A record low level of spending by affluent consumers for home furniture and furnishings is suggested by the most recent survey in a series of twice-yearly studies that began in Spring 2002.

Negative attitudes about the current economy and the economic outlook for the next 12 months are contributing to plans for spending less on home furniture and furnishings by affluent consumers during the next year, according to the Spring 2009 Affluent Market Tracking Study #15 conducted by the American Affluence Research Center.

In the Spring 2009 survey of the wealthiest 10% of all U.S. households, spending plans for home furniture and furnishings during the next 12 months, in comparison to their spending for such items during the past 12 months, are to be increased by 10% of the affluent consumers and to be reduced by 43% of the affluent consumers. The remainder (47%) expects to spend the same for home furniture and furnishings during the next year as in the past year.

The survey respondents indicated a negative 12 month outlook for business conditions and personal household income. They also reported declines in their net worth, as a result of substantial declines in the value of their home and their investments/savings during the past two years. Together, these factors have contributed to a general attitude toward reducing or deferring expenditures in all areas.

The intentions to reduce spending for home furniture and furnishings are consistent with the overall mood of the affluent market. Over 80% of the survey respondents reported that they had made a general effort to reduce or defer expenditures during the past 12 months, would make a conscious effort to do so during the next 12 months, or had both done so in the past and would continue to do so in the future.

The survey is representative of the population of the most affluent 11.2 million households in the U.S. that account for almost 40% of total personal income and two-thirds of the personal wealth of all Americans.

The 640 men and women included in the national survey have an average annual household income of $290,000, an average primary residence value of $1.2 million, an average net worth of $3.1 million, and average investable assets of $1.4 million. This survey of the affluent market has a maximum margin of error of five percentage points at the 95% confidence level.

These surveys track how affluent consumers assess current business conditions and their 12-month outlook for the economy, the stock market, personal household income, and their spending plans for different products and services that include major appliances, home computers, furniture/furnishings, home entertainment equipment, casual and upscale dining out, entertainment, recreation, domestic and international travel, designer and non-designer apparel, collectibles, fine jewelry, and political and charitable contributions.

* * *

Ron Kurtz is President of the American Affluence Research Center, which provides marketing research and mailing lists of affluent consumers to prominent companies targeting the affluent market.

AARC is an independent, private research organization dedicated to providing reliable marketing information about the values, lifestyles, attitudes, investments, and purchasing behavior of the most affluent segments of the U.S. population through both custom and multi-client surveys.

Ron’s experience includes over 20 years in senior management positions in the airline, hotel, and tour business. As the founding President of Sea Goddess Cruises, he created the product category of small deluxe ships for the very affluent. He also served as the chief marketing officer of four cruise lines, including Norwegian Cruise Line and Windstar Cruises.

Ron has been a key contributor to 6 start ups and 11 turnarounds of substantial businesses. He earned his MBA at Harvard Business School.

The American Affluence Research Center CONTACT: Ron Kurtz at 770-740-2200 or info@affluenceresearch.org. Website: http://www.affluenceresearch.org

Tags: Affluence Research, affluence surveys, affluent market, destination clubs, home furnishings spending, home furniture spending, luxury market
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A record low level of major home remodeling projects by affluent consumers is suggested by the most recent survey in a series of twice-yearly studies that began in Spring 2002.

Negative attitudes about the current economy and the economic outlook for the next 12 months are contributing to plans for deferring major home remodeling projects by affluent consumers during the next year, according to the Affluent Market Tracking Study #15 conducted by the American Affluence Research Center.

In the Spring 2009 survey of the wealthiest 10% of all U.S. households, only 10% of the affluent consumers reported plans for major home remodeling during the next 12 months. Equal to 1.1 million home remodeling projects, this is less than half the number in the Spring 2008 survey and a record low. The record high was 34% in the Spring 2005 survey.

The incidence of home remodeling plans is highest among those under age 50 (14%), those with income above $200,000 (13%), and those with a net worth of $6 million or more (13%).

The survey respondents indicated a negative 12 month outlook for business conditions and personal household income. They also reported declines in their net worth, as a result of substantial declines in the value of their home and their investments/savings during the past two years. Together, these factors have contributed to a general attitude toward reducing or deferring expenditures in all areas. The lower intentions to remodel are consistent with the overall mood of the affluent.

The survey is representative of the population of the most affluent 11.2 million households in the U.S. that account for almost 40% of total personal income and two-thirds of the personal wealth of all Americans.

