Blogging From the Luxury Summit: How the Wealthy Spend When Times Get Tough
With dire economic news coming out nearly every day what is going on in the luxury community? Are consumers worried? Have they stopped buying? At the American Express Publishing Luxury Summit the second annual Survey of Affluence & Wealth in America produced by American Express Publishing Corporation and the Harrison Group was revealed. As the survey reveals, no one is stopping their shopping anytime soon but they are shifting from what they call an "iWant" economy to an "iNeed" economy and finding new ways to spend money.
But the affluent aren't cutting back in the same way that those with less assets are. In these tight times people still want to shop and so they are turning to the internet to research products and compare prices. The study found that "smart shopping" can increase the value of a household income by more than 35%. Women are the main purchasers of everything from groceries and household necessities to apparel and "high-tech needs." Most purchasing is based on specific needs but what people purchase is driven both by the search for quality and craftsmanship as well as the idea that the product expresses their own personal taste and style.
Despite all the online shopping people all still love to shop as recreation. Online activity is often research for purchases. And while they like the malls and the boutiques they are also increasingly comfortable with buying pricey goods at stores like Costco and Sam's Club. On the list of the top ten luxury brands good old Target sits right at number 5. During his presentation, Dr. Taylor showed some of the videos of the people interviewed and the affluent got just as excited about talking about Target as they did about far pricier stores like Bergdorf Goodman. As I've mentioned before on this blog, today's luxury consumer likes their Ritz-Carlton and their Gucci bags but the also like their Costco groceries and Target T-shirts. And when they are shopping in the luxury stores they want an experience, a store that reflect the price of the products they are buying and the help of a salesperson who is an expert and is enthusiastic about their job and knowledgeable about what they are selling.
And what about the younger shoppers? DeeDee Gordon, the co-founder Look-Look conducted a panel with four young adults, ages 15 to 25 on what young luxury looks like. The panel startled the audience a bit with the amount of money and attention that young consumers are devoting to high-end luxury brands. This could be said to be a result of the way these young people were raised. Everyone on the panel cited their parents influence for helping them to develop these tastes. They also said that their parents were concerned about the rate of their spending which echoes what the survey revealed: that nearly 60% of the respondents representing the wealthiest members of the group are worried about their children's work ethic because they have grown up with money. Most of the wealthy in this country grew up middle class or lower and see that upbringing as having been beneficial to their development.
The overall results of the survey suggest a short term pessimism but a long term optimism especially when it comes to the real estate market. As our colleagues at Wallet Pop mentioned, the wealthy think this is a great time to buy real estate. A full 77% of those who had a discretionary household income of more than $500,000 believe that real estate is a real opportunity and that while property values are low now they will rebound strongly eventually.