Affluents Will Spend, With Optimism In Check
Luxury brands have a loyal following and don't need to worry about the economy hurting their volume in the least this year. Okay -- that's what they'd like, but they know it's not that simple, especially post-recession. There's some recovery this year, but that's not going to help much because affluent consumers have other reasons to be skittish -- many of which, such as higher taxes, are centered on Washington.
Still, both affluent and non-affluent consumers seem to be more optimistic than they were, according to the new Shullman Research Center's Luxury and Affluence Monthly Pulse. The survey-based study finds that a bigger chunk of consumers in three groups -- those making over $75,000, those making $250,000 or more and those making upward of $500,000 -- have a somewhat brighter outlook on the upcoming year than those among them who don't. Forty-six percent of affluent men making over $250,000 are optimistic; 30% are pessimistic.
The most optimistic group of affluent consumers are young people who make at least $250,000. Fifty-five percent of respondents asserted as much. Only 13% said they are pessimistic. They are also more likely to think they will be better off in a year. More of them than others also say that if the economy improves, they will spend more (45%).
"From my perspective," says the firm's CEO and founder, Robert Shullman, "they haven't lived through it; they are still naive, don't have families, no big expenses, and they aren't worried about college. The 35-to-54 bracket have more concerns."
Affluents are less worried about gasoline than total adults; a little more concerned about Obamacare, although those making half a million dollars or more are 10 percentage points more concerned than than the total population. Interestingly, those making $250,000 or more are more concerned than others about having enough money to retire comfortably and about the economy going into recession. They are also concerned about their families' health, and how Washington will resolve the debt-limit issue.
"There's uncertainty out there, and as such, they are being cautious," says Shullman. They still like luxury but since 2008, when things fell apart, they have changed their buying approaches. It's a caveat emptor situation."
By far the biggest purchase plans for the next year (96%) are for home-related investments, 88% for health exercise, 83% for financial investing, donations; 88% for pleasure trips; and 61% have luxury buying plans.
Among transportation purchases, 25% of affluents say they plan to buy or lease a vehicle. "If you are a luxury car seller, you will need to be more persuasive to get them to consider what you are offering," says Shullman.