May, 2012 – This article from JustLuxe discusses the results of the Spring 2012 American Affluence Research Center survey of the wealthiest 10% of all U.S. households. ( http://www.justluxe.com/luxe-insider/trends/feature-1767263.php)

By Susan Kime

At the end of the day, research value is often determined by methods of data collection used. We have written before on Ron Kurtz, CEO of The American Affluence Research Center and his research, as his is the type of work that stands the test of time: it is longitudinal, being the 21st in a continuing series of twice-yearly surveys; and it focuses on the wealthiest 10% of all U.S. households, as determined by the Federal Reserve Board, based on net worth.

The AARC survey is mailed to a randomly selected national sample of 4,500 men and women, meeting the minimum net worth requirement of $800,000. These Spring 2012 results are correlated from the 372 respondents who answered this survey, with the maximum margin of error is 5%, with a 95% confidence rate. Thus, the following is a snapshot of a growing optimism in the economy and spending, however, it may also depict a calm before the storm.

That said, and remembering that the last survey, Fall 2011, where there was a substantial decline in the economic outlook, the Spring 2012 depicts a more positive perspective on current business conditions, as well as a more positive outlook on personal income and net worth. In the Spring 2011 survey, 57% of the affluent feel their financial security is better or the same as it was in 2007 and 82% believe their net worth will be the same or better in 2013.

However, as Mr. Kurtz admonishes in his survey results, “There is a risk that the mood and spending plans of the affluent could decline later in the year, as it did in 2011, depending on changes in the key indicators of employment and GDP, the stock market, the credit crisis in Europe, congressional gridlock on budget and tax issues, and the outlook for the 2012 election.” These are the main variables that could change the mood of the survey population, thus changing attitudes and feelings toward purchasing anything in the latter half of this year.

However, now, the purchase intentions of this group rose slightly from the Fall 2011 survey, as regards buying a new motor vehicle, the possibility of major home remodeling, and acquisition of a vacation home. A substantial amount of possible additional purchases are represented by the respondents who are “undecided” about a cruise (8%), auto (10%), remodeling (8%), a primary residence (6.6%), and a vacation residence (7.5%). Given the 11.4 million households represented by this survey, it can be estimated that the affluent represent potential purchases of 2.3 million autos, 1.8 million remodeling projects, 1.7 million cruises (total of 3.4 million cruisers), 365,000 primary homes, and 433,000 vacation homes.

The index for all 17 product categories rose from the Fall 2011 survey. Increases were primarily single digits (and some only by one point) but five categories rose by double digits: domestic vacation travel (+17), international vacation travel (+13), dining in upscale restaurants (+11), collectibles (+15), and political contributions (+17).

More results of survey questions relating to economic change are listed below:

• On average, the respondents believe it will be about three more years before the stock market returns to pre-recession levels.

• Over a third (37%) expect the recovery to be in less than two years. At the time of the survey, the Dow Jones 30 index was around 13,000 or about 1,200 points from its pre-recession high.

• On average, the respondents believe it will be about four more years before unemployment returns to pre-recession levels. Over 40% expect the recovery to be in four to five years. The respondents feel the stock market will recover faster than unemployment.

Brands most used and appreciated are:

• 32% named Apple as the highest quality product or service

• 25% named Costco as the best retail chain

• 47% subscribe to a daily deal promotion (with Groupon having a 60% share)

• 81% belong to some type of customer loyalty program

• Rolex was a clear winner as the fine watch brand for the two attributes of best quality regardless of price and most prestigious

• Chanel being named for most prestigious

• Armani was a relatively strong winner as the man’s designer suits/clothing brand for the two attributes of best quality regardless of price and most prestige

• For automobiles, Lexus was named for best quality and Mercedes Benz for most prestigious

Part II will be examining the Harrison Group’s research findings in the 2012 Survey Of Affluence And Wealth In America. Visit AffluenceResearch.org to learn more.

Posted in Affluence Research, Apparel, Automobiles, Fine Jewelry & Watches, Luxury Market & Goods, Luxury Research Methodology | No Comments »

March, 2012 – This article from the South Florida Sun Sentinel discusses the make up of the top 1% income households in South Florida. ( http://www.sun-sentinel.com/business/fl-wealthy-income-20120302,0,6797386.story )

By Donna Gehrke-White and Dana Williams

Ever wondered how some of South Florida’s richest live?

