Highlights of Most Recent Survey
Highlights of the Fall 2014 Affluent Market Tracking Study #26
As an inexpensive way to conduct research among the affluent, custom questions can be purchased in these tracking studies for your exclusive use.
Major findings are detailed in section 4 below.
This report provides extensive current and historic trend data, presented for key demographic segments, on the following:
- Purchase intentions for 8 major expenditures including autos, primary residences and vacation homes, cruises, and major home remodeling
- Expected changes in spending for 17 products and services including vacation travel, dining out and recreational and entertainment activities, various durables for the home, apparel, and fine jewelry and watches
- Who has a positive outlook for the economy and their personal wealth and their spending plans
Special topics included in this report:
- what the affluent plan to spend for December holiday gifts, how that compares to last year, and who will spend the most.
- how the affluent plan to prioritize the spending of discretionary income on vacation travel versus saving, buying durable goods, and/or spending for entertainment or recreational activities.
- plans for 14 different travel activities ranging from staying in their own vacation home/condo to chartering a plane.
Two important marketing questions answered in new fall 2014 survey:
- Which affluent and luxury consumers are spending on your products and which are still reducing/deferring expenses?
- Which consumers plan a general effort to reduce or defer expenditures and which will continue to spend?
The new fall survey presents the above data for market segments defined by age, gender, income, and, most importantly, net worth.
Buy our new Affluent Market Tracking Study #26 with a full money back guarantee. If you are not totally satisfied with the report, your money will be fully refunded with no questions asked.
The 58-page/44 exhibit Fall 2014 Affluent Market Tracking Study #26 is available at a price of $495. With a full 109 page set of 65 tables of cross tabulated data, the price is $695. To order, click here and tell us which you would like to buy. Please include the purchase price, your name, and the name of your organization. AARC accepts checks and charge cards.
2) Survey and Report Content
This is the 26th in the original and only continuing series of twice-yearly surveys that focus on the 12.2 million households that represent the wealthiest 10% of all U.S. households, based on net worth, as determined by The Federal Reserve Board. Since 2002 these surveys have regularly measured and tracked the 12-month outlook of the most affluent households for the economy, the stock market and their personal earnings, savings, investment objectives, and spending plans for 17 product categories and 8 major expenditures. In addition, each survey contains special questions exploring new topics.
Special questions in this survey were used to identify the amount spent on December holiday gifts in 2013 and the amount expected to be spent in 2014.
A series of questions about travel identified how the affluent prioritize the spending of discretionary time and income on travel and plans for 14 specific travel activities during the next 12 months.
These tracking studies are unique in that they are conducted by mail (similar to the Conference Board surveys for the Consumer Confidence Index) among projectable national samples drawn at random, and they focus on the future outlook and spending plans of the affluent, rather than asking the respondents to remember and reconstruct past spending that is then extrapolated.
The surveys track plans for major purchases (vacation homes, primary residences, home remodeling, automobiles, boats, and cruises) during the next 12 months. The surveys also track planned changes in spending during the next 12 months for 17 categories of products and services. These include fine jewelry and watches, domestic and international travel, dining in casual and upscale restaurants, furniture, major appliances, entertainment equipment, home computer equipment, entertainment, recreational activities, collectibles, designer and non-designer apparel, and charitable and political contributions.
Our new, expanded report format with graphs and charts will help you to identify and understand the differences between affluent consumers and the true luxury consumers. These graphic elements, plus the executive summary and highlights sections, will facilitate a quick read of a report rich with data.
The wealthiest 10% of U.S. households account for almost half of all consumer spending, and these surveys are designed to provide information critical for effective marketing to affluent and luxury consumers.
3) Research Methodology
Unlike other affluent and luxury market research that is based on online surveys of panels of people who are compensated for participating in regular and frequent surveys, our unique direct mail surveys are based on projectable national samples drawn at random to be representative of the precisely defined population of affluent households, consistent with the research of the Federal Reserve Board. Confident of their anonymity, the respondents to our surveys are typically more affluent and more open in providing confidential information.
Surveys were mailed to a randomly selected, national sample of 4,500 men and women in households that, based on their income and ownership of certain assets, were expected to meet the minimum net worth requirement of $800,000. The overall survey response rate was 10.5 percent, thus showing the importance of this survey to the respondents, who have been a leading indicator of economic conditions, as when they called the recession in our March 2008 survey (well ahead of everyone else).
