spending

Wealthy Spending More On ...Fast Food?

Filed under: Dining, Wealth, Luxury Shopping

The recession might be on its way out but it seems many of the most affluent Americans have developed a habit that doesn't want to go with it: spending a lot of money on fast food. A recent study by American Express found that the rich spent 24% more on fast food during the second quarter of this year than they did during the same time last year. Spending also increased on fine dining, but only by about half as much.

The explanation for this unexpected spending trend could be attributed to fast food's addictive qualities or simply to choosiness on the part of wealthy Americans in regards to where and what they want to spend on. "We're seeing a bifurcated behavior pattern, with a lot of affluent consumers still trying to be frugal where they can by spending at quick-service restaurants and discount retailers, but we're also seeing a return to higher-end spending on air travel and luxury items," said Ed Jay, senior vice president of American Express Business Insights.

Or maybe they've just rediscovered the greasy awesomeness of a drive-thru cheeseburger and fries.

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Tags: economy, fast food, recession, spending

The Dawn Of A New Economy: Latest Findings on the Habits of the Wealthy from The Harrison Group and American Express Publishing

by Susan Kime (RSS feed) —

Filed under: Wealth

New research about America's wealthiest consumers was released Tuesday at the American Express Publishing Luxury Summit in Las Vegas. The results confirm that although discretionary spending is growing only modestly, there are changes occurring within the mindsets of today's affluent consumer that can drive America forward in the coming year.

Some of the highlights announced by Dr. Jim Taylor, vice chairman at Harrison Group, and Cara David, Senior Vice President, Corporate Marketing & Integrated Media of American Express Publishing, include:

• Luxury consumption to increase by $28 billion
• Affluent and wealthy consumers have become... happier!
• The wealthiest consumers have become... wealthier
• Re-emerging consumers are conducting "Precision-Shopping"
• They are increasingly immune to persuasion
• Xer professionals are now experiencing an "Economic Status Jam"
• Social media remains mainly social, but desire digital information and content is growing... but not at the expense of
traditional media
• Resourcefulness, self-sufficiency, value and needs-based purchasing dominate

These findings come from the 2010 Survey of Affluence and Wealth in America, produced by American Express Publishing and Harrison Group, released on Tuesday. Fielded monthly, 1,910 respondents among the top 10 percent of Americans have been interviewed in 2010 so far. The mean sample household income is $520,000. Each respondent completed a 50-minute questionnaire, covering topics such as shifting attitudes and marketplace priorities, as well as current and anticipated spending on over 18 categories. This is the fourth year of this study, allowing for the tracking of attitudes and behaviors over these difficult years. here the relevant findings:

Tags: affluent, AffluentFamilies, american express publishing, consumers, luxury, shopping mall, spending, wealth

Continue reading “The Dawn Of A New Economy: Latest Findings on the Habits of the Wealthy from The Harrison Group and American Express Publishing”

China's Growing Appetite for Luxury Labels

by Rigel Celeste (RSS feed) —

Filed under: Wealth

The luxury market in China is booming, so much so it's now the second largest in the world (behind only the United States) and growing 15% more every year. The shoppers in China can't seem to get enough designer labels and premium goods despite high luxury taxes and piracy driving prices up. Shanghai has been particularly indulgent, as have some smaller towns like Shenyang and Harbin, although you might not know it by walking through the mall or visiting a boutique as many high-end shoppers prefer to have the merchandise brought to them from the store. It's not unusual for a single customer to spend upwards of $129,000 in a single sitting.

Although the market is so good that many retailers can't afford not to be there, the Chinese definitely have their favorites and not all brands are faring equally. Among the most successful are Louis Vuitton, Gucci, Calvin Klein, and Cartier.

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Tags: asia, asian markets, china, economy, luxury goods, luxury market, luxury spending china, spending

Spectrem Group Reports That Millionaires Are On The Rise Again!

by Deb West (RSS feed) —

Filed under: Wealth

We've been reporting for a while now that the number of millionaires in the United states has been dropping. This is no surprise given the economic downturn the country has experienced. On Tuesday the Spectrem Group released a report stating that after a huge drop in the number of millionaires that the number of affluent households is starting to show signs of improvement.