The top 1 percent have a household income north of $400,000 a year — $401,600 in Broward County, $456,206 in Palm Beach County and $413,372 in Miami-Dade, according to a national survey of household incomes by Washington-based Sentier Research.

In the club are some big names like LeBron James, who makes $44 million a year; and every benchwarmer on the Miami Heat. But most of the 20,000 richest households in South Florida belong to executives, university presidents, surgeons, attorneys and entrepreneurs.

Some are dual-income couples with mortgages who send their children to public schools, according to Census surveys of 1,266 South Florida households in the top 1 percent between 2006 and 2010.

“I’m not a guy born with a silver spoon in my mouth — not as one of seven kids in my family,” said Gary Poliakoff, a Broward attorney and real estate investor. “I was on my own at age 12. I waited on tables and worked construction jobs through college. After law school, I opened a law firm on borrowed money without a single client.”

The Occupy Wall Street protest movement started the recent debate — and aroused curiosity —over just who are the nation’s top 1 percenters. Sentier researchers Gordon Green and John Coder, both former U.S. Census Bureau executives, crunched Census data from 2007 to 2010 from around the country to find out. They tallied pay, dividends, interest and other income to discover the minimum threshold for a family to enter the exclusive club.

You can see where your household ranks in your county at SunSentinel.com/income.

Many in the 1 percent are upset with the Occupy Wall Street movement’s portrayal of them as greedy and uncaring.

“I thought the whole purpose of the American Dream was to pick oneself by the bootstraps,” Poliakoff said.

Getting into Broward’s 1 percent took years of hard work, saving and investing, he said. Poliakoff started a law firm, Becker & Poliakoff, in 1973 with attorney Alan Becker. It has become Broward’s largest with 145 lawyers and lobbyists.

It takes a higher income to get into the top 1 percent in Palm Beach County because wealthy transplants, such as Slim-Fast creator S. Daniel Abraham, have raised the bar.

“They made their fortunes elsewhere,” said William B. Stronge, an economics consultant who is a professor emeritus at Florida Atlantic University.

No one studies South Florida’s top 1 percent because the group is so small, said Ron Kurtz, president of the American Affluence Research Center. He compares many of South Florida’s richest to their counterparts in Los Angeles and New York. They spend more and are flashier than the rest of the country’s elite, Kurtz said.

That’s partly because South Florida’s glitz, balmy weather and lack of a state income tax attract hundreds of athletes, entertainers, business leaders and well-off foreigners who buy homes here, said Stronge.

They like South Florida’s diversity, that ranges from Northeast snowbirds to Cuban exiles to those from the Caribbean islands. “They fit in,” Stronge said, even if they speak accented English or no English at all.

Delray Beach real estate entrepreneur and best-selling author Frank McKinney said there is hard work and stress behind the high salaries. “You have to take risks,” he said.

What concerns him is the growing number of Americans such as the Wall Street protesters who have what McKinney called an “entitlement mentality.”

McKinney said he couldn’t afford to have one. He just has a high school education and needed to make a living to put food on the table.

Now that he is wealthy he makes it a point to give to others, McKinney added.

Most of South Florida’s 1 percenters also are charitable, he said.

McKinney used his February “Survival to Thrival,” 4,071-mile book tour that promoted three new books including his religion-inspired The Tap to highlight the problems of the homeless.

He traded places with a homeless person in each city: They got to enjoy swank hotel rooms while he bunked in a homeless shelter.

“I wanted them to believe in the American way,” McKinney said.

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February, 2012 – This article I wrote for Luxury Daily discusses the validity and reliability of research among “luxury” and “affluent” consumers. ( http://www.luxurydaily.com/how-reliable-is-your-research-among-luxury-and-affluent-consumers )

By Ron Kurtz

There are many ways that weak research, combined with poor analysis, can lead to bad conclusions.

Research among “luxury” and “affluent” consumers is vulnerable to errors in various areas. For example, the lack of an objective or universal definition of “luxury” creates uncertainty as to what respondents understand the word to mean.

In addition, the level of “affluence” associated with true luxury consumers is subject to various differences of opinion among researchers. Some use a level of income, a criteria which seems to be much less stable and reliable than net worth, according to a recent study by the Federal Reserve Board.

The specific level of income or net worth can also vary substantially among researchers.

Rich definition?
Most consumer research, including that among luxury and affluent consumers, is based on online surveys among panels of people who have “volunteered” to respond to frequent and often lengthy questionnaires.

