Affluent Consumers: Demographic Patterns and Spending Trends, 7th Edition

 
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Published Oct 6, 2017 | 137 Pages | Pub ID: LA15000101

Affluent Consumers: Demographic Patterns and Spending Trends, 7th Edition

Affluent consumers have enjoyed a post-recession bounce far greater than that experienced by their lower-income counterparts. Between 2010 and 2016, the aggregate income of affluent households more than doubled, while aggregate income attributable to all other households was up just 19%. 

This new Packaged Facts report, Affluent Consumers: Demographic Patterns and Spending Trends, 7th Edition, highlights cross-currents in the affluent consumer market in an era marked by this widening gulf between the affluent and everyone else.

Affluent Consumers Prioritize Customized Products, Services

Some affluent consumers cope with the psychological baggage of being wealthy in an increasingly winner-take-all economy by declining to think of themselves, or to project themselves, as being affluent or wealthy at all. Such evolving mindsets among affluent consumers comes are reflected in changes in how they prefer to spend their money. For an increasing number of affluent Americans, the endless and conspicuous accumulation of possessions has become less important than financial access to meaningful experiences such as purposeful or at least truly exotic travel. In another shift, more and more upper-income consumers would rather achieve status by promoting the right kind of social values, as opposed to purchasing products and services that reflect a material world mindset. 

Another kind of status now sought after by affluent consumers comes is the ability to buy time, a transaction increasingly seen as the ultimate luxury purchase. Marketers are focusing on how to provide unique services to their affluent customers that provide the kind of convenience, time savings, and outsourcing of mundane tasks and concerns that ordinary consumers can’t afford. Customized, personalized products and services also rank high on the priority list of affluent consumers. 

While opportunities for the pursuit of excess still abound, especially for the ultra-rich, many affluent shoppers remain intent on searching for value and hunting for bargains. For example, data cited in this report show that affluent households are actually more likely than households on average to respond to money-saving incentive offers (58% vs. 46%), especially those offering a rebate with product purchase (54% vs. 38%). 

Report Scope & Methodology

Affluent Consumers: Demographic Patterns and Spending Trends, 7th Edition focuses on the affluent consumer market defined as adults with a household income of $250,000 or more, and also looks at consumers with a household income of $500,000 or more. 

U.S. Government data sources include U.S. Census Bureau household income data based on the Current Population Survey and data compiled by the Consumer Expenditure Survey of the Bureau of Labor Statistics. The report also incorporates an analysis of the latest available data from the Federal Reserve Survey of Consumer Finances that was included in a January 2016 U.S. Department of Labor-sponsored report. 

A primary source of consumer data in this report is the Simmons national consumer survey for Winter 2016-17, which was fielded between January 2016 and February 2017. For trend analysis of affluent consumers in the post-recession U.S. economy, the report uses as a baseline the Winter 2009-2010 Simmons survey. On an ongoing basis, Simmons conducts booklet-based surveys of a large and random sample of consumers (approximately 25,000 for each 12-month survey compilation) who in aggregate represent a statistically accurate cross-section of the U.S. population. 

In addition, this report cites a number of studies of affluent consumers and the luxury market sponsored by private consulting firms, including Bain & Company, Boston Consulting Group, Deloitte, Knight Frank and Wealth-X. The report is also based upon data collected from a range of other industry sources, including company websites, trade publications, business newspapers and magazines and consumer blogs.

