Q&A: For Affluent Gen Y, Confidence Soars
It won’t take much to brighten the spirits of affluent consumers. A new survey from Unity Marketing finds that people earning $100,000 or more are already making merry, with luxury spending, economic confidence and future spending all rising sharply. In the third quarter, luxury shopping among this group jumped 26%, says Pam Danziger, president of Unity Marketing and author of Putting the Luxe Back in Luxury: How new consumer values are redefining the way we market luxury. The optimism and enthusiasm are strongest in those 44 and younger, she says, and fills Marketing Daily in on the details.
Q: So 52% of your sample say they feel better about their finances than they did a year ago, and 37% think the country is moving in the right direction, up 15 percentage points from last quarter. Are these big shifts surprising?
A: Very surprising, especially since the survey was fielded in October, when uncertainly about the election was on everyone’s mind. Over the last two years, confidence has been up a bit or down a bit, but mostly on an even keel, so such a big change was unexpected. Age was a big factor. Older affluents were less positive, while those in the 25-to-44 age group were far more optimistic.
Q: What did this change do for luxury brands?
A: For the last few years, we’d seen luxury consumer spending mostly on a downward trend. But this is a big jump -- the biggest we’ve seen since we started the index back in 2004. Clothing was very strong, with spending up 95% over the previous quarter. Luxury kitchenware and cooks' tools are up 83%. And beauty and cosmetics jumped 75%.
Q: How about travel?
A: Basically flat. But the big change in the experience category is in dining. Cutting back on dining out, or choosing less expensive dining options, has become one of the favorite ways affluent consumers have of managing their spending. That’s true of both the upper-middle income HENRYS (high earners not rich yet with incomes $100,000-$249,999), as well as the ultra-affluents (the top 2% of the country’s earners, with incomes of $250,000 or more.) We’ve seen a really big uptick in dining out.
Q: Based on this, what are you expecting luxury spending to be like over the holidays?
A: The fourth quarter should be strong for marketers, and retailers that attract these shoppers. In fact, a third of the survey say they intend to spend more on luxury brands and services in the next year.
Q: What brands are doing well?
A: Nordstrom is always top-rated for us. In this survey, both Bloomingdales and Lord & Taylor were often mentioned, too. And of course, Costco.
A: Yes! Ultra-affluents are its biggest customers. One of the biggest mistakes marketers make is thinking that affluent people only shop for luxury brands and in luxury stores, but that’s not true. They shop at Ann Taylor, Loft, Banana Republic and Anthropologie. They are shopping upmarket, downmarket, and everywhere else.