The validity and reliability of such research should be carefully considered given a recent study that showed how panel members are often treated poorly.

The study showed that the poor treatment of panel members included “paying them pennies, giving them boring, lengthy, or irrelevant surveys, frustrating them with multiple closed studies, and bombarding them with opportunity after opportunity.This is most definitely not how you want to treat people upon whom you are depending for your success. And if you or your research vendors are not paying attention, this is exactly what may be happening in your research.”

While the report provides a review of general consumer panels, these same panels are the sources of respondents for surveys of affluent and luxury consumers.

It is hard to imagine how such people can be representative of the true luxury and affluent consumers. And, as a result, it is doubtful that the research results are projectable.

The new report is a sequel to a 2009 report by a prominent market research firm that ran an internal test on a few panels it had used or was considering. It arranged for a selection of mystery shoppers to sign up for each panel and be typical respondents for a month.

The new test used the same methodology to evaluate 12 major panels, including Toluna, e-Rewards, Clear Voice, Surveyhead, Opinion Outpost, MySurvey.and six more. All were evaluated from the perspective of the typical panel member.

Panel, not pummel
Some of the problem scenarios identified in this study of research panels were:

“Yours is the tenth questionnaire in a row that the respondent has completed that morning, and many of the others were long, boring, and irrelevant. The respondent is tired and inattentive.

“Or let us say that the respondent has attempted 12 different questionnaires this morning before trying yours. One of them asked 10 minutes’ worth of questions before telling the respondent they were not qualified – and tossed them out with no reward.

“One of them froze when the respondent was mostly done.

“Another one told the respondent they were not qualified and kicked them out before they could answer a single question.

“Two more were actually called “surveys” but were trying to get the respondent to compare car insurance rates.

“Five of them were already closed by the time the respondent tried to respond, even though the invitations were all sent yesterday or today. The respondent was disqualified for two more because they do not own a pet, even though they stated in their panel profile that they have no pets.

“The respondent is tired, frustrated, and annoyed, and now they are evaluating a new product concept that you really hope they will like. Now just how reliable is your data?”

BOTTOM LINE, if you buy syndicated research, you should ask if it is based on a panel survey and if so what company provided the panel.

If you are doing your own survey, you should be careful in how you select a panel provider. Or perhaps you should consider a different survey methodology.

Good research can be a valuable contributor to good planning and decision making. Good research requires careful planning and analysis. While this is not always easy, it is well worth the effort.

Posted in Affluence Research, Luxury Defined, Luxury Research Methodology | No Comments »

February, 2012 – This article from Inman News discusses an upscale, gated and guarded subdivision developed by Disney. ( http://www.inman.com/news/2012/02/21/your-very-own-magic-kingdom-a-price )

By Mary Umberger

ORLANDO, Fla. — You say you’re thoroughly smitten with all things Disney? You say you’ve been known to joke that you’d practically live at Walt Disney World if you could?

Got millions of dollars to spare?

That’s more or less the cost of admission for owning a home at Golden Oak, an upscale, gated and guarded subdivision that Disney is developing almost in the shadow of its iconic theme parks here — the development is just three miles away from Disney World.

But unlike the popular Disney theme parks, these homes are not approachable for the masses.

At prices ranging from $1.5 million to upwards of $8 million, the developer promises a house and neighborhood with the hallmarks it has carefully cultivated for decades: meticulous attention to detail; extensive personal service; and, if you’re so inclined, a daily dose of Mickey, Minnie and the crew.

Golden Oak’s development team is courting a very well-heeled clientele of Disney diehards that it’s certain are out there, in addition to others who may be lured less by “The Little Mermaid” than by the promise of tight security and a deep trust in the Disney brand.

To read the full article click here.

Posted in Affluence Research, Home Purchases & Remodeling, Vacation Homes | No Comments »

February, 2012 – This article from JustLuxe.com discusses the complicated nature of affluence research and what to be careful of when using the results. ( http://www.justluxe.com/luxe-insider/trends/feature-1729354.php )

By Susan Kime

My qualifications for writing this piece are these: I have done graduate level research, created my own design and collection methodology, and taught research design and program evaluation for two years, at the university level. I know the gnawing questions regarding research design, data collection methods, and validity/reliability measures. These are issues that kept me awake at night, worrying.

Is there something in the design, or in the research questions or in the sample size that will literally invalidate two years of work? Is there such a thing as true objectivity? And how valid are mail surveys? How generalizable are the results, especially if I can’t do longitudinal studies? How many similar observations and answers determine a true trend? And, was Heisenberg correct after all, with his Uncertainty Principle? If the more precisely one property is measured, the less precisely the other can be controlled, determined, or known, and where is the Tylenol-PM?

I have written two articles on JustLuxe about Luxury’s Mixed Messages, and I have not discussed one of the most challenging reasons for the mixed messages: the complicated nature of affluence research. There’s a reason: when I discuss the numbers and trends in this type of work, I often do NOT know the methods of data collection, and the designs used. I know, as most do, the emerging numbers and the generalizations posited from those numbers.

Affluence research is a type of market research — a method of surveying individuals using controlled and specific processes. It produces quantitative, measurable data, that often can be used to predict buying patterns, future demand, identification of target markets.

Quantitative market research refers specifically to the collection of factual, measurable data that includes personal data — sex, age, annual income, or number of children, of the person being surveyed. It also includes data like the number of times the interviewee visits a particular store or restaurant, the amount of money she spends on groceries every month, and the number of hours she spends watching television or listening to the radio.

A great amount of valuable information can be extracted from these data, so it is incumbent on the researcher to be as stringent as possible in his or her design and data collection procedures, as most errors can be traced to problems with how data are gathered. In particular, these errors occur due to problems associated with research validity and reliability, the two cornerstones of all quantitative and qualitative research.

Regarding validity, the question relates to whether the research is really measuring what it claims to be measuring. For instance, if a marketer is purchasing a research report from a company claiming to measure how people prefer the marketer’s products over competitors’ products, the marketer should understand how the data were gathered to help determine if the research really captures the information the way the research company says it does. And, regarding reliability, the question relates to whether research results already garnered, can be applied to a wider group than those who took part in a study. In other words, would similar results be obtained if another group containing different respondents or a different set of data points were used? If results are similar then it is likely the method of data gathering is reliable. Assuring research can be replicated and can produce similar results is an important element of the scientific research method.

With this said, Ron Kurtz, President and CEO of the American Affluence Research Center has taken on some of these issues with his Trends Caveats. His 30 year-plus research experience involves an MBA from Harvard, a book he wrote on Market Research Strategy And Techniques, and successful market research projects for Ford, Gillette, and groups in the travel field. He formed his own market research firm, American Affluence Research Center in 2002, where he has done a substantial amount of longitudinal survey research with the top 1% of the affluent population.

His Trends Caveats have been recently disseminated, and deal with his concerns with trends forecasts and the problems they evoke. I recently asked him about his motivation for writing them, and he replied, “I wrote my Trends Caveats out of a concern for those who read affluence research and accept findings that look positive and happy. Of course people want to have happy outcomes. But right now, media are inundated with trend forecasts and predictions from marketing and research agencies, consultants and pundits of all types. These predictions are often based on anecdotal research, old data or large changes in very small numbers, if they are quantified at all. This becomes problematic data, and I wanted people to be aware of it.”

Here are the Caveats:

1) Affluent consumers are not prone to substantial changes in their basic behavior and values from year to year or even over an extended period of time. This is evidenced by research begun in the 1970s by Thomas Stanley, author of “The Millionaire Next Door” and the more recent “Stop Acting Rich and Start Living like a Real Millionaire.” Our affluence research since 2002 has been consistent with that of Mr. Stanley’s.

2) A change from one year to the next is not necessarily a trend, especially if it applies to a large increase in a very small percentage of the market. That is more likely to be a fad that may or may not become a meaningful trend over a period of two or more years. For example, a market segment that triples from one percent to three percent is not a trend but may be an indicator of an emerging market.

3) Affluent consumers are not necessarily luxury consumers. Of course, the definition of “luxury” is in the eye of the beholder, which could be another important caveat when considering the forecasts of the trend pundits. Only the wealthiest one percent of U.S. households appear to be knowledgeable about the price points and brands of true luxury products. Before the recession, some luxury consumers were among the so-called mass or aspirational affluent. These consumers have been largely shaken out of the true luxury market.

4) It is important to stay focused on the key marketing priorities of attracting new customers and retaining the loyalty and increasing the purchases of existing customers. Marketers should avoid chasing emerging consumer market segments if that will cause them to be distracted and dilute efforts targeting their existing primary consumer markets.

