Affluent households are watching their pennies too, shifting their priorities from wants to needs due to the changing economic backdrop.
The second annual Survey of Affluence & Wealth in America by American Express Publishing Corp. and Harrison Group found that affluent consumers, or 70 percent of the top 10th of American consumers with the highest household income, are turning to the Internet to compare price and value. The shopping habits of these consumers are also shifting from an “iWant” to an “iNeed” economy. The survey was released earlier this month.
The respondents represented 10 percent of the U.S. population, or 12 million households averaging $352,000 in discretionary annual income. It is a group of individuals that overall represent 50 percent of U.S. consumption. Three segments were polled in the 2007 survey: affluent, superaffluent and wealthy. In the 2008 survey, an additional seven million upper-middle-class households that represent about 6 percent of all U.S. households were polled. American Express said that “nearly 80 percent of this entire group [surveyed] grew up in a middle-class or lesser environment.”
“Our research illustrates how today’s affluent and wealthy consumers consider a variety of marketplace and lifestyle factors when making purchasing decisions, be it online or in-store,” said Ed Kelley, president and chief executive officer of American Express Publishing Corp. “Clearly, it’s a new game for luxury marketers and a considerable opportunity to understand and anticipate these changing behaviors and purchasing patterns.”
Jim Taylor, vice chairman of the Harrison Group, observed that the availability of the Internet gives consumers economic power and choice. “Shoppers can readily compare price, quantity, features, warranty, delivery and amenities online [and they’ve] learned to apply intelligent logic to their purchasing power,” he said.
According to the survey, respondents consider spending money “serious business,” with three-fourths stating that “managing my family’s finances requires strong business management skills.”
The majority of consumers surveyed, or 70 percent, said they use Internet strategies to identify, price and compare and sometimes buy fashion and home purchases online. The remaining 30 percent prefer to shop alone or in-store with a knowledgeable salesperson.
However, savvy purchasing can increase the value of household income by more than 35 percent, freeing up in excess of $100,000 annually in additional aftertax cash flow, the study said.
The survey also found that decisions on what to buy are driven by specific needs, either as replacements or upgrades for an existing item or something new for a special occasion. Only one-third of the purchases are due to browsing, the survey found.