The 640 men and women included in the national survey have an average annual household income of $290,000, an average primary residence value of $1.2 million, an average net worth of $3.1 million, and average investable assets of $1.4 million. This survey of the affluent market has a maximum margin of error of five percentage points at the 95% confidence level.

These surveys track how affluent consumers assess current business conditions and their 12-month outlook for the economy, the stock market, personal household income, and their spending plans for different products and services that include major appliances, home computers, furniture/furnishings, home entertainment equipment, casual and upscale dining out, entertainment, recreation, domestic and international travel, designer and non-designer apparel, collectibles, fine jewelry, and political and charitable contributions.

* * *

Ron Kurtz is President of the American Affluence Research Center, which provides marketing research and mailing lists of affluent consumers to prominent companies targeting the affluent market.

AARC is an independent, private research organization dedicated to providing reliable marketing information about the values, lifestyles, attitudes, investments, and purchasing behavior of the most affluent segments of the U.S. population through both custom and multi-client surveys.

Ron’s experience includes over 20 years in senior management positions in the airline, hotel, and tour business. As the founding President of Sea Goddess Cruises, he created the product category of small deluxe ships for the very affluent. He also served as the chief marketing officer of four cruise lines, including Norwegian Cruise Line and Windstar Cruises.

Ron has been a key contributor to 6 start ups and 11 turnarounds of substantial businesses. He earned his MBA at Harvard Business School.

The American Affluence Research Center CONTACT: Ron Kurtz at 770-740-2200 or info@affluenceresearch.org. Website: http://www.affluenceresearch.org

Tags: Affluence Research, affluence surveys, affluent market, destination clubs, home remodeling spending, luxury market
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A record low level of spending by affluent consumers for major home appliances is suggested by the most recent survey in a series of twice-yearly studies that began in Spring 2002.

Negative attitudes about the current economy and the economic outlook for the next 12 months are contributing to plans for reducing major home appliance expenditures by affluent consumers during the next year, according to the Affluent Market Tracking Study #15 conducted by the American Affluence Research Center.

In the Spring 2009 survey of the wealthiest 10% of all U.S. households, spending plans for major home appliances during the next 12 months, in comparison to their spending for such items during the past 12 months, are to be increased by 9% of the affluent consumers and to be reduced by 39% of the affluent. The remainder (52%) expects to spend the same for major home appliances during the next year as in the past year.

The survey respondents indicated a negative 12 month outlook for business conditions and personal household income. They also reported declines in their net worth, as a result of substantial declines in the value of their home and their investments/savings during the past two years. Together, these factors have contributed to a general attitude toward reducing or deferring expenditures in all areas. The intentions to reduce expenses for major home appliances are consistent with the overall mood of the affluent market.

The survey is representative of the population of the most affluent 11.2 million households in the U.S. that account for almost 40% of total personal income and two-thirds of the personal wealth of all Americans.

The 640 men and women included in the national survey have an average annual household income of $290,000, an average primary residence value of $1.2 million, an average net worth of $3.1 million, and average investable assets of $1.4 million. This survey of the affluent market has a maximum margin of error of five percentage points at the 95% confidence level.

These surveys track how affluent consumers assess current business conditions and their 12-month outlook for the economy, the stock market, personal household income, and their spending plans for different products and services that include major appliances, home computers, furniture/furnishings, home entertainment equipment, casual and upscale dining out, entertainment, recreation, domestic and international travel, designer and non-designer apparel, collectibles, fine jewelry, and political and charitable contributions.

* * *

Ron Kurtz is President of the American Affluence Research Center, which provides marketing research and mailing lists of affluent consumers to prominent companies targeting the affluent market.

AARC is an independent, private research organization dedicated to providing reliable marketing information about the values, lifestyles, attitudes, investments, and purchasing behavior of the most affluent segments of the U.S. population through both custom and multi-client surveys.

Ron’s experience includes over 20 years in senior management positions in the airline, hotel, and tour business. As the founding President of Sea Goddess Cruises, he created the product category of small deluxe ships for the very affluent. He also served as the chief marketing officer of four cruise lines, including Norwegian Cruise Line and Windstar Cruises.

Ron has been a key contributor to 6 start ups and 11 turnarounds of substantial businesses. He earned his MBA at Harvard Business School.