According to their market research, after a sharp decline in wealth in 2008, the number of United States millionaires grew 16% to 7.8 million in 2009. The group reported that in 2007 a total of 9.2 households claimed millionaire status, the highest number in a ten year period that began in 1997. The Ultra High Net Worth households, considered to be those with a net worth of 5 million or more, also demonstrated a rebound of 17% to 980,00 in 2009. The market findings are based on the Spectrem Group's "Affluent Market Insights 2010" which is a survey that they claim has an error margin of plus or minus 4.4 percentage points.

The President of Spectrem Group George H. Walper, is quoted in the press release as saying it is" welcome news for an economy still working to recover." They conclude that while things are looking up due to the improvement of some asset classes the real estate market and general economy is still keeping the total number of millionaires well below its previous 1997 high. In an interesting related analysis, the company also researches a monthly Millionaire Investor Confidence Index which was down a point. It was also at the same level as the Affluent Investor Confidence Index (affluent being described as those with a $500,000 or over net worth) which is an unusual finding as the millionaires tend to be generally more optimistic than the affluent.

Tags: investor confidence, market research, Market-news, millionaire, millionaires, spectrem group, SpectremGroup, spending, ultra high net worth households, wealth, wealth survey

Study Says Luxury Changes People for the Worse

by Rigel Celeste (RSS feed) —

Filed under: Wealth

A new study found that when people are exposed to luxury they become more self-centered and less empathetic towards others.

The study was put together by Harvard professor Roy Y.J. Chua and London Business School assistant professor Xi Zou as a step towards understanding how luxury goods effect the human psyche, and as a means of explaining the harmful decisions of wealthy groups like Wall Street executives. In the study people were asked to make a series of decisions designed to pit self-interests against society-interests, and the people who thought about luxury immediately before the test made more selfish and potentially harmful decisions than those who didn't.

The results seem to suggest that businessmen who have meetings at posh resorts surrounded by opulence and luxury will make more profit-driven, self-interested decisions than those who meet in a modest conference room. What do you think, does being surrounded by luxury make a person more likely to think only about themselves?

Via psfk

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Tags: lifestyle, luxury, psychology, spending, spending habits, SpendingHabits, study, wealth

Roman Abramovich Blows $52K At Lunch, Is Decadence Back?

by Deidre Woollard (RSS feed) —

Filed under: Dining, Wealth

Do we need a better augury of a renewed global economy than this? TMZ is reporting that our favorite spendthrift Roman Abramovich is at it again. He spent around $52,000 on lunch in New York City at Italian food restaurant Nello's. Abramovich and his party of nine others dined on truffle carpaccio, rigatoni Siciliana, truffle taglioni, filet mignon and more but what really boosted the tab was the wine. The bill which TMZ has obtained shows bottles of Cristal Rosé, Chateau Petrus and Domaine Romanee-Conti La Tache as well as some Johnnie Walker Blue. Apparently, Abramovich and his crew aren't sweets lovers, there's just one lone tiramisu on the list.

TMZ reports that the check had an automatic gratuity of 20 percent, over $7,000 but Roman and crew threw in another $5,000, bringing the tip to 26 percent. Classy move, oligarchs.

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Tags: food-awards, nellos, new york city, NewYorkCity, roman abramovich, RomanAbramovich, spending

Number Of Millionaires Drops Sharply

by Deidre Woollard (RSS feed) —

Filed under: Wealth

That millionaire next door might not be a millionaire anymore. A recent report from the Boston Consulting Group shows that the number of millionaire households around the world fell from around 11 million in 2007 to 9 million last year, around 18 percent. In North America the number was even higher, a 22 percent drop. Global wealth overall has also declined dramatically.

The world's richest people are responsible for doing a greater share of the resource consuming and economy driving. While many say that the economy is beginning to recover there is the possibility that as 24/7 Wall Street put it, that we are looking at not just a jobless recovery but a "wealthless" one as well. While it can be hard to be sympathetic for the rich who are losing their ability to buy yachts or stay in five-star hotels, those indulgences are major economic drivers. The lack of disposable wealth also ends up affecting not just providers of luxury goods and services but also various philanthropic organizations.

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Tags: finances, millionaires, money, spending

More Graduates Getting Cash This Year

by Deidre Woollard (RSS feed) —

This year more than ever, graduates want cold hard cash. A report from the National Retail Foundation found that people giving gifts to those graduating this spring will be reaching for their wallets instead of heading to the stores. The 2009 Graduation Consumer Intentions and Actions survey shows that 58.9 percent of giftgivers will give cash, up from 56.8 percent last year. The gift card frenzy seems to be abating a bit too, down to 29 percent from 32.2 percent last year.