CHAPTER 1 EXECUTIVE SUMMARY
SCOPE AND METHODOLOGY
Scope of the Report
Methodology
TOPLINE INSIGHTS
Affluent Consumer Population Explodes in Post-Recession Bounce
Affluent Consumer Confidence Roars Back from Recession Low
The Middle Class Continues to Tread Water
Affluent Households Gain at the Expense of Everyone Else
Some of the Affluent Try to Avoid the Stigma of Wealth in an Age of Inequality
Inconspicuous Consumption Gains Favor
Many Affluent Consumers Like to Search for Value and Snap Up Bargains
Being Rich Means Having Enough Money to Buy Time
Affluent Consumers Demand Products and Services Designed Just for Them
The Affluent Shift From Piling Up Possessions to Buying Experiences
Ultra-Rich Still Cherish Brands That Others Can’t Possibly Afford (or Dare) to Buy
Affluent Consumer Market Represents Outsize Opportunity
As Income Grows, Demand for Professional Financial Advice Increases
Affluent Multicultural Households Represent Growing Opportunity
PERSONAL PROFILE OF AFFLUENT CONSUMERS
Affluent Consumers Are More Likely to Be Young, Urban or Coastal
3 in 10 Have Graduate Degree
Employment Profile in Sync with Educational Achievement
Most Affluent Households Have Multiple Earners
Married-Couple Family Households Predominate
Homeownership Key Marker of Affluence
Super-Affluent Differ in Some Ways From the Merely Affluent
Affluent More Likely to Have Liberal Political Outlook and Secular Social Values
CONSUMER PROFILE
Affluent Shoppers Tied to the Internet
Travel Services at Top of List of Online Purchases
Affluent Like to Save Money Too
Brick-and-Mortar Shopping Still Appeals
Shopping Patterns Reflect Two-Tier Economy
Affluent Shoppers Tethered to Internet Even While Shopping in Stores
Affluent Households Have Outsize Impact on Consumer Economy
Affluent Consumers Look for Quality When They Buy Apparel
FINANCIAL PROFILE OF AFFLUENT CONSUMERS
Nearly 40% of Income of Wealthiest Americans Comes from Investments
A Handful of Households Controls a Substantial Majority of Household Financial Assets in U.S.
Wealthiest Families Prosper in Spite of Market Dips
Richest Households Depend Less on Retirement Accounts
Super-Affluent Investors Display Greater Tolerance for Risk
Super-Wealthy Investors Play in a Their Own League
High-Value Life Insurance Part of Affluent Consumers’ Financial Planning
Loans Part of Affluent Lifestyle
MARKETING TO AFFLUENT CONSUMERS
Luxury Retailers Scale Back Brick-and-Mortar Presence
Luxury Retailers Forced to Raise Online Profile
Many Luxury Brands Learn How to Map a Digital Future
CHAPTER 2 TRENDS AND OPPORTUNITIES
MARKET TRENDS
Dominance of Affluent Consumers Decades in the Making
Figure 2-1 Share of Aggregate Household Income Received by Top 5% of Households, Selected Years 1970-2016
Wealthiest Control Three-Fourths of Family-Owned Assets
Figure 2-2 Share of Family Wealth Held by Families in Top 10 Percent of Wealth Distribution, 1989 vs. 2013
Figure 2-3 Amount of Family Wealth Held by Families in Top 10 Percent of Wealth Distribution, 1989 vs. 2013 (in trillion $)
Affluent Households Multiply in Post-Recession Bounce
Table 2-1 Household Growth, Affluent vs. Other Households, 2010-2016 (in thousands)
Affluent Consumer Population Tops 14 Million
Table 2-2 Population Growth, Affluent vs. Other Consumers, 2010-2016 (in thousands)
Figure 2-4 Affluent Consumers as Percent of Growth in Adult Population, 2010-2016
Affluent Still Grab Greater Share of Aggregate Income
