October 24, 2012
The outlook on holiday spending remains somewhat optimistic in the luxury sector as less affluent consumers plan to decrease the amount they spend on gifts and the top 1 percent plan to increase how much they shell out, according to a new report from the American Affluence Research Center.
The biannual Affluent Market Tracking Study revealed that affluent consumers remain cautious to spend – approximately 38 percent of respondents will make an effort to reduce or defer expenditures during the next 12 months. However, consumers ages 60 or older, affluent males and the highest-income and highest-net-worth groups are less apt to reduce spending during this time.
“The top one percentile - those with a net worth of more than $6 million - are expecting to maintain their spending,” said Ron Kurtz, president of American Affluence Research Center, Atlanta. “They may also increase their spending for holiday gifts while other affluent consumers are not.
“The affluent households will spend, on average, almost four times that of all households as estimated by National Retail Federation research,” he said. “Net worth is a more important indicator of spending plans than is income.
“Marketers should definitely aim at the top 1 percentile based on net worth.”
The American Affluence Research Center surveyed 435 male and female consumers who met its net worth requirement of $800,000.
No holiday from the holidays
Ninety-three percent of affluent consumers will buy holiday gifts this quarter.
This finding increased 2 percent from the 2011 survey results. Additionally, the most recent high was 97 percent in 2006.
Furthermore, 6 percent of respondents plan to spend more on holiday gifts this year than last year, up from 3 percent in the 2011 survey. They plan to spend an average of 11 percent more.
Seventy-one percent will spend the same amount compared to 69 percent in last year’s report.
Also, 23 percent of respondents plan to spend less. They will spend an average of 13 percent less.
The weighted average change in spending per household is estimated to be negative 2.4 percent, according to the findings.
Therefore, the estimated 2012 holiday spend is $2,102 per household that will purchase gifts, which constitutes a total spend of $22.3 billion.
In comparison, those surveyed said that the adults in their household spent approximately $2,154 on holiday gifts in 2011.
The likelihood of affluent consumers to purchase gifts this year increases as income increases and age and net worth decrease.
Shaking the box
On another note, the report also found projected differences in expectations and spending among certain demographics this holiday season.
For instance, 92 percent of women and 75 percent of men expect to receive a holiday gift.
Affluent consumers under the age of 50 are more likely to expect a gift while the wealthiest 1 percent of consumers with a net worth of more than $6 million are least likely to expect a gift.
These results were largely the same as the 2011 survey.
Additionally, women and men have specific gift expectations this year. The survey asked affluent consumers for the top two items on their holiday wish list.
Twenty-five percent of women want gift cards or certificates and 23 percent want money or a check. Also, 29 percent want clothing and 22 percent want fine jewelry.
Meanwhile, 45 percent of men want clothing; 23 percent want books, CDs and DVDs; 21 percent want gift cards or certificates; and 20 percent want sports equipment.
“While the affluent have a negative view of current business conditions, their 12-month outlook for business conditions, the stock market, and their personal net worth is relatively positive,” Mr. Kurtz said.
Tricia Carr, editorial assistant on Luxury Daily, New York