PALM BEACH, Fla.—New money is taking over America’s wealthy class and they are bringing a new set of values and expectations to the luxury experience.
Nearly 80 percent of households with a discretionary income of at least $125,000 come from the middle class, according to The Annual Survey of Affluence & Wealth in America, produced by American Express Publishing Corp. and the Harrison Group. This new upscale consumer, called the “Logic Shopper” in the survey, carries a “middle-class mentality.” This person uses diligence to save money and is more likely to comparison shop and browse Web sites, often saving as much as 50 percent for their products.
“As we examine the changing composition of the growing class of affluent consumers, it is important for us, as luxury goods marketers, to fully understand how the values of this new American aristocracy influence its members’ purchasing behavior,” Ed Kelly, president and chief executive officer of American Express, said Monday during the company’s Publishing Luxury Summit at The Breakers. “By embracing this mindset, we’ll be better able to serve the needs and desires of this consumer.”
The status and privilege of luxury has largely been replaced with a “wow” factor derived from the fundamental virtues of quality, craftsmanship, and design, said Jim Taylor, vice chairman of the Harrison Group, a strategic marketing and consulting research firm that performed the study. Luxury brands, he said, need to be anchored in these attributes.
“What we’re seeing is a two-tired luxury market,” Taylor told the audience in his presentation of the survey’s findings. “There will always be upscale consumers who enjoy the traditional shopping experience; however, our research shows that the new American aristocracy is stretching their dollars through comparative shopping. This illustrates the larger trend here about this growing class—their values and behavior around their money is a complete 180 degrees from the traditional wealthy stereotype.”
Key findings from the study include:
* These new affluent Americans are climbing to the top of the income pyramid, often netting more than $60,000 per month in disposable income, by virtue of hard work and an entrepreneurial spirit.
* Having accumulated this wealth, many of these individuals find it challenging to maintain their friendships and personal networks.
* They feel middle class at heart and many do not yet feel comfortable with their wealth. The learning process associated with accumulated wealth brings with it a significant degree of anxiety and a recognized need for understanding the “rules” of having wealth.
* Members of this group are generous when it comes to giving back. The more affluent they are, the more they give to charities.
* This group is a culture of technophiles. They are using technology to manage and enhance their lives. Television consumption is being controlled and is on the verge of being curtailed. More than half of these consumers own a DVR and are filtering at least half of their television viewing. Theses households spend 10.1 hours per week on the Internet and ten hours per week watching TV. They spend nearly six hours per week reading newspapers and magazines.