5) Traditional marketing communications channels should not be forsaken, especially if marketers are targeting affluent and luxury consumers. The conversations among marketing professionals seem to be exclusively focused on the opinions and statistics regarding the importance of the various forms of digital channels of communications. An unintended consequence of digital media is that the consumer audience has been substantially fractionated. Equally important, many in the large numbers of digital fans and followers of luxury brands are aspirational consumers and other “luxury-curious” voyeurs who cannot afford the products.

6) The true affluent, who are typically careful spenders who live within their means, are the more knowledgeable and more sophisticated consumers. Their priorities have always been quality and value when making a purchase decision. In addition, the vast majority of the affluent have always avoided ostentatious or conspicuous consumption. These are not new priorities for the affluent.

7) Last but not least, there is no substitute for using common sense when thinking about how to be consumer-sensitive in all aspects of the relationship, interaction and communication with customers. Just put yourself in the shoes of your customers. This Golden Rule applies to product, pricing, service, post-sale relations, communications and all forms of interaction with the customer.

Many of these are arguable, yet as a whole they certainly define some of the issues faced with affluent market research paradigms — both in theory and practice right now.

Posted in Affluence Research, Luxury Research Methodology | No Comments »

January, 2012 – This article from Luxury Daily discusses seven facts that should serve as signs of caution before basing marketing plans on trend forecasts. ( http://www.luxurydaily.com/7-trend-caveats-for-the-2012-luxury-and-affluent-market/ )

By Ron Kurtz

At this time of year, the media is inundated with trend forecasts and predictions from marketing and research agencies, consultants and pundits of all types. These predictions are often based on anecdotal research, old data or large changes in very small numbers, if they are quantified at all.

It is important to keep these predictions in perspective, as they are frequently prompted by a hidden agenda to attract media attention and to generate new business prospects.

Rather than joining the fray of trend predictions, we would like to remind you of certain facts that should serve as signs of caution before you start to base your marketing plans on these trend forecasts.

1) Affluent consumers are not prone to substantial changes in their basic behavior and values from year to year or even over an extended period of time. This is evidenced by research begun in the 1970s by Thomas Stanley, author of “The Millionaire Next Door” and the more recent “Stop Acting Rich and Start Living like a Real Millionaire.” Our research since 2002 has been consistent with that of Mr. Stanley’s.

2) A change from one year to the next is not necessarily a trend, especially if it applies to a large increase in a very small percentage of the market. That is more likely to be a fad that may or may not become a meaningful trend over a period of two or more years.

For example, a market segment that triples from 1 percent to 3 percent is not a trend but may be an indicator of an emerging market.

3) Affluent consumers are not necessarily luxury consumers. Of course, the definition of “luxury” is in the eye of the beholder, which could be another important caveat when considering the forecasts of the trend pundits.

Only the wealthiest 1 percent of U.S. households appear to be knowledgeable about the price points and brands of true luxury products.

Before the recession, some luxury consumers were among the so-called mass or aspirational affluent. These consumers have been largely shaken out of the true luxury market.

4) It is important to stay focused on the key marketing priorities of attracting new customers and retaining the loyalty and increasing the purchases of existing customers.

Marketers should avoid chasing emerging consumer market segments if that will cause them to be distracted and dilute efforts targeting their existing primary consumer markets.

5) Traditional marketing communications channels should not be forsaken, especially if marketers are targeting affluent and luxury consumers.

The conversations among marketing professionals seem to be exclusively focused on the opinions and statistics regarding the importance of the various forms of digital channels of communications.

An unintended consequence of digital media is that the consumer audience has been substantially fractionated.

While this provides the opportunity to personalize communications, it can also make it more difficult to reach large portions of the target market effectively and cost-effectively.

Equally important, many in the large numbers of digital fans and followers of luxury brands are aspirational consumers and other “luxury-curious” voyeurs who cannot afford the products.

6) The true affluent, who are typically careful spenders who live within their means, are the more knowledgeable and more sophisticated consumers. Their priorities have always been quality and value when making a purchase decision.

In addition, the vast majority of the affluent have always avoided ostentatious or conspicuous consumption. These are not new priorities for the affluent.

7) Last but not least, there is no substitute for using common sense when thinking about how to be consumer-sensitive in all aspects of the relationship, interaction and communication with customers.