Table 2-3 Growth in Mean Household Income, Top 5% vs. Other Households, 2010-2016
Table 2-4 Amount and Percent of Aggregate Household Income, Affluent vs. Other Households, 2010 vs. 2016 (in million $)
Table 2-5 Growth in Aggregate Household Income, Affluent vs. Other Households, 2010-2016 (in million $)
Affluent Consumer Population Explodes as Middle Class Hollows Out
Figure 2-5 Share of Total Aggregate Household Income, Third and Fourth Quintiles vs. Top 5%, 1970 vs. 2015
Even Upper Middle Class Households Squeezed by More Affluent Counterparts
Figure 2-6 Share of Total Aggregate Household Income, Top 5% vs. Other Households in Top 20%, 1970 vs. 2016
Figure 2-7 Share of Aggregate Household Income by Top 5% vs. Other Households in Top 20%, 1970
Figure 2-8 Share of Aggregate Household Income Received by Top 5% vs. Other Households in Top 20%, 2016
Table 2-6 Average Household Income, Top 5% vs. Other Households in Top 20%, 2010-2016
Ultra High Net Worth Americans Number in the Tens of Thousands
KEY MARKET OPPORTUNITIES
Affluent Consumer Confidence Roars Back from Recession Low
Figure 2-9 Percent Feeling Better Off Financially Now Than 12 Months Ago, Affluent vs. Other Consumers, 2009-2016
Figure 2-10 Percent Expecting to Be Better Off Financially 12 Months From Now, Affluent vs. Other Consumers, 2009-2016
Affluent Consumers Represent Outsize Opportunity
Table 2-7 Highlights of Consumer Expenditures by Affluent Households, 2016 (in billion $)
Attachment to Online Shopping Illustrates Payoff From Digital Strategies
Table 2-8 Impact of the Internet on Consumer Behavior, Affluent Consumers vs. All Adults, 2016
Spending Patterns Reveal Importance of Affluent Consumers to Brick-and-Mortar Retailers
Table 2-9 Highlights of Shopping and Spending Patterns, Affluent Consumers vs. All Adults, 2016
Travel Habits Set Affluent Consumers Apart
Table 2-10 Attitudes Toward Travel, Affluent Consumers vs. All Adults, 2016
Figure 2-11 Percent Growth in Number of Those Engaging in Selected Travel Activities, Affluent vs. Other Consumers, 2010-2016
Figure 2-12 Percent Making Two or More Foreign Trips or Spending $5,000 or More on Last Foreign Trip (in Last Three Years), Affluent vs. Other Consumers, 2016
High Income Increases Demand for Professional Financial Advice
Affluent Consumers Are Prime Customers for Loans as Well as Other Financial Services
Table 2-11 Highlights of Use of Financial Services, Affluent Consumers vs. All Adults, 2016
Affluent Multicultural Households Represent Growing Opportunity
Table 2-12 Growth in Number of Affluent Households by Race and Hispanic Origin, 2010-2016 (in thousands)
Figure 2-13 Affluent Non-Hispanic White and Multicultural Households as Percent of All Affluent Households, 2010 vs. 2016
CHAPTER 3 PERSONAL PROFILE OF AFFLUENT CONSUMERS
DEMOGRAPHIC HIGHLIGHTS
Affluent Consumers Are More Likely to Be Young, Urban or Coastal
Figure 3-1 Key Differences in Age and Place of Residence, Affluent Consumers vs. All Adults, 2016
Asians Overrepresented in Affluent Consumer Population
Figure 3-2 Race and Hispanic Origin, Affluent Consumers vs. All Adults, 2016
3 in 10 Have Graduate Degree
Figure 3-3 Educational Attainment, Affluent Consumers vs. All Adults, 2016
Employment Profile in Sync with Educational Achievement
Table 3-1 Employment Profile, Affluent Consumers vs. All Adults, 2016
Figure 3-4 Attitudes Toward Work and Career, Affluent Consumers vs. All Adults, 2016
