As 2015 draws to a close, the time has come to take stock of the learned Affluent trends and mindset– and our latest data paints a generally encouraging portrait for media and marketers interested in this essential market. (Note: we define “Affluents” as adults living in households with at least $100,000 in annual household income – roughly the top 25% of the country, and a group that holds 74% of U.S. net worth.We also examine Ultra Affluents – the top 3-4% of the country, which holds 48% of net worth).
Our Q4 Ipsos Affluent Barometer finds 56% of Affluents to be optimistic about the U.S. economy – the highest level in five years, and rivaling a post-recession high. Conversely, pessimism drops to a new low of just 19%. For the most part, this optimism is broad-based and extends beyond just the U.S. economy. When asked about different aspects of their lives, and the world around them, we find Affluents are most satisfied and optimistic about “close-to-home” elements of their personal lives – happiness, health, their children’s future. Still, their ratings of the domestic and global economies averaged more than 5 on 10-points scales measuring Affluent perceptions of the current state and their expectations for the future.
While this optimism is relatively broad in reach, Affluent optimism remains nuanced and pragmatic. For example, heightened optimism doesn’t necessarily translate to a more aggressive investment outlook. A majority of Affluents now consider stocks and real estate to be excellent/good investments at this time – both up to new highs – but Affluent risk tolerance shows signs of moderating, particularly after the market gyrations of recent months.
Heightened optimism also is no guarantee of heightened spending, at least in the upcoming holiday season. This year we find Affluent holiday spending intentions are tracking very closely to 2014 levels, with directional trends suggesting a slight increase in overall holiday spending counter-balanced by slightly lower high-end/luxury spending.
The segments leading holiday spending are familiar from last year, paced by Affluent men, Affluent Gen Xers, and Ultra Affluents. Similarly, the most widely-planned high-end gifts are similar to last year, with the list led by perfumes, smartphones, and – continuing a trend toward experiences we observed in last year’s holiday giving – vacations. Overall, holiday travel intentions are also tracking closely to last year – 44% plan to travel for Christmas/Chanukah/Kwanzaa, and 26% plan to travel for New Year’s.
While spending and travel intentions are comparable to last year, the data reflect the continued infusion of technology into Affluent lives. When asked about the top influences on their holiday shopping, browsing online retailers and doing online research top the list, and are growing from already high levels. Affluents expect to make 49% of their purchases by computer, a new high (although using mobile devices for shopping-related research is prevalent, less than 10% of purchases will likely be made via a mobile transaction). Futhermore, as the holiday season kicked off, twice as many planned to shop online on Cyber Monday (50%) than planned to shop at retail on Black Friday (25%).
It’s worth noting that interest in both “retail holidays” (Black Friday and Cyber Monday) is up over last year, suggesting continued strength in the value-orientation that’s been a hallmark of the post-recession mindset. Spending levels may be the same, but consumers are looking to hack the retail system and get more for the same outlay. At a broader level, this reflects one of the most potent (and most counter-intuitive) effects of the recession – it did not lower Affluent expectations, but rather it raised them. In the mid-2000s, Affluents in large numbers bought luxury offerings, with a mindset of “it will be expensive, but worth it” – today Affluents expect the highest quality and a deal, and are reluctant to make a trade-off.