The American Affluence Research Center CONTACT: Ron Kurtz at 770-740-2200 or info@affluenceresearch.org. Website: http://www.affluenceresearch.org

Tags: Affluence Research, affluence surveys, affluent market, destination clubs, luxury market, major home appliance spending
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Record low levels of spending for dining out in both casual/family restaurants and upscale restaurants is suggested by the most recent survey in a series of twice-yearly studies that began in Spring 2002.

Negative attitudes about the current economy and the economic outlook for the next 12 months are contributing to plans for reducing restaurant expenditures by affluent consumers during the next year, according to the Affluent Market Tracking Study#15 conducted by the American Affluence Research Center.

In the Spring 2009 survey of the wealthiest 10% of all U.S. households, spending for dining at casual/family restaurants during the next 12 months, in comparison to their spending for such items during the past 12 months, is to be reduced by 29% of the affluent consumers and to be increased by only 7% of the affluent consumers. The remainder (64%) expects to spend the same for dining at casual/family restaurants during the next year as in the past year.

Spending for dining at upscale restaurants is to be reduced by 54% of the affluent consumers and to be increased by only 2% of the affluent consumers. The remainder (44%) expects to spend the same for dining at upscale restaurants during the next year as in the past year.

To reduce expenses for dining out, the affluent consumers are most likely to eat out less frequently and to dine at less expensive upscale restaurants compared to the prior 12 months. Other methods for reducing restaurant expenditures are dining more often at casual/family restaurants and spending less for wines and liquor when dining out.

The survey respondents indicated a negative 12 month outlook for business conditions and personal household income. They also reported declines in their net worth, as a result of substantial declines in the value of their home and their investments/savings during the past two years. Together, these factors have contributed to a general attitude toward reducing or deferring expenditures in all areas. The intentions to reduce expenses for dining out are consistent with the overall mood of the affluent.

The survey is representative of the population of the most affluent 11.2 million households in the U.S. that account for almost 40% of total personal income and two-thirds of the personal wealth of all Americans.

The 640 men and women included in the national survey have an average annual household income of $290,000, an average primary residence value of $1.2 million, an average net worth of $3.1 million, and average investable assets of $1.4 million. This survey of the affluent market has a maximum margin of error of five percentage points at the 95% confidence level.

These surveys track how affluent consumers assess current business conditions and their 12-month outlook for the economy, the stock market, personal household income, and their spending plans for different products and services that include major appliances, home computers, furniture/furnishings, home entertainment equipment, casual and upscale dining out, entertainment, recreation, domestic and international travel, designer and non-designer apparel, collectibles, fine jewelry, and political and charitable contributions.

* * *

Ron Kurtz is President of the American Affluence Research Center, which provides marketing research and mailing lists of affluent consumers to prominent companies targeting the affluent market.

AARC is an independent, private research organization dedicated to providing reliable marketing information about the values, lifestyles, attitudes, investments, and purchasing behavior of the most affluent segments of the U.S. population through both custom and multi-client surveys.

Ron’s experience includes over 20 years in senior management positions in the airline, hotel, and tour business. As the founding President of Sea Goddess Cruises, he created the product category of small deluxe ships for the very affluent. He also served as the chief marketing officer of four cruise lines, including Norwegian Cruise Line and Windstar Cruises.

Ron has been a key contributor to 6 start ups and 11 turnarounds of substantial businesses. He earned his MBA at Harvard Business School.

The American Affluence Research Center CONTACT: Ron Kurtz at 770-740-2200 or info@affluenceresearch.org. Website: http://www.affluenceresearch.org

Tags: Affluence Research, affluence surveys, affluent market, destination clubs, luxury market, restaurant spending
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The potential market for vacation homes, including full ownership and private residence and destination clubs, has declined substantially from 2007 levels, reflecting losses in net worth and a negative 12-month outlook for the economy and personal income among the wealthiest 10% of US households surveyed in March 2009.

The American Affluence Research Center has studied this market every 2 years since 2005. The new Spring 2009 survey report includes relevant comparisons to the 2007 survey results.

About 60% of the affluent target market indicates no familiarity with either the private residence or destination club concepts, which represents little or no change from the 2007 survey. Familiarity with the concepts does vary by demographic segment of the affluent.

Among those familiar with the concept, 72% did not name a brand of private residence club with which they are familiar and 82% did not name a brand of destination club with which they are familiar. The majority did indicate recognition of one or more of the 9 brands listed for each concept.

