Economic uncertainty has made them 'invulnerable'
By LAURA LAYDEN
In fact, many believe the recession is still on, or there’s another on the way — and they continue to guard their “castles,” using cash as their “moats,” said Jim Taylor, vice chairman of YouGov, in a talk Tuesday at the Luxury Summit in Naples.
That was one of the key findings from this year’s Survey of Affluence and Wealth, focused on the world’s most elite consumers. The survey, in its ninth consecutive year, is a joint effort between magazine publisher Time Inc. and global research giant YouGov. It was released Tuesday, the last day of the summit, held at The Ritz-Carlton, Naples, beachfront resort, off Vanderbilt Beach Road.
The survey reveals that after weathering the recession, the wealthy have a new sense of confidence about seeing their families through tough times, and they have become what Taylor describes as “invulnerable.” They’re more focused on their families and shared experiences with the people they love, which is driving a shift in how they spend their money.
“We became resourceful,” he said of the wealthy, while addressing a crowd of luxury marketers. “We became self-reliant. We became financially responsible.”
The U.S. has eclipsed Japan in the savings rate of the wealthy. The savings account balance in the U.S. is now at $8.5 trillion, up 60 percent from 2007.
“There has never been anything like this,” Taylor said.
Today, luxury buyers are shopping based more on need. They are taking a more strategic approach in what they purchase, doing their own research and drawing more on their own tastes or judgments to make their buying decisions, rather than relying on brand messaging to form their opinions, Taylor said.
“Brands have lost their power,” he said.
He noted that confidence in brands is also down, with only about 3 percent of survey respondents saying products always live up to their promises.
Far fewer affluent American consumers in the top 5 percent of U.S. households have favorite brands in retail, fashion and luxury hotels than they did six or seven years ago. In 2007-08:
■ 47 percent chose a favorite retailer, versus 28 percent now.
■ 80 percent chose a favorite fashion brand, compared with 61 percent currently.
■ 67 percent identified a favorite luxury hotel, as opposed to 37 percent today.
It’s not just a U.S. phenomenon. The study – broadened beyond the U.S. for the first time this year – found similar results from affluent consumers in 11 additional countries. This year’s study included research from the United Kingdom, Europe, Asia and the United Arab Emirates, adding 2,500 non-U.S. consumers to the mix.
“This invulnerability is global,” Taylor said. “It’s everywhere.”
The initial wave of the study included more than 1,700 U.S. consumers, with a minimum of $100,000 in discretionary household income. It included data from a wealthier group, with at least $500,000 in income.
Today, the value of all worldwide assets is about $241 trillion, Taylor noted.
“That is trillion,” he said. “That is a lot of money.”
In delivering his message, Taylor wore what he described as a chic beach suit, with designer shoes that were made decades ago. He figured the wealthy guy who once owned the suit probably only wore it once or twice in the 1960s, paying $1,200 for it.
“We’re not doing that anymore,” he said in an interview after his talk.
While the wealthy may be spending less, the survey found they’re generally happier and feeling more fulfilled, with a greater focus on family and experiences.
The changing trends call for a fresh look at brands and branding, Taylor said.
U.S. spending is expected to increase 6.7 percent in key discretionary categories in the next year, and luxury will play an important role in that spending, he said.
Watches and tourism, in particular, will “rock,” with more shoppers focused on making the most of their time and on memorable experiences through travel, which they view not as a luxury, but as an entitlement.
Going forward, luxury brands and retailers will have to aim more at the heart, Taylor said, noting that many fashion ads today are “cold, distant and heartless.”
“I want my heart touched,” he said. “It’s my brand.”
Some brands, like Gucci, are transforming themselves, becoming more philanthropic and putting more meaning behind the label.
Robert Triefus, Gucci’s chief marketing officer, shared the story of its Chime for Change campaign, aimed at empowering women and girls around the globe, with the crowd of marketers at the summit. With the help of big-name celebrities, the campaign — now its own brand — has funded nearly 300 projects in more than 80 countries.
Doing the right thing is a part of Gucci’s DNA and it’s empowering to employees, which filters down to customers, Triefus said.
Other brands are taking note, with Kellogg’s Special K recently becoming a partner in Chime for Change.
“The momentum keeps building and the impact is fundamental,” Triefus said.
Tuesday’s other speakers included Arianna Huffington, chairwoman, president and editor-in-chief of The Huffington Post, an online news site. Her talk focused on time management and the importance of work-life balance, which have been struggles of her own.
In her latest book, Thrive, she makes a case for the need to redefine the meaning of success in today’s world, with a focus on family and what truly matters, from acts of kindness to cherished moments.
It seems the wealthy are listening.