The assessment of current business conditions fell 16 percentage points from the Spring 2012 survey. The index for future business conditions fell 13 points, and the index for change in the stock market dropped 15 points. These indexes have been lower in the fall survey than in the spring survey during both 2011 and 2012.
These results are consistent with the September general Consumer Confidence Index (70.3), reported by The Conference Board, and similar measures of consumer mood tracked by others. The expected change in after tax personal income was essentially unchanged. Over a third expect their net worth to be higher in September 2013. Those with the most optimism about future economic conditions are the under age 50, higher income, lower net worth, and male groups.
Spending plans for the 8 major items and the indexes for the change in spending for the 17 products and services tracked by these surveys are a little below levels in the Spring 2012 survey in most cases. 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 one (domestic vacation travel) remained in positive territory, five are in the neutral range, and 11 are in negative territory, suggesting a decline in spending.
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 27 percentage points higher for those expecting an increase or no change in their income versus those expecting a decline in income. The difference is 26 points based on net worth expectations. There are pockets of particular strength in the spending plans, especially among the wealthiest one percentile.
Those who say they have not and will not make an effort to reduce expenditures have an average age of 58.9 years, income of $325,000, and net worth of $3.6 million. This group tends to be about 3 years older and have a 16% higher average income and 29% higher average net worth than those planning to reduce or defer expenditures. Some of the highlights of the special topics covered in this survey include: about one of every five of the affluent do not expect to receive a Christmas or Hanukah holiday gift this year. Those most likely to expect to receive a gift are the under age 50 group (90%) and women (92%). For women, the top item on their gift “wish list” is some form of “currency” (i.e. a gift card or certificate, money or a check). In total this is the top gift for 48% of the women, while 31% of the men named this as one of their top 2 gift items. Clothing is a first choice for men (45%) while it is the second choice of women (29%).
About 7% of the affluent say they do not plan to buy holiday (Christmas and Hanukah) gifts this year. Intentions to purchase holiday gifts is lowest among the age 60+, under $200K income, and highest net worth groups.
On average, about 6% of the affluent planning to buy 2012 holiday gifts expect to spend more than last year, while 23% expect to spend less. Allowing for those who expect to spend the same, the average 2012 holiday gift expenditures of the affluent are estimated to decline 2.4% from 2011 levels. This produces an estimated average of $2,102 for 2012 holiday gift expenditures per affluent household or a total market of $22.3 billion (down 5% from 2011) after allowing for the households that will not buy holiday gifts in 2012. The expenditure per household for gifts is about four times that of all households as estimated by the National Retail Federation.
Estimates of the increase in total retail sales for the holiday shopping period of November and December range from 3.3% from ShopperTrak to 4.1% by the National Retail Federation.
The affluent reported making purchases during the past 90 days at an average of 7.5 of the 42 retail chains and 5 online retail outlets listed. The average ranged from 6.6 (under $200K income group) to 8.5 ($200K+ income).
The chains named by 40% or more were Home Depot Costco Target Bed, Bath and Beyond and Macy’s. Among the 5 online retail outlets, Zappos at 9% was named the most. The other 4 were each named by less than 2%. Some substantial differences in chains and online outlets named exist among different age, income, and net worth groups.
Romney was selected as the favorite candidate of 48% of the respondents while Obama was chosen by 35% of the respondents. About 16% said they were undecided. In contrast to surveys of likely voters among the general public, Romney has no gender gap as he is equally popular among both men and women.
Romney is strongest among age 50 to 59 and the highest net worth groups and of course among Republicans and those who voted for McCain in 2008. Obama is strongest among age 60+ and of course among Democrats and those who voted for him in 2008.
The independents are evenly split between Obama, Romney, and being undecided.
This report provides extensive current and historic trend data 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
Special topics included in this report include:
- Which Consumers Plan to Maintain Spending and Which Do Not (and Why)
- Top Items on the Holiday Gift Wish List (by Gender, Age, and Level of Wealth)
- What will be Spent on Holiday Gifts and Who will Spend the Most
- Which of 42 Retail Chains and 5 Online Retail Outlets are the Most Popular
- The Favorite Presidential Candidate and Why
This is report #22 in the original and only twice-yearly tracking study of the mood and spending plans of the wealthiest 10% of U.S. households, which account for almost half of all consumer spending. These surveys are designed to provide information critical for effective marketing to the affluent and luxury consumers.
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 market segments
- Which segments of the affluent are continuing to spend and which are not (and why)
- Top items on the holiday gift wish list by gender, age, and level of wealth
- What will be spent on holiday gifts and who will spend the most
- Which of 42 retail chains and 5 online retail outlets are the most popular
- The favorite presidential candidate and why
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 personal income 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. And it is based on a mail survey and not an online panel.
Survey and Report Content
This is the 22nd in the original and only continuing series of twice-yearly surveys that focus on the 11.4 million households that represent the wealthiest 10% of all U.S. households, based on net worth, as determined by The Federal Reserve Board,. These surveys regularly measure and track their 12-month outlook 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 reveal which segments of the affluent will be maintaining their spending during the next 12 months and which will not and their expectations of changes in income and net worth, which are clearly influences that help explain the current and near term spending plans of the affluent and provide a perspective of what to expect for your business over the next year or so.
This survey also contained a series of questions to identify which of 42 retail chains and 5 online retailers are favored by the affluent, based on where they had made purchases during the prior 90 days. The respondents also revealed the top two holiday gifts they would like to receive for Christmas or Hanukah, how much they spent for holiday gifts in 2011, and how much they expect to spend for holiday gifts in 2012.
Finally, there was a series of questions designed to determine the presidential candidate they intend to vote for in November and the major issues influencing their selection of a candidate.
ResearchMethodology
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 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 12.7 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 435 men and women who promptly responded and met the minimum net worth requirement of $800,000. Their households have an average annual income of $285,000, an average net worth of $3.1 million, average investable assets of $1.8 million, and an average primary residence value of $1.3 million.
The survey respondents represent 31 states and the District of Columbia. Eighty-six (86) percent are married. The average age is 57.6 years. Seventy-four (74) percent are males and twenty-six (26) percent are females.
The maximum margin of error of this survey, at 95% confidence, is five percentage points.