The incidence of access to wholly-owned vacation homes and time share, private residence club, and destination club units was essentially the same as in 2007. Reported plans to seriously consider purchase of one of these options during the next 12 months are about half what they were in 2007.

This new report (21 pages, including 19 tables), provides the following market insight:

• The brands/companies in both businesses with which the affluent report familiarity and how this has changed since 2007.

• The brands/companies in both businesses that the affluent recognize and how this has changed since 2007.

• Which segments of the affluent have the highest level of familiarity with the two concepts and with the brands in each business.

• Current ownership among the affluent of wholly-owned vacation homes and time share, private residence club, and destination club units.

• Plans by the affluent to seriously consider purchase during the next 12 months of wholly-owned vacation homes and time share, private residence club, and destination club units.

• Which segments of the affluent have the highest level of ownership or access to a vacation home and which are most likely to consider such an acquisition during the next 12 months.

• The current estimated value of wholly-owned vacation homes and how the values compare to the value of their primary residences and to vacation home values in 2007.

• The usage of vacation homes throughout the year versus seasonally.

• The distance between the primary residence and the vacation home.

Unlike other affluent and luxury market research that is based on surveying online panels of people who are compensated for responding to regular and frequent surveys, our unique direct mail study is based on samples drawn at random from, and representative of, the select population of the wealthiest 10% of US households.

This report is based on the responses of 640 men and women from households with an average income of $290,000, an average net worth of $3.1 million, and average investable assets of $1.4 million. The average age is 56 and 58% are males.

Tags: Affluence Research, affluence surveys, affluent market, destination clubs, luxury market, private residence ownership
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Luxury Defined: What the Affluent Will Spend for Luxury Price Points and Brands for 37 Products and Services

For several years, luxury retail and marketing consultants have fed the media with anecdotal research about the sales of $700 Manolo Blahnik shoes, $1,000 Prada hand bags, and $250 True Religion jeans as though such sales are common place.

But the affluent women in a survey of the wealthiest 10% of US households by The American Affluence Research Center (AARC) report they are more likely to spend less than $120 for nice shoes, less than $100 for a purse for every day, and less than $75 for a pair of women’s jeans.

“Luxury is a very ambiguous word that is used very loosely,” according to Ron Kurtz, President of AARC, who observed that “the definition of luxury varies considerably by individual and by product, as clearly demonstrated by our survey.”

Affluent Report the Most They Could Imagine Spending for 37 Products

In AARC’s ground breaking research on the definition of luxury among the wealthy, the survey respondents were asked to specify the most they could imagine spending for 37 different products and services. They were also asked to name the brand they would most likely purchase for each of the items.

The profile of the affluent in the survey sample is: $304,000 average household income, $3.1 million average household net worth, and $1.6 million average household investable assets. The average value of their primary home is $1.2 million. The average age is 55 while 86% are married and 60% are males. The national sample represents 33 states plus the District of Columbia.

In this study, both men and women were asked about the same 15 products and services. The wealthy women were asked about an additional 11 gender oriented products and the affluent men about an additional 11 products.

Both men and women were asked to provide a price (the median value of the price reported by men/women is shown in parenthesis) and a brand for a new auto ($40,000/$35,000) for personal use, a room in the winter in a Caribbean resort ($300/$250 per night), a European cruise ($300/$300 per person per night), a hotel room in New York City ($300/$300 per night) for a vacation, a refrigerator ($1,500/$1,500), an original painting $3,000/$3,000), a washer/dryer set ($1,500/$1,500), a king size mattress ($1,000/$1,500), a set of linens for a king size bed ($200/$150), wall to wall carpet ($20/$20 per square foot), a watch for dressy occasions ($1,000/$500), a watch for every day ($130/$150), a bottle of wine ($40/$30) for a special dinner at home, frames for sun glasses ($125/$150), and a large 24” wheeled garment bag ($200/$150).

Women were asked to provide a price (median value shown in parenthesis) and a brand for a dressy suit ($250), shoes ($120) to go with the dressy suit, a cocktail dress ($200), shoes ($100) to go with the cocktail dress, a pair of jeans ($75), a pair of diamond stud earrings ($1,000), a purse ($100) for every day, skin rejuvenation cream ($50 for 1.7 ounces), liquid make-up/foundation ($25 for one ounce), a bottle of perfume ($60 for 1.7 ounces), and lipstick or gloss ($15).

