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Zales Bumps Tiffany as Affluents' Jeweler of Choice

Highest Earning Households Spend Less

Apr 11, 2013 11:05 AM   By Jeff Miller
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RAPAPORT... Post-recession growth has not been uniform across income segments, according to Unity Marketing, which determined that it is the top 20 percent of earners, or 24.2 million households, who are driving the recovery. But even more interesting from the data is that ultra-affluents, or those earning $250,000 or more annually, are spending less on luxury goods, especially jewelry and watches. Spending increases are coming from those making $100,000 to $249,999 per year, or a group Unity labels the HENRYs -- high earnings, not rich yet -- and they account for 21.8 million households. In Unity Marketing's latest analysis, Luxury Report 2013, ultra-affluents are behaving more like the HENRYs as they have reduced purchases on luxury items and even the high-income ultras are trading down to less premium brands. One such example the report noted was that affluent consumers chose  Zales over Tiffany this year as their jeweler of choice.affluent spending

Furthermore, in 2012, Unity found that only 58.4 percent of affluents purchased jewelry this past year, down from 75.7 percent in 2011; and 70.6 percent purchased watches compared with 88.6 percent in 2011. Double-digit declines in spending were also observed for clothing, fashion accessories and premium beauty products, according to Unity Marketing.

"The most important shift in the economy at large is the growing importance of the affluent  in driving the recovery," said Pam Danziger, the president of Unity Marketing.   "The middle-class and lower-income folks have greatly reduced spending power, due to declining household incomes, tax changes and unemployment, so the affluent are the heavy-lifters behind all the news about retail and consumer spending growing.  If you dig a little deeper into the numbers, you find it is the affluent behind all the good economic news."

Unity concluded that by 2012, the HENRYs had recovered from the recession and improved their spending 3.4 percent above a level not seen since 2009. Even though HENRYs individually have a far lower spending threshold than ultra-affluents, there are about 10 HENRY households for each ultra-affluent home. 

Meanwhile,  ultra-affluents, or those in the top 2 percent  incomes bracket, have reduced their spending on luxury goods, according to Unity Marketing.  Ultra-affluents have spent 14.1 percent less on luxury since 2009 and in 2012, their spending reached its lowest level in five years, according to Luxury Report 2013. 

Danziger concluded that affluents would continue to be strategic in their purchasing power by making tradeoffs that will maximize the luxury return on their investment this year. They will continue to make strategic choices about which purchases will give them the most pleasure and which situations demand a true luxury brand purchase, she said. ''For example, ultra-affluents purchased more mass-market beauty brands (L'Oreal Paris, Olay and Cover Girl) than luxe brands (Clinique, Lancome, Chanel) in 2012 and their purchase overall of mass  beauty brands reached its highest level since 2008.

''Affluents are still cautious about spending on high-priced luxuries and are being strategic, like swapping high-priced Chanel lipstick for Cover Girl.  They are also indulging in more of what I call 'premium' class goods and services -- below luxury, but better than mass -- so for ultra-affluents the more affordable Ann Taylor is the most purchased luxe apparel brand and premium priced Coach tops the list in luxury fashion accessories,'' Danziger said. 

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Tags: affluent, analysis, households, Jeff Miller, Jewelry, spending, Tiffany, Unity Marketing, watches, zales
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"Zale, Tiffany, and the 'affluents' "
Apr 11, 2013 3:18PM    By Del Cook
This. Is. Pure. Nonsense. Seriously... tell 'em to take another survey....
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