Just put yourself in the shoes of your customers. This Golden Rule applies to product, pricing, service, post-sale relations, communications and all forms of interaction with the customer.

Posted in Affluence Research, Luxury Market & Goods | No Comments »

November, 2011 – This article from The Wealth Report of The Wall Street Journal discusses expectations that the richest 1% of Americans will spend about 2.3% more than they did last year on their holiday shopping. ( http://blogs.wsj.com/wealth/2011/11/29/what-the-1-want-for-the-holidays/?mod=google_news_blog )

By Robert Frank

The excesses of the 1% are now universally scorned – except when it comes to spending season.

Since the economy is so dependent on consumer spending, and consumer spending is dependent on the wealthy, the spending of the wealthy will be critical for a strong fourth quarter and possible recovery.

Early reports are mixed, depending on wealth and income levels. According to Harrison Group and American Express Publishing, consumers who make between $100,000 and $250,000 are expected to spend 17% less than they did in 2010.

Those with discretionary income of $250,000 or more, however, plan to spend 7% more than they did last year, the study found.

The American Affluence Research Center expects the richest 1% to spend about 2.3% more than they did last year. That increase comes despite (or perhaps because of) the unusually pessimistic outlook of the 1%.

“The wealthy can afford to brighten their lives by buying nice things to offset the gloomy environment,” Kurtz told CNBC.

What kind of bling are they buying to brighten things up?

According to Kurtz, the most popular gift that all income groups want to receive is money, either in the form of gift card, check or gift certificate. Ranking second was clothing. Among those worth $800,000 to $1.49 million, the third most popular gift is an iPad or similar tablet computer. For the $6 million or more crowd (the real one-percenters), the second most popular gift is books or CDs.

Fine jewelry was more popular with the affluent than the one-percenters (only 2% of the one-percenters want jewelry this season, compared with 8% for the affluent). Yet the one-percenters are twice as likely to buy sport equipment.

If that sounds overly modest, perhaps that’s because the survey didn’t include “G650″ “Feadship” or “Mulsanne” as gift options.

What do you think the 1% want this Christmas?

Posted in Affluence Research, Holiday Spending, Luxury Market & Goods | No Comments »

November, 2011 – This Consumer Nation article on CNBC.com discusses the holiday spending projections for the affluent and their current mood concerning the economic situation. (http://www.cnbc.com/id/45278612/)

By Christina Cheddar Berk

Wealthy Americans may appear to the masses as a unified group, but there is divergence in the attitudes of the rich toward holiday spending this year — which means that the key to how the holiday season unfolds may rest in the hands of the wealthiest.

Affluent households, or those who represent the top 10 percent of American wage-earning households, are expected to account for 23 percent of the total 2011 holiday spending this season, according to Harrison Group, a market research firm.

Here’s the surprise: Although forecasts are calling for average — or in a few cases, above average — gains in holiday spending, gift-giving budgets of affluent families are down, according to Harrison’s research. However, among the wealthiest of the wealthy spending is projected to be higher.

The data collected by Harrison Group and American Express Publishing from 769 affluent Americans with discretionary household incomes ranging from $100,000 to more than $1 million dollars. It projects an overall decline of $1.04 billion, or a 6.1 percent drop, in plans to give gifts among affluent and wealthy families compared with 2010.

The decline in spending is being led by the consumers who make between $100,000 and $250,000. Those in that income bracket are expected to spend 17 percent less than they did in 2010, according to the study. On the other hand, those at the very top of the income spectrum, with discretionary income of $250,000 or more, plan on spending 7 percent more than they did last year.

Those who are cutting back are not doing it because they are worried about their economic situation, according to Jim Taylor, vice-president of Harrison Group. Instead, he suspects the shift reflects a change in priorities over the last few years, resulting in less emphasis on material goods.

A More Meaningful Christmas

“We’re a lot more mature as a society,” Taylor said. This means there is a desire to have a more meaningful holiday season, with the focus on spending time with the people they care about versus giving or receiving gifts.

“Expressions of happiness are being increasingly decoupled from the desire to acquire more and more things,” he said.

The American Affluence Research Center, which specializes in surveys and mailing lists of the affluent, also found that the wealthiest one percentile of households by net worth will be a pocket of strength this holiday season. The group expects the affluent as a whole to spend about 2.3 percent more than they did last year.