Men were asked to provide a price (median value shown in parenthesis) and a brand for a business suit ($500), shoes ($200) to go with the business suit, dress shirt ($75) to go with the business suit, a tie ($50) to go with the suit, a tuxedo ($500), shoes ($125) to go with the tuxedo, shirt ($75) to go with the tuxedo, a sport coat ($250), slacks ($100) to go with the sport coat, a dressy long sleeve sport shirt ($75), and dressy short sleeve sport shirt ($50).

Conspicuous Consumers Only 10% of Affluent Market; Most Affluent Not Familiar with Luxury Brands

“The research results support two important observations about the affluent market and their spending on luxury items,” according to Kurtz.

First, the affluent market is composed primarily of people with middle class backgrounds who continue to pursue a somewhat middle class lifestyle with middle class values. Kurtz emphasized that “about 90% of the affluent, or 10 million households, are not conspicuous or ostentatious consumers. They spend conservatively and save carefully. America’s current credit and economic problems might have been avoided if these affluent people, with their conservative spending and saving habits, had been recognized as role models. They have demonstrated the importance and value of living within your means.”

Second, only about 10% of the wealthy, or the 1 million households that account for less than 1% of US households, might be considered conspicuous consumers. With the exception of this relatively small niche segment, the affluent market does not appear to be very knowledgeable about the pricing and brands of products that are generally recognized by marketers as being in the higher price points associated with the luxury category. This seems to create an opportunity to substantially increase the market for high end luxury products if the affluent market can be educated about why they should consider buying them and the brands that offer them.

False View of Luxury Market Created by Anecdotal Research Provided to the Media

None of this is new news or indicative of a new trend. The conventional wisdom is that the US has witnessed increasingly conspicuous and ostentatious consumption by an increasingly affluent market for a period of about 30 years, which has been interrupted by brief interludes of retrenchment during the occasional recession and the 9-11 tragedy. This popular perception of the luxury market and the wealthy has resulted from anecdotal “research” provided to the media that used examples such as a young Wall Street attorney spending $50,000 of a year end bonus for a new watch or a secretary spending $1,000 for a new hand bag.

Other examples of conspicuous consumption among the wealthiest 1% have created the impression that there were many hundreds of thousands of people making a million dollars a year or more among the ranks of the entertainers, professional athletes, Wall Street bankers and attorneys, Fortune 500 executives, real estate developers, and entrepreneurs who have taken their company public. In fact the latest IRS data shows less than 400,000 US households in this income bracket.

The actual size and spending patterns of the affluent market are well documented by the data from the Internal Revenue Service and The Federal Reserve Board and the research of the affluent by former Georgia State University Professor Thomas J. Stanley that began in the 1970s and led to “The Millionaire Next Door” and a series of related books beginning in 1996. Dr. Stanley’s research produced similar conclusions regarding the lifestyle, values, spending, and savings profile of the affluent as that suggested by the AARC research. In fact, since AARC’s inception in 2002, the results of its research have been consistent with Dr. Stanley’s research.

No Long Term Changes in Spending Evident Among the Affluent

Contrary to assertions by some luxury market consultants that the current economic problems are creating longer term changes in their lifestyles and reductions in spending on luxury and conspicuous consumption by America’s wealthy, most of the affluent are behaving like their normal, rational, and frugal selves. Their careful spending is not a new trend.

While the concepts of “stealth wealth” and “luxury shame” are now being advanced by the retail and luxury consultants and futurists through anecdotal research about cut backs in the spending on ostentatious luxury, Kurtz feels “the sale of luxury goods and services, as defined by the majority of America’s affluent, is not subject to much change in 2009, just as it has not shown much change over the past 30 years.”

Kurtz emphasized that he “doesn’t see any evidence that the majority of the affluent are showing major long term trend changes in their spending patterns and attitudes. They have never been ostentatious or conspicuous consumers. They have always been careful shoppers and savers who look for quality and value in their purchases, the brands they buy, and the stores where they shop.”

The affluent market in the US is cutting back and deferring expenditures, according to AARC research in early 2008, due to current economic conditions, especially given the reduced values of their homes and stock portfolios. However, these expenditure changes should not materially affect the sales of the high end products and brands normally associated with ostentatious “luxury” because most of the people in this market have not represented a substantial source of the sales of such products. “They will not suddenly be switching from Manolo Blahnik to Stuart Weitzman shoes, from Prada to Coach purses, or from Four Seasons hotels to Marriott,” according to Kurtz, “because they were not supporting those brands previously.”