Grads are getting less too. The survey shows that Americans will spend a total of $88.01 on graduation gifts this year compared to last year's number of close to $100. The reason is pretty obvious, the economy. Many students will pool gifts for larger purchases or savings to bulwark them against a rough job market. The traditional watch or briefcase is losing out to practicality and a gift that while appreciated, might be more easily forgotten.

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Tags: gifts, graduation, spending

Affluent Consumers Regain A Bit Of Confidence

by Deidre Woollard (RSS feed) —

Filed under: Wealth

Following the luxury surveys lately is getting increasingly confusing, a response perhaps to the uncertainty in the marketplace. The overall consensus seems to be that hopes for better days are alive, they just remain off in the distance a bit. The most recent survey of affluent consumers from Unity Marketing shows results similar to the ones we saw recently in the Bain's "Luxury Goods Worldwide Market" study which is that recovery is coming, it's just not coming too quickly.

Unity Marketing's Luxury Consumption Index reports a modest uptick of 1.5 points in their latest survey of affluents (average income of $207,000). While luxury consumers are still cutting back on spending they do feel more optimistic about the future of both their personal finances and the country's economic recovery. Many of the 1,034 people surveyed said they see a recovery coming within the next twelve months.

What will happen to the luxury goods industry remains to be seen No one knows if the current climate of austerity is permanent. Tom Bodenberg, Unity Marketing's chief economist thinks that luxury consumer spending could rise as a response to the recent enforced wallet tightening. But he also says that the media's focus on "recession chic" could continue to have an effect on the perception of conspicuous consumption. The best possible scenario for luxury goods businesses is that 2009 is a reverse of 2008 which had a strong first few months and then a sudden and deep decline.

Are you ready to spend money on luxury goods right now?
Yes	90 (37.8%)
Ask me in six months	50 (21.0%)
Maybe next year	59 (24.8%)
I'm all thrift, all the time from now on	39 (16.4%)

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Tags: luxury, spending, unity marketing, UnityMarketing, wealth

Luxury Downturn Predicted To Continue

by Deidre Woollard (RSS feed) —

Filed under: Wealth

The slide in the luxury goods market is set to continue for a bit longer. That's the data to be gleaned from the semi-annual update to Bain's "Luxury Goods Worldwide Market" study. The study shows that the luxury goods market will experience a 15-20 percent decline during the first two quarters of 2009 down from 170 billion euros in 2008 to about 153 billion euros this year.

But the study does see the proverbial light at the end of the tunnel. It predicts that the luxury market will start to even out in the second half of the year ending up with a net decline of 10 percent for 2009 overall. Like other studies, this one looks to China and the Middle East for signs of hope, seeing a projected growth of seven percent in China and two percent in the Middle East.

Overall all luxury shoppers are feeling more tentative and spending less. Luxury, however, remains a stratified industry with several different types of spending behavior. The lower tier of luxury consumers switching to less expensive brands and the more affluent luxury shoppers switching their focus to the intrinsic quality of materials.

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Tags: designer, luxury, spending, wealth

New York Decides Against Luxury Tax Proposal

by Deidre Woollard (RSS feed) —

Filed under: Wealth

It's looking like New York will follow fast on the heels of Illinois in deciding not to add a luxury tax for jewelry over $20,000. The American Watch Association sent an e-mail to members on Monday saying that while the New York State Legislature has agreed to tax increases to deal with a budget deficit, the luxury tax proposal is not part of it. The luxury tax would have also applied to aircraft costing more than $500,000, yachts over $200,000, cars that cost more than $60,000 and furs over $20,000.

But don't go spending yet, high earners in New York will be feeling an increased pinch. Income taxes were raised one percentage point to 7.85 percent for couples with income over $300,000 and couples with more than $500,000 in income will pay 8.97 percent. The three-year tax increase is expected to add $4 billion to the state coffers this year.

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Tags: income tax, IncomeTax, luxury tax, LuxuryTax, spending

Russian Shoppers Pulling Back Too

by Deidre Woollard (RSS feed) —

I've written about the troubles befalling American malls but it's tough in Russia too. The AP reports that the economic crisis and low oil prices are starting to make Moscow's popular GUM shopping center on Red Square look a bit like a ghost town. Some boutiques are closing while others are doing the same thing that their U.S counterparts are doing, offering deep discounts to lure anyone who might still be shopping. Russia has been a tremendous growth area for many international brands over the past few years as Russians became accustomed to increased spending power. Now it seems that they've followed the rest of the world into shopping retreat.

