Receive the latest articles for free. Click here to get the Luxury Daily newsletters.
Double-digit spend increase expected for most-affluent US consumers: studyBy Rachel Lamb
Buying intentions for major purchases such as dining, retail and travel by the most affluent consumers in the United States grew in double digits from fall 2011, according to the most recent study from the American Affluence Research Center.
The stock market is the No. 1 indicator of whether or not affluent consumers feel good about spending. However, the potential spending in cars, remodeling projects, cruises and homes could be substantial.
“The affluent have returned to a level of optimism about the economy, the stock market, their personal income and net worth and their spending plans that is comparable to the spring 2011 survey,” said Ron Kurtz, president of the American Affluence Research Center, Atlanta. “The readings are not back to pre-recession levels, but they are definitely improved and well above recession lows.
“Research shows the mood and spending plans of the affluent are heavily influenced by what is happening in the stock market,” he said. “If the market holds or rises from its current range of about 13,000, the affluent will be in a good mood and ready to spend.”
The bi-annual Affluence Research survey includes reports from the 10 percent most-affluent households in the U.S.
This report is based on the responses from 372 men and women who promptly responded and met the minimum net worth requirement of $800,000. Their households have an average annual income of $267,000, an average net worth of $3.1 million, average investable assets of $1.8 million, and an average primary residence value of $1.2 million.
Consumers are still uncertain about the economy. Almost all believe it will be three more years before the stock market returns to pre-recession levels, but about 37 percent expect it to be less than two years.
The purchase intentions of the affluent during spring 2012 increased in all categories. Most were single-digit, but others were double-digit.
For example, domestic vacation travel rose 17 percent, political contributions grew 17 percent, collectibles grew 15 percent, international vacation travel rose 13 percent and dining in upscale restaurants grew 11 percent.
Other categories including cars, cruises, remodeling and primary and secondary homes were single digits.
Of the 11.4 million households represented in the survey, it can be estimated that the affluent represent potential purchases of 2.3 million cars, 1.8 million remodeling projects, 1.7 million cruises, 365,000 primary homes and 433,000 vacation homes, per the study.
Another big finding was with loyalty programs.
Approximately 81 percent of the respondents belong to one or more loyalty programs.
Furthermore, of those who are involved in loyalty programs, the average number is 10. However, 5 percent of affluent consumers belong to 25 or more programs.
The respondents said that the most important feature of all loyalty programs is the value and type of rewards earned.
American Express was named the best overall loyalty program provider by 16 percent of respondents.
What is more is that approximately 54 percent of respondents say that loyalty programs influence them to spend more than they would with that particular business.
Luxury brands may want to up their CRM and loyalty programs, knowing this information.
“The research is relatively encouraging,” Mr. Kurtz said. “The top one percentile is the sweet spot for the luxury industry in the U.S.
“These households are more familiar with luxury brands and more willing and able to spend for true luxury,” he said. “They will contribute to increased sales of luxury items, especially autos and vacation travel.”
Rachel Lamb, associate reporter on Luxury Daily, New York
Like this article? Sign up for a free subscription to Luxury Daily's must-read newsletters. Click here!
Related content: 71pc of affluents to uphold holiday spend, most-affluent to shell out more: report, 12pc of affluent consumers under 50 book hotels via mobile: study, Affluent consumers maintain spending despite slow economy, 3pc of US wealthy-demo to increase holiday spending: study, Holiday travel up 6pc year over year: American Express Publishing, leave a response, or trackback from your own site.