Affluent Consumers Continue their Bumpy Ride to Financial Confidence

Furniture World News Desk on 9/1/2014

Compared to last quarter, affluent consumers in the third quarter 2014 are nearly 20% more confident in their financial status and standing, as measured by Unity Marketing's Luxury Consumption Index (LCI), based upon five key measures of consumer confidence. Yet despite the strong gain in the third quarter, the LCI didn't make up for its 15.9 point loss in the second quarter 2014. As a result, today's affluent consumers are less confident about their financial status and the direction of the country overall than at the start of 2014, reports Pam Danziger, president of Unity Marketing, which conducts quarterly surveys among n=1,200+ affluent luxury consumers (avg. income $264.4k) representing the top 20% of households based upon income.

Danziger will provide an executive summary of the latest Affluent Consumer Tracking Study including marketing implications on September 24 at noon e.d.t..

Mass-affluent HENRYs (high-earners-not-rich yet) are financially skittish, while the top 2% Ultra-affluents feel on stable financial ground, but are opting for inconspicuous, as opposed to conspicuous, consumption

"Throughout the post-recession recovery period, Unity Marketing has tracked a bumpy trajectory of affluent consumer confidence, with gains one quarter frequently lost in the next. Overall the 2010 & 2011 period were strongest as measured by the LCI and affluent spending on luxury," Danziger says.

"But since the end of 2012, the HENRYs who make up 90 percent of the affluent consumer segment have felt financially insecure, unlike the Ultra-affluents who have been more positive. This makes sense since the HENRYs, with incomes ranging from $100,000-$249,999, feel decidedly middle-class, even if they are by every other measure at the upper tier of the income pyramid. Ultra-affluents who are at the top of the income hierarchy tend to feel personally more financial stable, yet they are worried too, especially about the growing public opinion concern about income inequality," Danziger notes.

HENRYs and Ultra-affluents both are worried, but in different ways

Across the board affluents today are worried, but their worries differ. Nonetheless, those respective worries are taking a toll on marketers that target the high-end and luxury sectors of the consumer market. Danziger explains, "The mass-affluent HENRYs are watching their pennies and saving their discretionary income, rather than spending it. As a result, HENRYs are trading down to less premium brands and shopping in more mass-market oriented stores.

"Ultra-affluents, on the other hand, are turning to inconspicuous consumption. They are confident enough to pay premium and luxury prices, but they don't want to make a spectacle of their wealth. So their spending is going undercover toward purchases that are private, like things for their home, or less showy, such as brands with subtle logos and markings, or to luxury purchases made online where the Fedex truck delivers the goods and nobody sees them walking down the street with a Neiman Marcus, Barney's or Bergdorf Goodman bag," Danziger concludes.

Marketers targeting the affluent face a "Tale of Two Cities" that demand different marketing approaches

In essence today's luxury and high-end marketers confront two distinct marketing challenges: mass affluents who used to contribute important, if less frequent, sales to luxury marketers' coffers and ultra-affluents who now want to keep their luxury indulgences discreet. These marketing challenges demand different approaches and different strategies for marketers.

"The new selling environment calls for marketers to get a fix on the type of customer they want to sell to and meet their very different and distinct needs. HENRYs want bargains and less expensive indulgences, while Ultra-affluents need to go undercover. Unity Marketing's research into the mindset of the affluent will give marketers a deeper understanding of each customer segment and how to maximize sales to both," Danziger concludes.

Click this link to download a free white paper that details the topline results of the latest Unity Marketing survey of affluent luxury consumers.

Click this link to register for a webinar September 24 where Pam Danziger will address the marketing challenges and opportunities for marketers at the upper-end of the consumer market.
About Pam Danziger and Unity Marketing

Pamela N. Danziger is an internationally recognized expert specializing in consumer insights for marketers targeting the affluent consumer. She is president of Unity Marketing, a marketing consulting firm she founded in 1992. Pam received the 2007 Global Luxury Award for top luxury industry achievers presented at the Global Luxury Forum by Harper's Bazaar. Luxury Daily named Pam to its list of "Women to Watch in 2013." She is a member of Jim Blasingame: The Small Business Advocate's Brain Trust and a contributing columnist to The Robin Report, a monthly newsletter for senior executives in the retail, fashion, beauty, consumer products and related industries.

Pam gives luxury marketers "All Access" to the mind of the luxury consumer. She uses qualitative and quantitative market research to learn about their brand preferences, shopping habits, and attitudes about their luxury lifestyles, then turns these insights into actionable strategies for marketers to use to reach these high spending consumers.

Pam is a frequent keynote speaker for audiences that need to understand the nuances and distinctives of the affluent consumer segment, including HENRYs (High-Earners-Not-Rich-Yet) and Millennials on the road to affluence.