The sales of the high end “luxury” products appear to be derived primarily from international “new rich” consumers and by the small segment of the wealthiest 1% in the US, as previously noted. A portion of the sales have apparently also been derived from those stretching their resources (especially their credit) to achieve a taste of luxury.

A segment of the small niche market of conspicuous American consumers will have to change their spending and saving behavior. The Wall Street investment bankers, attorneys, and others in related activities are experiencing large reductions in income and net worth. Many of the younger people in this group don’t have substantial net worth to fall back on, as they were spending what they were making (and perhaps even more). Changes in the spending of these people, as well as among the wealthy “new rich” citizens of the countries now experiencing recessions and declines in oil and commodity prices, will contribute to the decline in sales of the ostentatious “luxury” brands.

Concepts such as “discreet luxury,” in Kurtz’s view, are creations of some retail and luxury consultants who invent terms such as “mass affluent,” which he considers to be an oxymoron, to promote new consulting work. In his opinion, “some of these consultants are prone to invent such terms to describe changes in behavior among a small group of people as major trends. These trend projections are often based only on anecdotal or “managed” research.”

2 Important Aspects of the Research Methodology

The results of this research demonstrate that surveys that attempt to measure spending on “luxury” items are useless, at best, and dangerously misleading, at worst, if “luxury” is not precisely defined by specific price points. The same appears to be true for surveys that attempt to identify “luxury” brands without specifying price points to define “luxury.”

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, AARC’s unique mail surveys are based on 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 AARC’s surveys are typically more affluent and more open in providing confidential information.

The 43 page, 74 table report is available for $595 including a complete 302 page set of tabulations (or $395 without the tabulations).

AARC provides marketing research, mailing lists, and consulting services to businesses that focus on the affluent. For more information: Ron Kurtz at KurtzGroup@comcast.net or 770-740-2200.

Tags: Affluence Research, affluence surveys, luxury research, survey of the affluent
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New Survey Identifies Price Points and Brands for 37 Products and Services

“Luxury” is a very ambiguous word that is used very loosely. Perceptions of luxury vary by individual and by product.

In new ground breaking research, a national survey of the wealthiest 10% of US households reveals how the affluent define “luxury” by price points and brands.

The survey respondents were asked to specify the most they could imagine spending for 37 different products and services. They were also asked to name the brand they would most likely purchase for each of the items.

The results of this new research demonstrate that surveys that attempt to measure spending on “luxury” items are useless, at best, and dangerously misleading, at worst, if “luxury” is not precisely defined by specific price points. The same appears to be true for surveys that attempt to identify “luxury” brands without specifying price points to define “luxury”.

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 mail surveys are based on 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.

The profile of the survey sample is as follows: $304,000 average household income, $3.1 million average household net worth, and $1.6 million average household investable assets. The average value of their primary home is $1.2 million. The average age is 55 while 86% are married and 60% are males. The sample represents 33 states plus the District of Columbia.

In this study, both men and women were asked about the same 15 products and services. Women were asked about an additional 11 gender oriented products and men about an additional 11 products.

Both men and women were asked to provide a price and a brand for a new auto for personal use, a room in the winter in a Caribbean resort, a European cruise, a hotel room in New York City for a vacation, a refrigerator, an original painting, a washer/dryer set, a king size mattress, a set of linens for a king size bed, wall to wall carpet, a watch for dressy occasions, a watch for every day, a bottle of wine for a special dinner at home, frames for sun glasses, and a large 24” wheeled garment bag.

Women were asked to provide a price and a brand for a dressy suit, shoes to go with the dressy suit, a cocktail dress, shoes to go with the cocktail dress, a pair of jeans, a pair of diamond stud earrings, a purse for every day, skin rejuvenation cream, liquid make-up/foundation, a bottle of perfume, and lipstick or gloss.

Men were asked to provide a price and a brand for a business suit, shoes to go with the business suit, dress shirt to go with the business suit, a tie to go with the suit, a tuxedo, shoes to go with the tuxedo, shirt to go with the tuxedo, a sport coat, slacks to go with the sport coat, a dressy long sleeve shirt, and dressy short sleeve shirt.

The research results support two important observations about the affluent market.

First, the affluent market, as defined by the wealthiest 10% of US households, is composed primarily of people with middle class backgrounds who continue to pursue a somewhat middle class lifestyle with middle class values. They are not conspicuous or ostentatious consumers. They spend conservatively and save carefully.

