Jim Taylor, vice chairman of the Harrison Group, presented results of the annual "Survey of Affluence and Wealth in America, 2010," produced by his company and American Express Publishing, to 200 luxury executives during the American Express Publishing Luxury Summit in Las Vegas.
Not all luxury consumers are faring as well as wealthy families (minimum annual discretionary income of $500,000):
- 94 percent of affluent households ($125,000-$249,000 annual discretionary income) believe we’re still in a recession.
- 60 percent of those believe the recession will last at least another year.
- 70 percent of survey participants are still concerned about financial security.
- 26 percent still believe they could lose their job.
- 20 percent believe their company won’t survive or is in jeopardy.
- 38 percent worry they could run out of money.
Other findings include:
- Wealthy families (minimum annual discretionary income of $500,000) are not shopping because it makes them happy but because they’re happy. Shopping is an expression of this happiness. "This is a revolutionary reversal," said Cara David, a senior vice president at American Express Publishing, who presented the findings with Taylor.
- Only 27 percent of wealthy baby boomers say they’ve achieved their dreams. Nearly 40 percent say their careers have stalled.
- Market categories such as travel, fashion, and finance have become highly segmented. Affluent and wealthy Americans spend most of their disposable income in one category, David said.
- Taylor said luxury sales fell by 10 percent in 2009 because of the following:
- About $1.1 million affluent households were lost. About half (500,000) have returned. "It’s important to realize people didn’t stop buying luxuries because they didn’t like luxuries," Taylor said. "It’s because a million people lost their jobs."
- About 12 to 18 percent of households surveyed became "extreme savers."
Joining the affluent in job loss and insecurity are upper middle class households (discretionary income of $100,000-$125,000).
Based on the current state of the luxury market, Taylor noted the following:
- The greater the required dimensionality of product representation, the greater the need for simplicity of message
- Using varying media in a campaign requires more consistent presentation across media.
- Wider ranges of price/value/choice require more specific detail.
- As the cost of acquiring a new customer increases, so does the potential value of retaining him.
- Making more money per product increases the marginal value of scarcity.
- Higher cost of risk increases marginal value of brand.
- As the value of loyalty as a component of profitability increases, so does demand for proprietary language.