Archive for March, 2011

Recession Over…for Millionaires

A luxury bounce, yet a cautious sensibility pervades just about everything

March 21, 2011 – #6

For a second year in a row, the ranks of millionaires have grown. “The number of U.S. households worth at least $1 million rose to 8.4 million in 2010, compared to 7.8 million the prior year.  The affluent market grew in 2010 due primarily to the stock market rebound, but attitudes remain significantly different than in 2007”, according to a Spectrem Group report.  [source: CNNmoney]

Recent sales reports from luxury marketers Neiman Marcus, Saks, Burberry, Louis Vuitton, Hermes and Tiffany are showing a significant upswing as their customers are turning up in stores again.

Neiman Marcus shoppers. Source: NY Post

And yet… we haven’t gone back to the pre-recession consumer mindset.  Maybe we never will.  Why?  Because the bigger picture has changed, and recession-humbled Americans now have a broadened view of circumstances across the board.  There’s a sense that things may be getting better – but certainly not for everyone.  Hints of the changed sensibility show in our 2011 SCAN data:

More Americans – 34% – believe that “young people today will not be able to live better than their parents”.  Five years ago, only 26% held that belief.

 More agree that it’s tougher to break through to their idea of success.  In just one year, the number of Americans who strongly agree that “these days there are more obstacles to achieving the American Dream than there used to be” has jumped from 49% to 55%.

As the Spectrem report characterized the prevailing mood even among affluent:  “The millionaire comeback continues but many millionaires are living under a cloud of caution”.

Business Implications: The tempered optimism we’re seeing among consumers means that when we spend we will continue to want to appear intelligent in our purchases rather than showy – even when it comes to luxury goods.  Lasting quality, informed design, craftsmanship, quiet taste, and “sure thing” attributes like safety give consumers permission to buy now.