Amazingly, even though affluent consumers are concerned that they’ll run out of money, that the recession will last longer than a year and that we may in fact be headed for a full-fledged depression, they’re…happy.
I was shocked to hear the news, which was revealed by American Express Publishing and the Harrison Group in their latest “Survey of Affluence and Wealth in America.” In the study, 66 percent of the 1,500 upper middle class, affluent, super-affluent and wealthy individuals interviewed said they are “very happy.” How so?
Well, the truth is, apparently, now that the wealthy have had to become a bit more self-sufficient and resourceful, they’re feeling pretty good about themselves. Their new frugality has taught them to be smarter shoppers and to save more money in every category of their lifestyles. This new behavior has spurred them to feel they are more connected to their families. As a result of all of this, the level of their self-esteem is way up, even though the value of their assets may be way down.
That’s all well and good on the human level, but this new ability to say “no” to impulse shopping doesn’t bode well for retailers who have benefited mightily during the past few years of heady and ostentatious spending.
There is a glimmer of hope, however. Because consumers are saving, and saving a lot, they have money sitting in cash accounts “just waiting for something to do,” says Dr. Jim Taylor of the Harrison Group. In fact, it’s estimated that the richest households are harboring an average of $300,000 in discretionary income that they would have once spent frivolously. Taylor suspects that our rich friends, proud of their new thrifty attitude, may “bonus” themselves in December by spending some of that dough on something fabulous for themselves. “That will affect the travel business positively,” Taylor says.
Other findings from the report revealed a reversal in other trends. Taylor says that as the affluent seek to reward themselves with quick getaways, they’re tending to travel less with large groups than they had in the past. The desire to be around their top 10 friends is waning, apparently. The kids might not necessarily find themselves in tow on these short breaks either, as parents try to get away from it all, he reported. Not surprisingly, now that the affluent are more sensitive to their peers who may be suffering greatly from the poor economy, they are shying away from bragging, “I just came back from the most expensive trip ever.” They’re still traveling, but they’re going under the radar and visiting enclaves that give them lower visibility.
Other good news? Sixty-six percent of those surveyed said their spending on resorts and fine hotels will remain the same over the next 12 months; 78 percent said they’re not cutting back at all on their travel plans.
So there you have it. I would suggest watching for that spending bubble to burst in December. Stay in touch with your clients throughout the year and be prepared to propose a wonderful trip to them for the end of the year, as they pat themselves on the back for being so resourceful. They deserve the trip, and you deserve their business!