This report is based on the responses from 359 men and women who promptly responded and met the minimum net worth requirement of $800,000. Their households have an average annual income of $284,000, an average net worth of $3.1 million, average investable assets of $1.6 million, and an average primary residence value of $1.2 million. Over 94% have a net worth of $1M or more.
The survey respondents represent 39 states. Eighty-three (83) percent are married. The average age is 57.5 years. Forty-seven (47) percent are men and fifty-three (53) percent are women.
The maximum margin of error of this survey, at 95% confidence, is five percentage points.
Index values range from 0 to 200 and are compiled by subtracting negative feedback from positive. The value of a neutral response is 100. An index value of 100 means equal positive and negative feedback.
This survey is more informative than others for several reasons. Unlike some other surveys of the affluent, this is not an extrapolation of past spending that they have been asked to remember and reconstruct. It is designed to identify future spending plans and intentions.
Unlike most other surveys of the affluent, this survey of people does not include respondents who do not qualify to be among the wealthiest 10% of US households, based on net worth. Research by the Federal Reserve Board and the IRS shows that net worth is a more stable indicator of wealth than is income. There is more turnover among the people in the highest percentiles of income than among the people in the highest percentiles of net worth.
Unlike other types of surveys where the respondents cannot be confident of their anonymity, the respondents to our surveys are typically more affluent and more open in providing confidential information.
4) Major Findings
Affluent Positive in their Personal Wealth Outlook Despite Some Concern about the Economy
The assessment of current business conditions is essentially unchanged from the Spring 2014 survey and is 5 points below the Fall 2013 index. The index for future business conditions declined 10 points from the spring survey and is 5 points below the Fall 2013 survey. The index for change in the stock market declined a substantial 21 points from the Spring 2014 index. While remaining near or slightly above neutral territory, these indexes suggest some uneasiness among the affluent about general economic conditions, which may reflect concerns about the global tensions and stock market volatility prevalent during September, when the survey was in the field, after new market highs were achieved mid month.
The composite ACE 12-month Economic Outlook Index (which is the average of the 12- month outlook for business conditions, the stock market, and household income) declined a substantial 10 points from the Spring survey, but remains 3 points above the Fall 2013 reading and is just below positive territory (99). This index is in neutral territory while the overall Consumer Confidence Index of the Conference Board is slightly negative.
The expected change in after tax personal income rose a modest 3 points from Spring 2014 and is a strong 15 points above Fall 2013. Over a third expect their net worth to be higher in September 2015. These are positive factors for potential increases in spending.
The indexes for the change in spending for the 17 products and services tracked by these surveys are about the same as the prior two surveys in most cases. There was a decline of 10 percentage points in the affluent who expect to acquire one of the 8 major items. A substantial amount of additional potential purchases of the 8 major items are represented by the consumers that have yet to decide about a new auto, a cruise, a remodeling project, and the acquisition of a primary or vacation home. Of the 17 product categories, only two (both vacation travel categories) are in positive territory, seven are in the neutral range, and eight are in negative territory, suggesting a decline in spending. Eleven of the 17 categories were equal to or stronger than in Spring 2014.
Expectations regarding future income and net worth influence and/or correlate with spending plans. For example, the average index for changes in spending plans is 13 points higher (92 versus 79) for those expecting an increase or no change in their income versus those expecting a decline in income. The difference is 29 points (94 versus 65) based on net worth expectations.
With a third of the affluent planning to defer or reduce expenditures during the next 12 months, this represents a small improvement of 3 percentage points from Spring 2014 and a record low for this reading.
The mood and spending plans of the affluent in September (when stock indexes reached record highs in mid month) may have been negatively influenced by the increasing global tensions and the resulting volatility and declines in the stock market during October.
Some of the highlights of the special topics covered in this survey include: 97% of the affluent households are forecast to spend an average of $2,623 for December holiday gifts, which is about the same as last year and represents a total of about $31 billion.
On average about 80% of the affluent say they will spend more or the same on holiday gifts this year versus 2013 and 20% say they will spend less. However, it appears the affluent spent in 2013 almost 12% to 24% more than they had anticipated in the Fall 2013 survey, thus supporting the premise that people, especially the affluent, often tend to spend more for gifts than they had planned.
