Retail Surveys
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Survey: Wealthy now skipping jewels, private jets
April 30, 2009
New York--A new study shows that the richest Americans, unnerved by the state of the economy, are cutting back on spending money on luxury items, including jewelry, because they are worried about their own financial security and fear that the recession will last longer than a year.
"The Survey of Affluence and Wealth in America," presented by American Express Publishing and Harrison Group, found that 53 percent of America's wealthiest consumers worry they could run out of money. Almost three out of four (73 percent) cited a belief that the current recession will last longer than a year. That marks a 10 percent jump from those who felt the same way in December 2008, and a 25 percent increase over September 2008. The same group is deeply concerned that the United States could be headed for a depression.
The study contains further grim news for jewelers: Jewelry has been grouped into the same category as private jets when it comes to items that the rich are not willing to spring for--at least for the time being.
"Our data suggests that in 2009, we'll see a decline in retail spending among affluent and wealthy consumers," says Jim Taylor, vice chairman of the Harrison Group, a Waterbury, Conn.-based marketing and research consulting firm that co-authors the quarterly study. "The negative outlook is, however, modifying. The rate of decline is now in the single-digit range for everything we measure, except private jets and jewelry. This contrasts with rates of decline in excess of 25 percent last year, in luxury categories."
At the same time, the recession continues to bite deeply into purchasing intent, the survey said. Across the 15 categories measured, the trend line suggests continued, although moderating, drops in purchases in the categories of fashion, automobiles, luxuries and jewelry. But going on vacation is a different story. Travel appears to be the only category that has stopped eroding on a quarter-on-quarter basis, the survey found.
In another twist, those surveyed reported being happier, even though they do not see rosy times ahead. Fewer than half of the individuals surveyed (46 percent) reported feeling "extremely/very optimistic" about their future. Even fewer (42 percent) said that they feel "extremely/very optimistic" about their child's future. However, more than half of the wealthy respondents (66 percent) said they are "very happy," the first time results have revealed a clear upturn in American happiness since the survey began in 2007, suggesting the decline in optimism appears to have bottomed out, and the possibility for an upturn exists, according to the report.
The report also notes that "being in the black is the new black," and that more than three-quarters of those surveyed (76 percent) reported taking pride in their newfound shopping habits, and another 65 percent now describe themselves as "smarter" shoppers.
"Beginning last Christmas, shoppers--especially women--began to take pleasure in saying no to unexamined consumption," Taylor said. "They began to take pride in their ability to resist the urge to buy and started to examine why they needed a new dress, a new fixture, anything really. And then, they derived pride--self-esteem--from their ability to make careful, reasoned purchase decisions."
During the past 12 months, respondents have also been saving 16 percent more of their household income and increasing contributions to their retirement plans by 6 percent, the study showed. At the same time, they've reduced their financial investments by 7 percent. The dramatic shift toward saving, versus spending, underscores respondents' beliefs that the recession will continue for an extended period of time. More than three out of four said that the real estate and banking crisis has negatively affected their sense of financial security.
The study included more than 1,500 upper middle class, affluent, super affluent and wealthy individuals, and was designed to assess the impact of the current economic turmoil on financial planning and spending. The respondents have discretionary annual incomes of at least $100,000, ranging up to $5 million.
Representative of 10 percent of the American population, the group accounts for half of all retail sales, 70 percent of all profit margins at retail and 80 percent of all non-retirement account assets, according to a release on the study.
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