Study finds that the "Henry" (High Earners Not Rich Yet) segment spent 7.3% less on furniture, lamps and floor coverings from 2009-11.
After being MIA due to the recession, finally the HENRYs are back, so reveals the just released Unity Marketing's annual state of the luxury market report. The return of these lower-income affluent consumers is cause for celebration for luxury and high-end marketers, as this population makes up in numbers what they might lack in financial firepower.
The HENRYs stand for "High Earners Not Rich Yet" who by the numbers comprise 80 percent of the affluent consumer segment. While the typical HENRY consumer can only rarely if ever indulge in core product ranges from ultra high-end luxury brands like Chanel, Louis Vuitton, Hermes, or Gucci, they do support these brands with less costly purchases, such as lipstick from Chanel, small leather goods from Louis Vuitton, etc. And they are a critically important customer segment of such 'accessbile' luxury brands as Coach, Ralph Lauren, Tiffany, Kate Spade, Vera Wang, Michael Kors, Restoration Hardware and premium mass brands, like Ann Taylor, Banana Republic, Williams Sonoma, among others.
Unity Marketing's annual report on the state of the luxury market has just been released. The Luxury Report 2012: the Ultimate Guide to the Luxury Consumer Market, provides detail data about the purchase behavior, spending patterns and trends in the market for luxury among the nation's most affluent consumers for purchases from 2008 through 2011. "After an extraordinary year in 2010, things are returning to a more steady state in the luxury market in 2011," says Pam Danziger, president of Unity Marketing and author of Putting the Luxe Back in Luxury.
Based upon the results from Unity Marketing's luxury consumer surveys conducted throughout 2011 among over 5,000 affluents with incomes on average of $288,600, key findings from the new study include:
Luxury consumer spending peaked in 2010, but dropped back to 2009 levels in 2011 -- The average amount luxury consumers reported spending on luxury was on the decline throughout 2011, reaching its lowest level in the past three years during the fourth quarter 2011.
Ultra-affluent spending on luxuries has been most volatile, as the lower-income HENRYs picked up the pace of luxury spending in 2011 -- Ultra-affluents (i.e. those at the top 2 percent of U.S. households with incomes starting at $250,000) cut their spending by nearly 30 percent from 2010, while the HENRYs (High Earners Not RichYet with incomes $100,000-$249,999) increased their spending on luxury by some 11 percent from 2009 levels. Even though HENRYs individually have a far lower spending threshold than ultra-affluents, there are nearly ten HENRY households for every ultra-affluent. That is why with a total of 21.3 million households, the HENRY segment is a critically important part of the consumer market.
What's Hot, What's Not in Luxury Now -- In total luxury spending grew only 1.3 percent from 2009 to 2011, with the best performing categories as measured by change in spending being travel (up 40.8 percent); kitchenware and cooks' tools (up 37.5 percent); entertainment (up 33.6 percent); dining (up 26.5 percent) and fashion accessories (up 23.4 percent). By contrast those categories falling most from 2009 to 2011 were kitchen appliances (down 23.9 percent); watches (down 20.1 percent); jewelry (10.2 percent); and furniture, lamps and floor coverings (down 7.3 percent).
Danziger continues, "Last year we were looking for the return of the HENRYs back into the luxury market and this year we can say they have returned and are more positive about spending in the future. For example, in 2009 only 18 percent of the luxury consumers surveyed expected to spend more on luxury in the next twelve months; by comparison 26 percent in 2011 predict greater spending on luxury throughout 2012."
As another positive indicator, Danziger notes that fewer affluent consumers are making changes in their lifestyle due to worries about the economy. Among the most notable positive changes in their lifestyle is that affluent consumers are dining out more often and shopping more frequently. They are less likely to delay purchases and in another indicator of a positive shift in sentiment, fewer affluents are resorting to using coupons to save money.
About Pam Danziger and Unity Marketing: Pamela N. Danziger is an internationally recognized expert specializing in consumer insights for marketers targeting the affluent consumer. She is president of Unity Marketing, a marketing consulting firm she founded in 1992. Pam received the Global Luxury Award for top luxury industry achievers presented at the Global Luxury Forum in 2007 by Harper's Bazaar.
Pam gives luxury marketers "All Access" to the mind of the luxury consumer. She uses qualitative and quantitative market research to learn about their brand preferences, shopping habits, and attitudes about their luxury lifestyles, then turns these insights into actionable strategies for marketers to use to reach these high spending consumers. Unity Marketing is the voice of the luxury consumer for such clients as PPR, Diageo, Starwood, Tempur-Pedic, Google, Swarovski, Constellation Wines, Luxottica, Orient-Express Hotels, Italian Trade Commission, Marie Claire magazine, The World Gold Council, and The Conference Board.
Call Pam at 717-336-1600 to receive more details about the HENRY segment of the luxury consumer market or visit http://www.unitymarketingonline.com.
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