The expenditure per affluent household for gifts is about four times that of all households as estimated by the National Retail Federation (which has forecast a 4.1% increase in total retail holiday gift sales for this year) and by PriceWaterhouseCoopers (which has forecast a 7% decline in holiday gift expenditures).
When given 5 choices as possible priorities for spending discretionary income, about 42% said they prefer to divide the discretionary income among durable goods, and local experiences or travel. This response did not vary significantly among the different demographic segments.
The second most important choice was saving or investing discretionary income, which was cited by 32% of the respondents. The emphasis on saving and investment is consistent with considerable prior research showing the affluent are careful spenders who save aggressively and live within their means.
Among 13 different vacation activities that might be planned for the next 12 months, the top 3 most frequently mentioned activities were return to a favorite destination (53%), use reward points to purchase or upgrade air, hotel, or cruise reservations (52%), and travel with adult children and/or grand children (40%).
Plans for making a major expenditure during the next 12 months and the indexes for changes in spending were relatively consistent with the expressed priorities for spending discretionary income. For example, among those whose priority is to save/invest their discretionary income, 62% said they would not acquire any of the 8 major expenditure possibilities.
Affluent and Luxury Consumers are Often Very Different
Given all the discussion of the top 1% and income inequality, when considered in the context of the media focus on extravagant and ostentatious spending by a small number of the wealthy, it would be easy to lose sight of the true profile, values, and motivations of the wealthiest 10% of U.S. households, which new Federal Reserve Board research shows to be approximately 11 million millionaires based on net worth.
In 1995 Dr. Thomas Stanley began to share his years of research among millionaires with his book “The Millionaire Next Door”. In early 2009 he updated his research with the book “Stop Acting Rich…and Start Living Like a Real Millionaire”. The new research was pretty consistent with what Dr. Stanley had found in his earlier research. In other words, over a 30+ year period of research, millionaires continued to display the same profile, values, and motivations.
In Dr. Stanley’s research, and in our own research over the past 12 years, we have found there are certain important attributes that most millionaires share. These attributes include:
- live within their means
- careful shoppers who look for good quality and value
- aggressive savers
- limited experience with true luxury retailers and brands
*** Satisfaction Guarantee: Full Money Back If You Are Not Totally Satisfied ***
Buy our new Affluent Market Tracking Study #26 with a full money back/no questions asked guarantee. If you are not totally satisfied with the report, your money will be fully refunded with no questions asked.
The 58-page/44-exhibit Fall 2014 Affluent Market Tracking Study #26 is available at a price of $495. With a 109-page set of 65 tables of cross-tabulated data, the price is $695. To order, click here and tell us which you would like to buy. Please include the purchase price, your name, and the name of your organization. AARC accepts checks and charge cards.
5)Top 4 Ways to Use and Benefit from This Research
If your perceptions of today’s luxury and affluent consumers (who are often very different) are largely derived from what you read in the media and online, you are probably creating your marketing strategies and plans based on false premises. To stay ahead of your competitors, you need AARC’s new research report to understand today’s luxury and affluent consumers and how to market to them.
1) Develop an understanding of the general mood of the affluent and their expectations for business conditions and their personal wealth over the next 12 months. Gives you a basic perspective on general market conditions that will determine marketing opportunities and challenges
2) Identify changes in the spending plans of the affluent for your specific product category during the next 12 months. Shows you how potential sales of your product category compare to prior years and indicates what competitive pressures may result in your industry
3) Learn which segments of the affluent market represent the best sales potential for you during the next 12 months. Identifies the market segments that are cutting back on spending and those that are continuing to spend for your product category.
4) Create your marketing and sales plans with data based on the future intentions of the affluent. Unlike many other surveys of the affluent, this is not an extrapolation of past actions that they have been asked to remember and reconstruct.
With this new report, you will learn:
- Spending plans over the next 12 months of both the luxury and affluent consumers (and they are often different)
- Which of 8 major expenditures show the most sales potential and among which segments
- Which of 17 product categories show the most sales potential and among which consumers
- Which segments of the affluent are continuing to spend and which are not (and why)
- What they spent for December holiday gifts and the method of purchasing the gifts
- How they prioritize the spending of discretionary income on vacation travel
- Which of 14 vacation travel activities they plan for the next 12 months
Order your copy today.
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