Back in October I mentioned that the managing director of Mercury, the country's biggest luxury goods group has said that sales have fallen at the popular TsUM shopping center. Mercury's stores sell many of the world's top luxury brands, everything from Gucci to Maserati cars and Chopard jewelry through the TsUM department store and other luxury shops.

Also it was recently announced that this year's Moscow World Fine Art Fair, set to take place at the end of May, has been canceled. The cancellation was mainly due to troubles getting sufficient sponsorship to cover the costs of the fair. ArtInfo reports that only a few dealers had pulled out of the fair but cancellations from Bulgari and Harry Winston prompted the organizers to cancel now rather than months from now when the economic crisis could be even worse. They hope to bring the fair back next year.

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Tags: moscow, recession, shopping, spending, then and now, ThenAndNow

High End Luxury Stays Afloat In Tough Times

by Deidre Woollard (RSS feed) —

Filed under: Wealth

Two articles came out today that seem to indicate that while low and middle-tier luxury are floundering the there is still money to be made in the top tier. The Wall Street Journal and Wealth Bulletin both look at numbers from consulting firm Bain & Company which predicts general demand for luxury goods this year to fall by three to seven percent but sees hope in the high end. Bain also says that brands which inhabit the upper strata of luxury, which they call absolute luxury (Harry Winston, Loro Piana, Brioni and many others) will either hold steady or have modest growth. This is because the very wealthy may not buy as much as they did last year but they aren't going to be downsizing the way other segments of the market might.

Bain defines two other tiers of he luxury market with 'a' words-- aspirational, which includes brands like Gucci and Louis Vuitton which attract upper middle class consumers and accessible which includes brands like Coach and Ralph Lauren which have a lower price point and appeal to a broader range of people. These two segments have had explosive growth in the past couple years and are already suffering in the economic downturn. But the high-end of luxury remains strong because people still want good things, they are just buying less of them. They are increasingly choosy about getting the best, preferring bespoke pieces and commissions to branded luxury goods. These findings seem to echo the words of Cartier CEO Bernard Fornas who told Reuters at the SIHH watchfair last week that " the real, true luxury is back."

Tags: luxury, spending

Then And Now: Mall Deathwatch

by Deidre Woollard (RSS feed) —

It looks like all those door-busting sales didn't do much good this holiday season and it could mean that some malls may be permanently out of business. The slowest retail holiday season in 38 years could end up dooming 2,000 to 3,000 malls by the middle of the year with an estimated 200,000 more businesses shutting down. Even those that are still around will be cutting back on store locations, shutting down stores that aren't making good sales numbers. An ABC News article quotes Howard Davidowitz, the chairman of retail consulting firm Davidowitz & Associates who says that: "The American standard of living is changing forever."

At the beginning of 2008 we mentioned the dying out of the traditional indoor shopping mall which was being replaced by outdoor shopping areas. But the recent economic fallout is affecting both the indoor and outdoor kinds of shopping malls as what is now changing isn't how people shop but whether or not they shop at all.

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Tags: malls, shopping, spending, then and now, ThenAndNow

Holiday Luxury Spending Tumbles

by Deidre Woollard (RSS feed) —

The numbers are in from Christmas 2008 and bleak doesn't even begin to cover it. The Wall Street Journal reports that total retail sales, excluding automobiles, fell over the year-earlier period by 5.5% in November and 8% in December through Christmas Eve, according to MasterCard Inc.'s SpendingPulse unit. If you take out gasoline sales the overall percentages work out to a 2.5% drop in November and a 4% decline in December (the drop in gas prices contributed to overall lower sales).

The luxury market was the worst hit with sales falling over 21%; add in jewelry sales and that number goes up to 34.5% The grim numbers have forced retailers to increase their savings offers moving up the typical January clearance sales to huge post-Chrstmas sales this weekend. It doesn't seem to have worked too well from what I saw out there today though. Part of the reason may be that this holiday season shoppers spent less on gift cards as presents so there is less of an immediate incentive for people to rush back into the stores.

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Tags: holidays, luxury, sales, spending

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