America’s affluent consumers will find holiday joy by focusing on relationships and experiences, rather than material gifts, according to data collected in September for the Survey of Affluence and Wealth in America, produced by Harrison Group and American Express Publishing.
The new survey sampled 769 affluent Americans with discretionary household incomes ranging from $100,000 to over $1 million. One in three are planning to take a special trip this holiday season as a gift for their family and one in five would like the gift of travel.
Affluent households – who represent the top 10 percent of American wage-earning households – are expected to account for 23 percent of the total 2011 holiday spend ($68.74 billion) this season. Gift-giving budgets of affluent families are down, resulting in an overall decline of $1.04 billion (a 6.1 percent drop) in gift-giving intentions among affluent and wealthy families, compared to 2010.
This decline is led by those with discretionary incomes of $100K to $250K, whose holiday spending budgets are projected to be 17 percent lower than in 2010. On the other hand, expenditure on gifts will be up seven percent (to an average of $2,708) among those at the very top of the income spectrum, with discretionary incomes of $250,000 or more.
What’s more, seven percent of affluent families report they are increasing their spending this year by an average of 33 percent for a 2011 gift-giving budget of $3,887, on average. Conversely, the 14 percent of those surveyed that plan to spend less expect to spend an average of $884 this year.
For added context, the study also polled 839 consumers in a general population sample. Non-affluent consumers that were surveyed plan to spend an average of $558 on gifts this holiday season, with 28 percent of the general population expecting to spend less on gifts than they did in 2010.
The declines among the affluent population are not the result of increased anxiety over personal financial situations. Twenty-nine percent of affluent consumers report that their household income is up over last year and 30 percent say the same about their assets. Eighty-four percent say they are confident that they have the financial resources to weather a continuation of the recession or a double-dip recession. One in five affluent consumers say they are happier now than they were a year ago, and 76 percent testify that they are a “lucky person.”
Dr. Jim Taylor, vice president of the Harrison Group, commented, “After four plus years of reprioritizing and realigning their spending to match their values, affluent consumers are feeling quite good about themselves and their ability to maintain – and even increase – their family’s happiness and well-being.”
In fact, 84 percent of affluent Americans indicate that they are determined to make this holiday season a great one for their family. Eighty-one percent say that the best part of the holidays are spending time with the people they care about, versus either giving (15 percent) or receiving gifts (3 percent).
According to Taylor, “Expressions of happiness are being increasingly decoupled from the desire to acquire more and more things. The search for the holiday spirit no longer centers on the search for ‘stuff’ – it resides in family and in simplicity.”
Fifty-seven percent of affluent consumers say they are looking to buy fewer gifts this holiday season. Among the 14 percent who say they are trimming their gift budgets, 57 percent say this is because they “just don’t need as much stuff.” This response is up 14 points from last year. In 2010, the number one response to this question was “worried about the economy” and, interestingly, this answer is down 21 points in 2011, from 68 percent to 47 percent.
Cara David, senior vice president of corporate marketing & integrated media at American Express Publishing, said,"Although the retail landscape might be a bit different from years past, affluent consumers are still excited about purchasing special gifts for their loved ones. They are willing to spend on items or experiences that will bring happiness, but their sense of resourcefulness will continue to be top of mind."
For the majority of affluent consumers (69 percent) the gifts they buy need to have “lasting, enduring value.” It would seem that, at least for some, experiences fit the bill. One in three are planning to take a special trip this holiday season as a gift for their family, one in five would like the gift of travel as a gift for themselves and 13 percent would like a gift certificate to a restaurant. Furthermore, 28 percent of all affluent consumers are looking to “splurge on a special holiday gift” for their family – a rate that rises to 40 percent among the wealthiest consumers, with discretionary incomes of $250,000 or more.
A significant percentage of affluent consumers, 31 percent of men and 49 percent of women, say it is very or extremely likely that they will purchase for themselves as they are buying for others. This may be because husbands and wives are not likely to see their “wish list” fulfilled by their spouses. Thirty-six percent of wives would like jewelry as a holiday gift while only 27 percent of husbands plan on giving gifts in this category. Twenty-two percent of married women would like a spa treatment, while only 11 percent of married men plan on giving this gift, and 25 percent of wives want a gift card to a specific retailer with only 12 percent of husbands saying they will purchase this for their wives. But the biggest disconnect is in the most common gift that wives plan on giving their husbands: 47 percent of wives say they will buy apparel for their husbands, but only 21 percent of husbands have put this on their wish list.
Additional Findings from the study:
• One in five affluent Americans plan to spend more time with their immediate family, 16 percent will spend more time with their grown children, parents or grandparents and 16 percent will spend more time with friends.
• Small parties will trump larger celebrations, with 10 percent planning to spend more time hosting intimate gatherings at their home and the same percent saying they will spend less time hosting holiday parties at their home.
• Sixty-eight percent of affluent consumers say the holidays are “among the happiest times of the year” while 32 percent say they are among the most stressful.
• Sixty-four percent of those surveyed say gift-giving is a “rewarding way to show people how much I care about them,” while 36 percent say gift-giving is a “hassle.”
• Seventy-two percent of women say that holiday shopping puts them in the holiday spirit, while 36 percent say it makes them feel like a Scrooge. For men, the “Scrooge factor” is higher, at 43 percent.
• Men and women have similar views on gift-giving: Forty percent of all respondents say that if they could, they would give only gift cards, gift certificates or cash, Thirty-four percent say they would make charitable donations in lieu of gifts, and Twenty-seven percent would skip gift-giving all together, given the opportunity.
• When it comes to the mix of on- and off-line shopping, 37 percent of affluent consumers say they will do more of their gift shopping online than in stores, while 24 percent say there will be a pretty even split. Only 34 percent of those surveyed say they will do more shopping in stores rather than online.
• Online shopping wins hands-down on convenience and price, with 71 percent of affluent consumers saying that online is more convenient and 53 percent that believe you find better prices online.