Figure 3-5 Percent Changing to a Better Job in Past 12 Months/Planning to Change in Next 12 Months, Affluent Consumers vs. All Adults, 2016
Most Affluent Households Have Multiple Earners
Figure 3-6 Percent of Households with Two or More Employed Adults, Affluent vs. All Households, 2016
Married-Couple Family Households Predominate
Table 3-2 Household Structure, Affluent vs. All Households, 2015
Figure 3-7 Selected Household Characteristics, Affluent Consumers vs. All Adults, 2016
Homeownership Key Marker of Affluence
Figure 3-8 Percent Living in Owned House or Condo/Co-op, Affluent Consumers vs. All Adults, 2016
Super-Affluent Differ in Some Ways From the Merely Affluent
Figure 3-9 Selected Demographic Characteristics of Consumers with Household Income of $250,000--$499,999 vs. Consumers with Household Income of $500,000 or More, 2016
POLITICAL AND SOCIAL VALUES
Affluent More Likely to Be Politically Active and Have Liberal Political Outlook
Figure 3-10 Measures of Political Activity, Affluent Consumers vs. All Adults, 2016
Figure 3-11 Political Outlook, Affluent Consumers vs. All Adults, 2016
Secular Social Values More Prominent Among Affluent
Figure 3-12 Selected Social Values, Affluent Consumers vs. All Adults, 2016
CHAPTER 4 CONSUMER PROFILE
HIGHLIGHTS OF CONSUMER ATTITUDES AND BEHAVIOR
Affluent Shoppers Tied to the Internet
Figure 4-1 Attitudes Toward Shopping Online, Affluent Consumers vs. All Adults, 2016
Figure 4-2 Made Online Purchase in Last Three Months, Affluent Consumers vs. All Adults, 2016
Travel Services at Top of List of Online Purchases
Table 4-1 Items Most Likely to Be Ordered Online in Last Three Months, Affluent Consumers vs. All Adults, 2016
Affluent Are Prime Candidates for Online Home Delivery Subscriptions
Figure 4-3 Use of Online Home Delivery Subscriptions, Affluent Consumers vs. All Adults, 2016
Affluent Like to Save Money Too
Figure 4-4 Use of Coupons and Response to Incentive Offers, Affluent vs. All Households, 2016
Brick-and-Mortar Shopping Still Appeals
Table 4-2 Type of Brick-and-Mortar Retail Outlets Recently Shopped, Affluent Consumers vs. All Adults, 2016
Shopping Patterns Reflect Two-Tier Economy
Table 4-3 Selected Retail Outlets More or Less Likely to Be Shopped At in Last Three Months, Affluent Consumers vs. All Adults, 2016
Affluent Shoppers Tethered to Internet Even While Shopping in Stores
Figure 4-5 Use of the Internet When Shopping in Brick-and-Mortar Retail Outlets, Affluent Consumers vs. All Adults, 2016
OVERVIEW OF SPENDING PATTERNS
Affluent Households Have Outsize Impact on Consumer Economy
Table 4-4 Aggregate Consumer Expenditures, Affluent vs. All Households, 2016
Affluent Have Different Spending Priorities
Table 4-5 Key Differences in Spending Priorities by Expenditure Category, Affluent vs. All Households, 2016
Affluent Consumers Look for Quality When They Buy Apparel
Figure 4-6 Attitudes Toward Apparel Spending, Affluent Consumers vs. All Adults, 2016
Table 4-6 Aggregate Spending on Apparel and Services by Category of Expenditure, Affluent vs. All Households, 2016 (in million $)
New, Luxury Vehicles Capture the Attention of Affluent Consumers
Figure 4-7 Attitudes Toward Buying New or Luxury Vehicles, Affluent Consumers vs. All Adults, 2016
Figure 4-8 Percent Spending $40,000 or More on Most Recently Purchased/Leased Vehicle, Affluent Consumers vs. All Adults, 2016
Table 4-7 Aggregate Spending on New and Used Cars and Trucks, Affluent vs. All Households, 2016 (in million $)
