Study: Luxe Loses Luster for Wealthy

NEW YORK Fears about personal finances are bubbling over to America’s richest, says a new survey by American Express Publishing and researcher Harrison Group, whose findings bode ill for the already-softening luxury advertising category.
The survey, conducted Sept. 19-23 among 614 consumers with an annual household income of $100,000-plus — the top 10 percent of America’s families — asked how the market turmoil was affecting respondents’ spending plans. It supplements earlier ones by the two companies in December 2007 and April and June this year.
The vast majority of respondents — 83 percent — said they were waiting for items to go on sale before buying. Luxury is losing favor with this group; the percentage of people who said a little luxury was important in tough times declined to 50 percent from 61 percent in June. As for the holidays, 20 percent of families said they planned to cut spending on gifts in favor of charitable giving.
“What makes the survey a source of concern is that this top 10 percent represents over 50 percent of all retail spending,” Jim Taylor, vice chairman of Harrison Group, said in a statement. “It is affluent consumers who have kept the consumer economy afloat and whose purchasing is critical to the coming holiday season.”
Attitudes among the affluent have worsened throughout the year, with 48 percent of the country’s richest families saying they were worried about running out of money, up from 35 percent in April. Sixty percent said they believed the economy was in a recession that would last more than a year, up from 55 percent in June.
Optimism also is on the downswing. Fifty-five percent of respondents indicated they were optimistic about their future, down from 93 percent in 2005.
Cara David, co-director of the study and svp, strategic insights and marketing and sales for AmEx Publishing, pointed out that while the rich are cutting back on certain expenditures like fashion and jewelry, they’ve not stopped spending altogether.
“They’re holding things like family vacations and the new family cars they need,” she said. “They’re going from an ‘I want’ to an ‘I need’ perspective.”
The survey also found that the Republican Party is losing its hold on the wealthy. The percentage of the affluent calling themselves Republicans stood at 34 percent in September, down from 46 percent in 2006, the survey showed. An equal percentage said they were independent, up from 19 percent two years ago.
The findings suggest that the affluent still favor Republican candidate John McCain for president but that there are enough undecided wealthy voters to tip the scales in favor of Democratic hopeful Barack Obama.