Tiffany."
- Affluent consumer confidence is on the rise, signaling new willingness to indulge in luxury purchases – Unity Marketing
- Prospects Bright for Strong Holiday Sales among the Nation’s Luxury Consumers—Find Out Which Brands Will Benefit Most! – Unity Marketing
- Shopping in the ever-expanding lap of luxury – Minneapolis Star Tribune
- Affluency: New Definitions of Luxury – Advertising Age
- The 47 Percent May Struggle but the Top 20 Percent Are Feeling Flush – The New York Times
BrainTrust
Recent Discussions
Discussion Questions
How are luxury consumers different today than in the past? What does that mean for retailers looking to attract their business?
Poll
Given the discussion on taxes (especially for those evil “millionaires”) and the future of an economy with $16T going to $20T in debt, I’d say affluent customers today are one of two things. Either they’re not as bright as they used to be or they are having a dance on the deck of the Titanic.
I would not recommend any retailer going long on this particular customer segment. It’ll dry up overnight.
The knowledge economy and lower taxes have shrunk the middle-class and concentrated wealth at the very top. According to a documentation aired last week on TVO, the top 300 richest Americans now have the same combined assets as the bottom half of the US population (over 150 million people!). Unfortunately people get hung up on politics and principles when the real concern is economics. Henry Ford would have told you that he wanted to make sure his workers could afford an automobile!
So yes affluent customers will shop at premium stores, unfortunately, regardless of how much they consume, they cannot possibly make up for the loss in purchasing power of the middle class. I think the bigger story is here is why the middle class ain’t shopping….
Luxury shoppers have changed in the past few years. They have entered the world of channel blurring and look for bargains as well as purchasing their luxury items in many different retail outlets as well as online.
Many of them have been introduced to store brands during the recession and now see the quality and value in many of them
In addition to POS data retailers should be mining their shopper card and credit card data to see where the opportunities lie with the luxury shopper. This is an opportunity for new purchases as well as bigger baskets on a regular basis.
Consumers are shopping cross-channel and cross-store in an ever-increasing manner. Catalog, brick & mortar, internet, TV-shopping channels, shopping overseas, etc. are all in the mix, for luxury goods shoppers as well as the overall population.
Finding a “deal” is fashionable for all.
Those patterns present retailers with opportunities and challenges in the merchandising, marketing, and operations arena (the more things change, the more they remain the same). Luxury consumers of past generations traveled to the same “department store” as previous generations, or had a need to maintain their “image” for purchases.
Today, they are in the mix of chasing products and services on different paths.
Luxury consumers may have more confidence and are buying more, but they are not the same luxury consumers as in the past. They are looking at price tags and are more price sensitive. That doesn’t mean they won’t spend more for value. They will. But you’ll also notice some very nice cars parked outside of Walmart.
In spite of harsh class-warfare rhetoric, the reality is that the “government-industrial complex” has thrived over the past few years. Major corporations are doing very nicely, profit and stock-price-wise, with large cash reserves growing in safe places, awaiting more confidence in just what the “new” rules are going to bring.
The net result of this burgeoning prosperity is accelerating income disparity, with those connected to the government-industrial complex thriving, and MASSES of the middle class moved downward, and many joining the lower classes, dependent on wealth transfer through government administration, rather than employment by the industrial side of the complex. (The government side is exploding with prosperity—at least around Washington DC.)
No wonder the “Top 20 Percent Are Feeling Flush – The New York Times.” It’s not the big businesses that are being crushed, and their employees, if they can hang onto their employment, will continue to have the wealth to shop for luxury.
If you add to this situation the pending torrent of oil wealth that will almost certainly flood the US in the next few years, you may get to see what socializing the most productive engine in the world, with “unlimited” free money (black gold,) will do. Will this be “heaven?” Or the other place? It remains to be seen. 😉
Well when I bought my last Jag I didn’t haggle! On the new one I shopped about 25 sources and saved about $8,000. That’s $8,000 more I have to waste on my children and grandchildren. I feel better about wasting money on them than wasting it on myself. I am firmly convinced that government is going to find a way to steal every dollar I have so I am spending, hiding or giving away all.
Affluent consumers and luxury customers are not the same. About half of luxury products are purchased by aspirational customers. Spending by the top 1% of the demographic pyramid didn’t slow much. It was the balance of the affluent individuals whose values have been recalibrated.
In the US about 80% of the affluent come from a middle-class or less upbringing. The vast majority still remember what their parents taught them about paying too much for anything, as well as conspicuous consumption.
There are few commonalities amongst the affluent. One of them is they all save money.