But the AARC is not seeing the same level of happiness that turned up in Taylor’s research. Instead, the group, which also polls a sample of the wealthiest 10 percent of U.S. households by net worth, discovered a record-low outlook for current business conditions and the 12-month outlook for the economy in their fall survey.

But Ron Kurtz, the center’s president, said the glum mood might encourage more spending.

“The wealthy can afford to brighten their lives by buying nice things to offset the gloomy environment,” Kurtz said.

Luxury Sales Seen Higher

If that is true, it would be good news for online sales, department stores and luxury goods.

Craig Johnson, president of retail consultancy Customer Growth Partners, expects sales of luxury items will rise 12 percent this holiday season, with strength in apparel, accessories such as handbags, and jewelry.

This is one factor in Johnson’s overall opinion that holiday sales will be much stronger than many industry analysts are expecting. (He is expecting retail sales to rise 6.5 percent from last year, which if true would be the best growth since 2004. This compares with the National Retail Federation’s forecast of 2.8 percent increase in holiday sales.)

But luxury sales also are being helped by a new crop of consumers who had previously not spent on luxury at all, but have been responsible for driving a significant portion of luxury spending growth this year, according to Ed Jay, senior vice president of American Express Business Insights.

These luxury newcomers make up about 61 percent of all luxury consumers and are responsible for 36 percent of all luxury spending, Jay said. By contrast, the active luxury spender, who is most likely a baby boomer, was responsible for 68 percent of all luxury spending, and when the recession hit, 25 percent of these consumers stopped spending, he said.

Also, the average consumer has been trying to spend more up-market and that has helped the luxury goods market, Jay said.

And that points to a growing perception that affluence doesn’t mean what it used to. An affluent consumer may not be someone who has enough expendable income to buy more goods; it may be a person who is so dedicated to a particular category that they are spending on those goods.

We’ve seen this behavior during the recession, as consumers cut back on nearly everything —but some still found the money to buy new gadgets such as iPhones and iPads.

All this means that if affluent consumers do focus more on experiences rather than goods, the luxury market still may see a strong holiday.

Posted in Affluence Research, Holiday Spending, Luxury Market & Goods | No Comments »

November, 2011 – This Luxury Daily article discusses the rise in luxury men’s apparel (http://www.luxurydaily.com/why-the-scramble-for-luxury-menswear/).

By Rachel Lamb

At one point taking a backseat to the much-more-hyped women’s apparel, luxury menswear is now the most quickly-rising and lucrative segments of the industry, causing female-centric designers to pay more attention to the other half of the population.

Notable companies and brands such as PPR, Christian Lacroix and Net-A-Porter have been honing in on menswear, bespoke goods and tailors. Why the sudden interest in luxury menswear?

“Men are becoming more fashion-conscious as the media shows how celebrities are exhibiting different fashion styles,” said Ron Kurtz, president of American Affluence Research Center, Atlanta.

“Participation in menswear can add value to a brand by extending its product line and base of customers, both of which can contribute to increased sales,” he said. “Menswear can enhance a brand’s relations with the channels of distribution that feature both women’s and men’s fashions.”

Mad for fashion
The reason why menswear is booming is still out for verdict, but experts have a few hypotheses.

“Brands are getting into luxury menswear because of the perception that it is an under-served area,” said Paula Rosenblum, managing partner at RSR, Miami. “Men are generally not as price-sensitive as women and they just want something that works for them.”

Another possibility is media influence.

Indeed, fashion-savvy men on television, in movies and on the red carpet could get consumers’ creative juices flowing.

For example, retailer Banana Republic based an entire collection off of the popular TV show Mad Men.

Well-tailored suits, ties and an overall “done up” look was brought back when men realized they could look like Don Draper and let go of grunge.

Another fashion guru could likely be Chuck Bass from Gossip Girl who has a penchant for velvet blazers, bowties and pocket squares.

Of course, the ever-growing infatuation with celebrities’ apparel and accessories on the red carpet is broadcast across the Internet and on TV, burning images of well-coifed gentlemen into watchers’ minds.

Further possibilities for the sudden surge in menswear could include the end of casual Friday and the rise of the metrosexual, according to Ms. Rosenblum.

Mr. Tailored
Luxury brands are definitely noticing this trend and are using menswear as leverage to entice affluent consumers.

For example, early last week, luxury conglomerate PPR announced its intent to acquire men’s fashion label and tailor Brioni.

