October 6, 2011
Luxury consumers who represent the top 10 percent of U.S. wage-earning households are forecast to increase their spending on emotional gifts for their families this holiday season, according to findings from a study conducted by American Express Publishing and Harrison Group.
Rather than focusing on quantity of gifts, affluent consumers are more likely to spend with their entire family’s interests in mind. Affluent households are expected to account for 23 percent of total 2011 holiday spend.
“This is a good indicator of overall intention to spend,” said Jim Taylor, vice chairman of Harrison Group, New York. “These are the folks that have been the least hit by the recession.
“Affluent consumers are incredibly responsive to events in the wider environment,” he said. “They button their wallet pockets to see what the effect of particular events will be and just wait it out in a prudent and conservative way.
“However, they are chasing what we call the worth model – it was expensive, but it has value so it was worth it.”
Harrison Group and American Express Publishing fielded questions from the upper middle class, affluent, super affluent and wealthy consumers.
Those analyzed were divided into three groups – general public who made less than $100,000 discretionary income, bedrocks who made $100,000-$249,000 discretionary income and pinnacles who made more than $250,000 discretionary income per year.
Family matters
This holiday season, bedrock individuals are expected to spend $1,163 per household where pinnacle households are expected to pay $2,708.
Combined, this will make up approximately $15.8 billion in total holiday spend, per the study.
While non-affluent consumers and bedrocks are expected to shave off 11.2 percent and 17 percent amount spent respectively, the most affluent pinnacle consumers are expected to burgeon spend 7.2 percent.
Source: Harrison Group/American Express Publishing
“For luxury retail, this is an extraordinary number,” Mr. Taylor said.
Consumers will most likely be spending on apparel and fashion, gift cards to a specific retailer, books, gift cards or certificates to a restaurant, accessories or a gift card that can be used anywhere such as American Express or Visa gift cards.
Source: Harrison Group/American Express Publishing
Although total spend for consumers will be down, affluent buyers are planning to spend more of their budget on their friends and families.
In fact, 84 percent of consumers said that they are determined to make this holiday season great for their families.
Although 51 percent of pinnacle individuals claim they are planning on buying less this holiday season, 69 percent said that they want to buy gifts that have lasting, enduring value for their loved ones.
In fact, approximately 40 percent of pinnacles say that they intend to splurge on special gifts for their families.
This data is consistent with that from other studies that claiming the affluent family is emerging as the new market for luxury brands since children greatly influence their parents’ buying habits (see story).
Internet clicks
In addition to discovering for who affluent consumers will be spending for, the study also touched on where and when pinnacles and bedrocks will buy holiday gifts.
Approximately 24 percent of affluent consumers have already started their holiday shopping and will keep spending throughout the season, according to the study.
Of the 74 percent who have not started yet, 47 percent plan on starting after Thanksgiving or early December, 30 percent before Thanksgiving, 19 percent Thanksgiving weekend and 4 percent last minute in late December.
Online shopping wins hands-down on convenience and price, with 71 percent of affluent consumers saying that online is more convenient and 53 percent believing that they can find better prices online, per the study.
Source: Harrison Group/American Express Publishing
Thirty-seven percent of affluent consumers plan to do more of their gift shopping online than in stores, while 24 percent say that there will be an even split.
“This will be a season of love,” Mr. Taylor said. “The holiday is decoupled from the desire to acquire.
“Expect consumers to pare down the number of gifts, but up the value of emotional thought and giving something special,” he said.
Final Take
Jim Taylor, vice chairman of Harrison Group
Rachel Lamb, associate reporter on Luxury Daily, New York
Share your thoughts. Click here