It is interesting to see the different perceptions of the luxury consumer represented by the various comments about this article. Chris Ramey comes closest to what is probably the most accurate picture of the true luxury consumer, which our research shows is the wealthiest 1% based on net worth. The so called “mass affluent” or “aspirational affluent” were pretty much taken out of the market by the new economy and have been unable to come back in any significant numbers as purchasers of true luxury products and brands.
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Given the discussion on taxes (especially for those evil “millionaires”) and the future of an economy with $16T going to $20T in debt, I’d say affluent customers today are one of two things. Either they’re not as bright as they used to be or they are having a dance on the deck of the Titanic.
I would not recommend any retailer going long on this particular customer segment. It’ll dry up overnight.
The knowledge economy and lower taxes have shrunk the middle-class and concentrated wealth at the very top. According to a documentation aired last week on TVO, the top 300 richest Americans now have the same combined assets as the bottom half of the US population (over 150 million people!). Unfortunately people get hung up on politics and principles when the real concern is economics. Henry Ford would have told you that he wanted to make sure his workers could afford an automobile!
So yes affluent customers will shop at premium stores, unfortunately, regardless of how much they consume, they cannot possibly make up for the loss in purchasing power of the middle class. I think the bigger story is here is why the middle class ain’t shopping….
Luxury shoppers have changed in the past few years. They have entered the world of channel blurring and look for bargains as well as purchasing their luxury items in many different retail outlets as well as online.
Many of them have been introduced to store brands during the recession and now see the quality and value in many of them
In addition to POS data retailers should be mining their shopper card and credit card data to see where the opportunities lie with the luxury shopper. This is an opportunity for new purchases as well as bigger baskets on a regular basis.
Consumers are shopping cross-channel and cross-store in an ever-increasing manner. Catalog, brick & mortar, internet, TV-shopping channels, shopping overseas, etc. are all in the mix, for luxury goods shoppers as well as the overall population.
Finding a “deal” is fashionable for all.
Those patterns present retailers with opportunities and challenges in the merchandising, marketing, and operations arena (the more things change, the more they remain the same). Luxury consumers of past generations traveled to the same “department store” as previous generations, or had a need to maintain their “image” for purchases.
Today, they are in the mix of chasing products and services on different paths.
Luxury consumers may have more confidence and are buying more, but they are not the same luxury consumers as in the past. They are looking at price tags and are more price sensitive. That doesn’t mean they won’t spend more for value. They will. But you’ll also notice some very nice cars parked outside of Walmart.
In spite of harsh class-warfare rhetoric, the reality is that the “government-industrial complex” has thrived over the past few years. Major corporations are doing very nicely, profit and stock-price-wise, with large cash reserves growing in safe places, awaiting more confidence in just what the “new” rules are going to bring.
The net result of this burgeoning prosperity is accelerating income disparity, with those connected to the government-industrial complex thriving, and MASSES of the middle class moved downward, and many joining the lower classes, dependent on wealth transfer through government administration, rather than employment by the industrial side of the complex. (The government side is exploding with prosperity—at least around Washington DC.)
No wonder the “Top 20 Percent Are Feeling Flush – The New York Times.” It’s not the big businesses that are being crushed, and their employees, if they can hang onto their employment, will continue to have the wealth to shop for luxury.
If you add to this situation the pending torrent of oil wealth that will almost certainly flood the US in the next few years, you may get to see what socializing the most productive engine in the world, with “unlimited” free money (black gold,) will do. Will this be “heaven?” Or the other place? It remains to be seen. 😉
Well when I bought my last Jag I didn’t haggle! On the new one I shopped about 25 sources and saved about $8,000. That’s $8,000 more I have to waste on my children and grandchildren. I feel better about wasting money on them than wasting it on myself. I am firmly convinced that government is going to find a way to steal every dollar I have so I am spending, hiding or giving away all.
Affluent consumers and luxury customers are not the same. About half of luxury products are purchased by aspirational customers. Spending by the top 1% of the demographic pyramid didn’t slow much. It was the balance of the affluent individuals whose values have been recalibrated.
In the US about 80% of the affluent come from a middle-class or less upbringing. The vast majority still remember what their parents taught them about paying too much for anything, as well as conspicuous consumption.
There are few commonalities amongst the affluent. One of them is they all save money.
It is interesting to see the different perceptions of the luxury consumer represented by the various comments about this article. Chris Ramey comes closest to what is probably the most accurate picture of the true luxury consumer, which our research shows is the wealthiest 1% based on net worth. The so called “mass affluent” or “aspirational affluent” were pretty much taken out of the market by the new economy and have been unable to come back in any significant numbers as purchasers of true luxury products and brands.