Affluent Responsible for Nearly One in Five Dollars Spent on Mortgage Interest
Table 4-8 Aggregate Spending on Selected Housing Expenses, Affluent vs. All Households, 2016 (in million $)
Affluent Households Spend $39 Billion Annually on Household Furnishings and Equipment
Table 4-9 Aggregate Spending on Household Furnishings and Equipment by Category of Expenditure, Affluent vs. All Households, 2016 (in million $)
Entertainment and Sporting Goods Industries Depend on Affluent Consumers
Table 4-10 Aggregate Spending on Entertainment by Category of Expenditure, Affluent vs. All Households, 2016 (in million $)
CHAPTER 5 FINANCIAL PROFILE OF AFFLUENT CONSUMERS
PROFILE OF AFFLUENT INVESTORS
Investing Central to Affluent Consumer Identity
Table 5-1 Ownership of Investments by Type of Investment, Affluent vs. Other Households with Investments, 2016
Nearly 40% of Income of Wealthiest Americans Comes from Investments
A Handful of Households Controls a Substantial Majority of Household Financial Assets in U.S.
Table 5-2 Distribution of Overall Asset Holdings by Household Income
Table 5-3 Distribution of Overall Asset Holdings by Top 1% and 5% of Households
Wealthiest Families Prosper in Spite of Market Dips
Figure 5-1 Average Amount of Financial Assets Held by Families in Top 10 Percent of Wealth Distribution, 1989 vs. 2013 (in thousand $)
Richest Households Depend Less on Retirement Accounts
Table 5-4 Distribution of Asset Holdings, Highest-Income vs. All Other Households (in billion $)
Table 5-5 Distribution of Asset Holdings, Top 5% and 1% of Households vs. All Other Households (in billion $)
Super-Affluent Investors Display Greater Tolerance for Risk
Table 5-6 Distribution of Asset Holdings Other Than IRAs and Defined Contribution Plans, Highest-Income vs. All Other Households
Table 5-7 Distribution of Asset Holdings Other Than IRAs and Defined Contribution Plans, Top 5% and 1% vs. All Other Households
Super-Wealthy Investors Play in a Their Own League
USE OF FINANCIAL SERVICES
Reliance on Professional Financial Advisors Increases with Income
Figure 5-2 Sources of Financial Information, Affluent vs. Other Investors, 2016
Table 5-8 Household Sources of Financial Advice by Income Level
Amex Scores with Affluent Consumers
Table 5-9 Ownership of Credit and Debit/ATM Cards, Affluent Consumers vs. All Adults, 2016
Figure 5-3 Percent of Credit Card Holders with Household Income of $250,000 or More by Brand of Card, 2016
Affluent Consumers Place High Value on Having Good Insurance Coverage
Figure 5-4 Attitudes Toward Life and Homeowners Insurance Coverage, Affluent Consumers vs. All Adults, 2016
High-Value Life Insurance Part of Affluent Consumers’ Financial Planning
Figure 5-5 Percent with Life Insurance Coverage of $200,000 or More, Affluent Consumers vs. All Adults, 2016
Table 5-10 Type of Life Insurance Carried, Affluent Consumers vs. All Adults, 2016
Affluent Consumers Are Prime Customers for Wide Range of Insurance
Table 5-11 Other Insurance Carried by Type of Insurance, Affluent Consumers vs. All Adults, 2016
Loans Part of Affluent Lifestyle
Figure 5-6 Percent Who Agree “I Don’t Like the Idea of Being in Debt,” Affluent Consumers vs. All Adults, 2016
Table 5-12 Type of Loans Have, Affluent vs. All Households, 2016
CHAPTER 6 MARKETING TO AFFLUENT CONSUMERS
OVERVIEW
Luxury Retailers Scale Back Brick-and-Mortar Presence
Luxury Retailers Forced to Raise Online Profile
Many Luxury Brands Learn How to Map a Digital Future