On Wednesday Nov. 9, PPR chairman/CEO François-Henri Pinault said that Brioni’s acquisition makes a lot of sense for the conglomerate, especially since the growth in menswear is significantly stronger than in women’s fashion.

Since PPR has a multitude of either women-focused brands such as Alexander McQueen, Stella McCartney and Boucheron, or men-and-women-split brands such as Gucci and Bottega Veneta, its planned acquisition of Brioni makes it clear that the conglomerate is aiming to get into menswear.

In addition, label Christian Lacroix announced intent create tailored men’s clothing including suits retailing $1,000 and up, according to a report from Women’s Wear Daily.

Other brands that have primarily focused on women’s clothing are also focusing on menswear as of late.

Gilt Groupe ditched flash-sale sites in June to launch its first full-priced mens retailer Park and Bond in a partnership with Conde Nast’s GQ magazine (see story).

Furthermore, online retailer Net-A-Porter launched a men’s ecommerce destination Mr. Porter earlier this year that has seen momentous success (see story).

Even department store Bergdorf Goodman is using social media as a way to connect with males with its “What I’m Wearing” feature on Facebook that chooses one employee to take a picture of and describe each outfit of the work week once a month.

“The luxury shopping is [changing],” Ms. Rosenblum said. “I think dress styles among the population shift over time and luxury is no exception.

“We’ve come out of a 25-year period of ever-more casual dressing back to a point where dressing well is considered appropriate,” she said. “Men are bored with the plain suit and traditional tux.”

Posted in Affluence Research, Apparel, Luxury Market & Goods | No Comments »

November, 2011 – This Luxury Daily article discusses the affluent community’s attraction to the Breitling American Tribute Watch promotion to honor U.S. troops (http://www.luxurydaily.com/breitling-honors-veterans-with-limited-edition-watch/).

By Rachel Lamb

Swiss watchmaker Breitling is celebrating the United States’ armed forces with a limited-edition American Tribute Watch, of which only 50 will be produced.

The brand will be donating all proceeds from the American Tribute Watch to the Fisher House, a military-oriented charity. The watch will be sold only in New York and Florida.

“Breitling wanted to pay special tribute to U.S. troops this Veterans Day, so the brand created the limited-edition American Tribute Watch,” said Thierry Prissert, president of Breitling USA, Wilton, CT.

Fisher House is an organization that builds homes to provide free, temporary housing to families to service members needing medical care across the country.

About face
The American Tribute Watch is based on the Breitling Chronomat 44 watch. It features Caliber 01, the watchmaker’s movement.

Each of the 50 pieces are individually numbered and have an etching on the back of the watchface that reads, “Breitling for America. United We Stand.”

The watch will retail for $8,960 and is available only in Breitling’s New York and Aventura, FL boutiques.

“This promotion will stimulate positive media exposure for Breitling at a time leading into the holiday gift season, which is an important time for selling watches,” said Ron Kurtz, president of American Affluence Research Center, Atlanta.

“[Also], it will strengthen Breitling’s image as being a patriotic supporter of veterans,” he said. “The exclusivity of limited-edition products contributes to a perception of luxury.”

Mr. Kurtz is not affiliated with Breitling, but agreed to comment as an industry expert.

Breitling has been closely linked with the armed services, specially aviation. This has enabled Breitling to count on this professional advice in designing products to military standards of functional excellence and reliability, according to Breitling’s Mr. Prissert said.

However, this timepiece is to celebrate all veterans, not just the United States Air Force, according to Breitling.

CSR for CRM
Breitling’s veteran-inspired watch makes sense since the company is intertwined with aviation for some time now and prides itself on designing products made to withstand extreme air, water, wind and atmospheric pressure.

Many Breitling customers are extreme athletes whose hobbies or professions include aviation and deep-sea diving. Actor John Travolta, himself a passionate aviator, also models for Breitling.

That said, it is entirely possible that a chunk of Breitling’s customer base have, or have family members who have, been part of the armed forces.

Breitling is committing to its customer base by engaging them in an area that it believes will target the greatest number of people.

“Segments of the affluent community will be attracted by this promotion,” Affluent Research’s Mr. Kurtz said. “Retired military officers, affluent people who have served in the military and affluent people who are very patriotic will be among those favorably disposed by this promotion.

“[Additionally], some in the affluent market will want to wear and proudly display such a watch as a conversation piece,” he said.

Posted in Affluence Research, Fine Jewelry & Watches, Luxury Market & Goods | No Comments »