Second, with the exception of a small niche segment, this market does not appear to be very knowledgeable about the pricing and brands of products that are generally recognized by marketers as being in the higher price points associated with the luxury category. This seems to create an opportunity to substantially increase the market for high end luxury products if the affluent market can be educated about why they should consider buying them and the brands that offer them.

None of this is new news or indicative of a new trend. The popular perception is that the US has witnessed increasingly conspicuous and ostentatious consumption by an increasingly affluent market for a period of about 30 years, which has been interrupted by brief interludes of retrenchment during the occasional recession and the 9-11 tragedy. This perception has resulted from anecdotal “research” in the media that uses examples such as a young Wall Street attorney spending $50,000 of a year end bonus for a new watch or a secretary spending $1,000 for a new hand bag.

The media has created the impression that there are hundreds of thousands of people making a million dollars a year or more among the ranks of the entertainers, professional athletes, Wall Street bankers and attorneys, Fortune 500 executives, real estate developers, and entrepreneurs who have taken their company public. This, together with the purchases of luxury goods by international visitors leveraging the weak value of the dollar, has given a distorted view of the size and nature of the true affluent market in the US.

The perception of the size and spending patterns of the affluent market created by the media is inconsistent with the data from the Internal Revenue Service and The Federal Reserve Board. The research of the affluent by Professor Thomas J. Stanley that began in the 1970s and led to “The Millionaire Next Door” and a series of related books beginning in 1996 produced similar conclusions regarding the lifestyle, values, spending, and savings profile of the affluent as that suggested by the AARC research. In fact, since AARC’s inception in 2002, the results of its research have been consistent with Professor Stanley’s research.

The 43 page, 74 table report can be purchased for $595 (including a set of 302 pages of data cross tabulations). Place your order by clicking on Order Luxury Defined Report or calling  770-740-2200.

Tags: Affluence Research, affluence surveys, luxury research, survey of the affluent
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Spending Plans Stabilizing as Expectations for Business Conditions and Stock Market Rise

This new study, the fourteenth in a series of twice yearly tracking surveys by The American Affluence Research Center, indicates the affluent may feel the economy is bottoming out and that they are upbeat about improvements in business conditions and the stock market during the next 12 months.

The composite Affluent Consumer Expectations (ACE) 12-Month Economic Outlook Index of 113 rose 11 points from the Spring survey and represents a relatively positive outlook overall. Substantial increases in the indexes for future business conditions (up 24 points to 123) and the stock market (up 19 points to 124) offset a decline in the expectations for personal household income (down 10 points to 93), the third element of the composite index. Index values can range from 0 (totally negative) to 200 (totally positive), with an index of 100 being a neutral reading.

Highlights of this national survey of 552 affluent men and women can be found at www.affluenceresearch.org The survey participants have an average income of $304,000, an average net worth of $3.1 million, and average investable assets of $1.6 million.

The index of 47 for current business conditions represents only a modest drop of 5 points from the Spring 2008 survey, which had a precipitous drop of 56 points from the Fall 2007 survey. This index is at its lowest level since the Fall 2002 survey and essentially indicates the view of the affluent that the economy has effectively been in a recession for several months, as first noted in the Spring 2008 survey.

Over half (54%) of the respondents have no plans to make any of 8 major expenditures in the next 12 months. This is essentially unchanged from the historic high recorded in the Spring survey (53%). Plans to acquire a new primary residence were up slightly for both buying (3.4%) and building (1.5%). Plans for motor vehicle acquisitions (20%) and plans to cruise (14%) were unchanged from the historic lows of the Spring survey.

Of the 17 categories of products and services, for which expected changes in spending during the next 12 months are tracked, the indexes for 9 categories were up, 7 were down, and 1 was unchanged. In all 17 categories, at least two-thirds said they would spend the same or more as they did during the prior 12 months.

This survey also included a series of questions that reveal how the affluent define “luxury” by price points and brands for 37 different products and services. This ground breaking research demonstrates the ambiguity of the word “luxury” among the affluent and their apparently limited familiarity with the brands normally associated with luxury.

The results of this research demonstrate that surveys that attempt to measure spending on “luxury” items are useless, at best, and dangerously misleading, at worst, if “luxury” is not precisely defined by specific price points. The same appears to be true for surveys that attempt to identify “luxury” brands without specifying price points to define “luxury”.