Luxury Shopping Experiences Can Still Attract the Ultra-Rich
Personalization and Customization Key to Reaching Luxury Buyers
Luxury Marketers Focus on Providing an Experience Rather than Selling a Product
Being Rich Enough to Buy Time Seen as the Latest Status Symbol
Illustration 6-1 Bentley on Demand
The Ultra-Rich Still Cherish Brands That Others Can’t Possibly Afford (or Dare) to Buy
CASE STUDIES OF MARKETING TO THE AFFLUENT CONSUMER
Bentley Motors Takes Personalization to New Levels
Illustration 6-2 Bentley Inspirator
Illustration 6-3 Bentley on Demand
Tiffany & Co. Highlights Commitment to Sustainability
Neiman Marcus Seeks to Improve Customer Experience through Technology
Illustration 6-4 Memory Mirror
Luis Vuitton’s Ad Campaigns Features Famous Faces
Illustration 6-5 Luis Vuitton’s “Series 7” Campaign
Burberry Turns to Social Media to Launch Cosmetics Product
Illustration 6-6 Burberry’s ”Cat Lash Mascara” on Pinterest
APPENDIX
POST-RECESSION TRENDS
Table A-1 Population Growth, Affluent vs. Other Consumers, 2010-2016 (in thousands)
Table A-2 Household Growth, Affluent vs. Other Households, 2010-2016 (in thousands)
Table A-3 Growth in Use of Financial Services, Affluent vs. Other Consumers, 2010-2016 (in thousands)
Table A-4 Growth in Selected Travel Activities in Last Three Years, Affluent vs. Other Households, 2010-2016 (in thousands)
Table A-5 Change in Home Remodeling Activities, Affluent vs. Other Households, 2010-2016 (in thousands)
Table A-6 Change in Purchase of Big-Ticket Items, Affluent vs. Other Households, 2010-2016 (in thousands)
PERSONAL PROFILE OF AFFLUENT CONSUMERS
Table A-7 Demographic Profile, Affluent vs. All Consumers, 2016
Table A-8 Demographic Profile of Affluent Consumers: Household Income of $500,000 or More vs. Household Income of $250,000-$499,999, 2016
Table A-9 Social Values, Affluent vs. Other Consumers, 2016
Table A-10 Political Profile, Affluent vs. Other Consumers, 2016
Table A-11 Memberships and Leisure Activities, Affluent vs. All Consumers, 2016
Table A-12 Participation in Physical Fitness/Exercise Programs, Affluent vs. Other Consumers, 2016
Table A-13 Attitudes Toward Career, Affluent vs. All Consumers, 2016
USE OF FINANCIAL SERVICES
Table A-14 Attitudes Toward Personal Finances, Affluent vs. All Consumers, 2016
Table A-15 Indicators of Financial Confidence, Affluent vs. All Consumers, 2016
Table A-16 Ownership and Use of Credit and Debit Cards, Affluent vs. All Consumers, 2016
Table A-17 Ownership of Financial Accounts, Affluent vs. All Consumers, 2016
Table A-18 Type of Loans Have, Affluent vs. All Consumers, 2016
Table A-19 Type and Value of Life Insurance Carried, Affluent vs. All Consumers, 2016
Table A-20 Type of Other Insurance Carried, Affluent vs. All Consumers, 2016
CONSUMER ATTITUDES AND BEHAVIOR
Table A-21 Spending and Buying Patterns, Affluent vs. All Consumers, 2016
Table A-22 Consumers as Influencers, Affluent vs. All Consumers, 2016
Table A-23 Attitudes Toward Technology and the Internet, Affluent vs. All Consumers, 2016
Table A-24 Impact of the Internet on Media Consumption, Affluent vs. All Consumers, 2016
Table A-25 Attitudes Toward Food, Affluent vs. All Consumers, 2016
Table A-26 Attitudes Toward Fashion, Affluent vs. All Consumers, 2016
Table A-27 Attitudes Toward Automobiles, Affluent vs. All Consumers, 2016
Table A-28 Attitudes Toward Travel, Affluent vs. All Consumers, 2016

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