The profile of the affluent customer continues to evolve. Just last September an Ispos Mendelsohn report alerted the world to the complete disappearance of the affluent “middle class,” meaning the 100-200k segment. Now a new report from Unity Marketing says they’re back. Meet HENRY.
HENRY stands for Higher Earning, Not Rich Yet. He disappeared in 2008, but he’s back now, and he’s got some cash to spare. Before we get into what HENRY looks like, consider the ramifications of his return for digital marketers who want to reach him. First, if marketers were tracking the analytics available from targeting partners they wouldn’t be surprised at this turn of events. Customer segments do shift their basic demographics. Second, because HENRY is still a small but growing customer segment, effective behavioral and spending targeting tactics are essential. HENRY is valuable to address, but he’s easy to miss. He’s also important to prepare for in the future, So customize digital messages for him now.
Who is HENRY? HENRYs have an annual income of $100,000 to $249,999. (Pre-recession, Fortune magazine defined them as $249,000-$500,000). Their return to the market was marked by an 11% rise in spending on luxury goods in 2011 over a two-year period, per Unity Marketing’s Annual State of the Luxury Market Report. But the HENRYs aren’t wealthy despite solid salaries. Usually two-income households, much of HENRYs’ paychecks go to mortgages, taxes and child-related expenses including childcare bills, school tuition and summer camp.
This group is critically important to accessible luxury brands like Coach, Kate Spade and Restoration Hardware, as well as to higher-end mass brands such as Williams Sonoma, Ann Taylor and Banana Republic. They may also make smaller purchases from more premium luxury brands, like a Chanel lipstick or a Louis Vuitton wallet, even if they can’t indulge in larger purchases from core product lines.
But what HENRYs lack in cash, they make up for in numbers: There are nearly 10 HENRY households for every “ultra-affluent” one. While ultra-affluents cut their spending by nearly 30%, HENRYs raised theirs by 11%. By some estimates, HENRYs account for 80% of the luxury market. While total luxury spending grew only 1.3% from 2009 to 2011, HENRY is above the curve. His best performing categories as measured by spending is travel (up 40.8% over the past two years. Over the last year, they’ve spent mostly on entertainment (they’re eating out more) cookware and kitchen items (they’re eating in more), and fashion accessories.
So how do you reach HENRYs? It’s a tricky question, since this market crosses several demographics. A HENRY may be shelling out university tuition for her kids, or she may be just a few years out of college herself. The one universal truth about this group is that they are smart and careful with their money. They have to be: Hard hit by the economy and taxes, these high earners can’t afford to live extravagantly, although they do appreciate the finer things. It’s the reward for the hours of hard work these dual-earners have put in.
For a HENRY, “finer” refers to more than a label – it’s indicative of a quality brand. A HENRY will spend more on a handbag because the leather and styling are superior, not because it’s stamped with the Coach logo. The Cuisinart coffee maker will last longer and make better coffee than the Mr. Coffee. And the room at the high-end resort will have more space, better beach proximity and superior services to the Comfort Inn by the airport.
HENRYs want to enjoy that reward they’ve earned, so offer them a brand experience that feels rewarding. There’s a reason they favor brands like Banana Republic and Williams-Sonoma: These brands keep it simple and focus on quality in a manner that’s clear and honest. Both offer reasonable shipping options and return policies, and online coupons are frequently available. Also, both brands are status symbols, albeit low-key ones. And HENRY’s may not admit it, but they seem to like those status symbols. They’ve worked hard for them.