Unlike other affluent and luxury market research that is based on surveying online panels of people who are compensated for participating in regular and frequent surveys, our unique study is based on samples drawn at random from, and representative of, the 11.2 million households that account for the wealthiest 10% of US households based on net worth, according to the latest Federal Reserve Board research.

The 38 page, 33 table report can be purchased for $395 (or $595 with the full set of 302 pages of data cross tabulations).

AARC provides marketing research, mailing lists, and consulting services to businesses that focus on the affluent. For more information: Ron Kurtz at KurtzGroup@comcast.net or 770-740-2200.

Tags: Affluence Research, affluence surveys, luxury research, survey of the affluent
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In the latest of the twice yearly surveys of the most affluent 10% of US households by The American Affluence Research Center, the respondents were asked to specify the most they could imagine spending for 37 different products and services if they were to purchase the item during the next 12 months. They were also asked to name the brand they would most likely purchase. The goal was to identify how the affluent define luxury, in terms of price points and brands, for each of the products.

The minimum and maximum price points reported in this new survey, though realistic for many of the products, should probably be dismissed as being rather “extreme”. The median value, which is the mid point (not the average) of all the values/prices reported, seems to be very realistic for all 37 products and services, if not a bit low, given the affluence of the respondents. It is important to note the relative degree of consistency between women and men in the median values for most of the 15 products where they both gave opinions.

For a European cruise, the median value was $300 per night per person. This was true for the responses of both males and females. The lowest price suggested was $60 (men) and $100 (women). The highest price was $10,000 (men) and $20,000 (women).

Less than a quarter of the respondents named the cruise brand they would most likely purchase. Among those that did, the most frequently mentioned brands were Royal Caribbean (18%) and Princess (17%).

The AARC research has consistently shown over the years that the affluent represent over 3 million cruisers per year and that most of their cruises are with companies that would be considered premium or contemporary brands. The price points and brands reported in this new survey are consistent with prior survey findings.

The Fall 2008 Affluent Market Tracking Study #14 is a national survey representative of the wealthiest 11.2 million households (as defined by net worth in the most recent Federal Reserve Board research). The 552 survey participants have an average income of $304,000 and an average net worth of $3.1 million.

The results of this research demonstrate that surveys that attempt to measure spending on “luxury” items are useless, at best, and dangerously misleading, at worst, if “luxury” is not precisely defined by specific price points. The same appears to be true for surveys that attempt to identify “luxury” brands without specifying price points to define “luxury”.

Survey highlights are posted at www.affluenceresearch.org

AARC provides marketing research, mailing lists, and consulting services to businesses that focus on the affluent. For more information: Ron Kurtz at KurtzGroup@comcast.net or 770-740-2200.

Tags: Affluence Research, affluence surveys, luxury travel
Posted in Affluence Research, Cruises, Luxury Defined, Luxury Market & Goods, Vacations | No Comments »

In the latest survey of the most affluent 10% of US households by The American Affluence Research Center, only 14% of the respondents indicated plans to cruise during the next 12 months. This is the same as the level recorded in the Spring 2008 survey and effectively the historic low for this series of twice yearly surveys, which were started in Spring 2002.

Those most likely to cruise are age 60+ (18% of this group) and those with a net worth of $6 million or more (29% of this group). Given that these surveys are representative of the 11.2 million US households that comprise the wealthiest 10% of all households, this market segment represents the potential of 1.6 million cruise buying households (for 3.2 million cruisers).

The AARC research has consistently shown over the years that the affluent represent over 3 million cruisers per year and that most of their cruises are with companies that would be considered premium or contemporary brands. This survey included a series of questions for which the goal was to identify how the affluent define luxury, in terms of price points and brands, for each of 37 different products and services. The price points and brands reported in this survey for a European cruise are consistent with prior survey findings.

The Affluent Market Tracking Study #14 is a national survey representative of the wealthiest 11.2 million households (as defined by net worth in the most recent Federal Reserve Board research). The 552 survey participants have an average income of $304,000 and an average net worth of $3.1 million.

Survey highlights are posted at www.affluenceresearch.org

AARC provides marketing research, mailing lists, and consulting services to businesses that focus on the affluent. For more information: Ron Kurtz at KurtzGroup@comcast.net or 770-740-2200.

Tags: Affluence Research, affluence surveys, cruise travel
Posted in Affluence Research, Cruises, Vacations | No Comments »