Published on: May 16, 2011by Kevin Coupe
Nick Carraway was right when he said, in F. Scott Fitzgerald’s The Great Gatsby, “The rich are different from you and me.” And he remains right today.
(Ernest Hemingway is reputed to have replied to that line by saying, “Yes, they have more money.” He may or may not have actually said it. But if he did, he was right, too.)
The Wall Street Journal had a story the other day about how affluent consumers have been changed by the recession, even though many of them did not lose their houses, jobs or retirement savings. Or even much sleep, or at least not as much as their less moneyed brethren.
According to the story, “What's showing up in the latest research is a broad-based caution—a sudden aversion to salespeople, a tepid response to ads focused on brand images, and a new interest in price-shopping. In Harrison Group's first-quarter survey of consumers with a median income of $275,000, 38% said they wait for items to go on sale, versus 31% in 2010. Indeed, obtaining discounts on luxury goods has become a competitive sport among many well-to-do consumers...”
The story goes on: “In fact, one time-honored tenet of the luxury industry—that discounted prices lower products' prestige—appears to no longer be true, according to several studies. A survey released in April by the American Affluence Research Center, a luxury consultant based in Alpharetta, Ga., found that 60% of respondents said discounts didn't affect their opinion of brands.
“Items the rich do value at full price are one-of-a-kind clothes and accessories and experiences that create fond memories. Weekend getaways and vacations were the top two things the wealthy intended to spend more money on, Harrison Group says. The new luxuries are things that are in limited supply and have an emotional quality, rather than just a high price tag...”
The study by Harrison Group found that 41 percent of so-called “affluent consumers” said that they believe the brands they wear say a lot about who they are, compared to 51 percent three years ago, before the recession hit.
It is an interesting study, suggesting that the rich intend to hang onto their money and, when they spend it, do so with greater discretion. Which means that even retailers that focus on more upscale markets will need to focus with greater alacrity on their differential advantages.
There was, by the way, another story on the subject of consumer spending that caught my eye...
The Washington Post reports that new statistical studies show that people are more willing to default on their mortgages than they are to stop paying their credit card bills. In other words, “a significant number of Americans are now willing to lose their house to save the stuff that’s in it.”
The shift in priorities is fascinating: “Under the new payment hierarchy,” the Post writes, “their homes have become a liability and the consequences of skipping a mortgage payment seem far away, especially as legal wrangling over foreclosure can stretch for months. A credit card, on the other hand, can help them satisfy the immediate demands of paying for food or keeping the lights on. In addition, lax lending standards allowed many to buy a home with little financial investment - now manifesting itself as a lack of emotional attachment as well.”
Two eye-opening shifts in consumer attitudes taking place in the new, post-recession economy.
- KC's View: