Susan Kime, luxury columnist for JustLuxe.com, articulates the key insights from the 2012 American Express Publishing Luxury Summit
The 2012 American Express Publishing Luxury Summit was just completed, and one of its main concentrations was, as it has always been in the past, relevant research about wealth and affluence – based on surveys, interviews and focus groups conducted by the Harrison Group, led by Dr. Jim Taylor, Vice Chairman.
Their sampling plan includes monthly interviews. The data collected in QI 2012 involved 1,268 interviews of affluent and wealthy consumers, including 432 Upper Middle Class (discretionary income between $100,000-$150,000) 446 Core Affluent ($150,000-$450,000 discretionary income) and the One Percenters ($450,000 and above.)
Unlike survey results cited by other groups, this survey data paints a darker picture, due to two new, problematic reactive trends, and two new proactive trends, more solution-based, relating to the issues raised by the first two.
“ 65% of those interviewed said they are saving now because they are worried about the future ”
According to Dr. Taylor, “One of the observations that gives us pause is there’s been no comeback in optimism about one’s own future, one’s children’s future or about the shape of the country.” Further, and equally as troubling, “there is very little real confidence or solid vision for what the future is going to be like.”
That sense of disconnection, due to the murkiness of the future, has a profound result for spending patterns of those three groups mentioned above. These people do not spend, they save. Sixty-five percent of those interviewed said they are saving now because they are worried about the future. Eighty percent of those surveyed said they would spend more if they knew what the future would hold.
As Dr. Taylor said at the AMEX Publishing Luxury Summit, “Many people proclaim that the economy is OK, but people still believe they can lose everything. Those whom we researched have a due regard for risk, as 75% of our respondents still believe we are in a recession.”
“ The very public debate over economic fairness throws a wrench into what should be a more straightforward recovery in the luxury marketplace ”
The second trend is that success, by its classic definitions, is under siege. Dr. Taylor said, that according to the 2012 Survey, “there is a growing sense that success may be unattainable by middle-class definitions—hard work, patience may have little relevance."
Success is also under siege by economic fairness with questions regarding what a fair share actually is. Fairness appears to have different definitions depending on one’s income level. According to the Survey, “The very public debate over economic fairness throws a wrench into what should arguably be a more straightforward recovery in the luxury marketplace.”
As a result of these two disquieting trends, two other trends have emerged that appear to have more positive, solution-based ideas embedded within them. First is the strengthening of the Circle Of Trust concept—meaning the overarching importance of family and friends. “Tighter circles are emotionally safer circles,” says the Survey.
“ Last year, 92% of our respondents looked for a lower price, now, they are searching for detail, artistry, sublimity, quality, service ”
The fourth trend deals with what the luxury consumer looks for, right now, in a luxury brand: worth and a sense of welcome. Dr. Taylor explains, “As wealthy consumers feel they are under some kind of siege and feel they are in an emotional recession, they are looking for brands that provide a sense of welcome, a sense of comfort.
They are also looking for a sense of worth. Last year, 92% of our respondents looked for a lower price, now, they are less attracted to discounts, and are rather searching for detail, artistry, sublimity, quality, service and a willingness to pay full margin.”
The image of this type of buyer versus that of last year has allowed the emergence of a new luxury consumer dichotomy: the worth-oriented vs. a deal-oriented consumer, where two of the most observable, research-wise, distinctions are age and income range: Worth-oriented shoppers have a median household range of $475,000 vs. deal-oriented are in the $225,000 range.
“ The worth-oriented shopper looks for the meaning of the brand rather than the fame of the brand. The product must distinguish rather than differentiate itself ”
Worth-oriented shoppers also have been wealthier longer than deal-oriented shoppers. Forty-five percent of the worth-oriented have been wealthy for 15 years or longer, whereas only 32% have been wealthy for that amount of time.
One of the Take-Away Values for this data is the worth-oriented looks for the meaning of the brand rather than the fame of the brand, so what must become apparent is the product must distinguish rather than differentiate itself.
“Never has there been a time in American history when there has been such a wildly diverse range of wealth” Dr. Taylor said, “We are aware of seniors, Boomers, and most recently the newest class of Millennials, who are children of entrepreneurs, and have never known privation. It is an exciting time to redefine what luxury means, and how luxury can be sold to each age and income range.”
To further investigate Wealth and Affluence on Luxury Society, we invite your to explore the related materials as follows:
- Key Insights from The Wealth Report 2012
- Behind the Bonus: Discretionary Income and Luxury Spending
- 8 Key Trends Impacting the Wealthy in 2012