Laurel Tielis

Laurel Tielis

SAN FRANCISCO–F. Scott Fitzgerald’s 1926 short story, The Rich, begins, “Let me tell you about the very rich. They are different from you and me.” Ernest Hemingway has a character reference that remark in The Snows of Kilimanjaro, and add, “Yes, they have more money.”

Fitzgerald and Hemingway were both right, according to the American Express 2011 Survey of Affluence and Wealth in America, the company’s sixth. The rich have lots more money, but they’re just as concerned about spending it wisely.

Ryan Manville, Vice President of AmEx Publishing and Dr. Jim Taylor, Vice Chairman of the Harrison Group Inc., the organization that prepared the survey, discussed the findings with the Luxury Market Council of San Francisco at the City Club last week.

Thirty-four hundred (3,400) families participated. They were divided into four equal categories—upper middle class, affluent, super affluent, and wealthy. Chosen because they’re among the top 20 per cent of households with discretionary income of $100,000 and above, those classified as wealthy—the billionaires—had approximately $20 million in disposable income to spend yearly.

The Good News

According to the presenters, blue skies are on the horizon as blue chip stocks rebounded from 2008 losses last December, income and assets are on the rise, and there have been 42 months of household debt reduction. Vacation spending is just about back to its highest levels. Overall, the economy is far more robust. And more good news, they foresee a 1,400 Dow in September.

The Not-So-Good News

Here’s the less than good news, though, especially for retailers. The affluent are spending less. They’re increasingly skittish, and are feeling more guilt in terms of making purchases.

Eighty-five (85) percent reported an increased happiness factor, but it’s due to shopping less and spending more time with families (that’s why vacation spending is up). That’s a turnaround from 2008, when 45% of the respondents felt successful because of their careers. Now, they feel successful because of their  personal life.

What’s Happening Now?

For every day of the debt crisis, Taylor said, “affluent people spend one per cent less.” Conversely, he said, “Every time Obama gets Osama sales go up one percent.” And although American Express just reported record sales, Taylor warned of the fourth quarter.

While the forecast is for an eight percent increase in luxury spending this year, it still will not reach the 2006 level. Also, while business travel and conferences have come back, store owners will see the equivalent of coal in their stockings when it comes to selling business gifts at Christmas time.

As for the green movement, according to Taylor, “it remains in the tank. Consumers don’t care, he said, instead they see it as “leftist righteousness.”

What it Means to You

Taylor said, “In 2008, we were all scared. There’s been a negative 15 percent growth rate since this began and we have become a substantive consumer economy. Buying is now based on need rather than want.”

Last year, he said, the curve of needs began to expand into fashion as well as the home repairs business. So while there’s a comeback in spending, it’s a different kind of spending. Just like the rest of us, almost half of those surveyed are applying a price to value ratio when it comes to making a purchase, only one-fifth are willing to pay full price.

That’s made consumers “much more resourceful, ” and even among the high income people surveyed “90 are looking for a deal.” Only two percent of consumers trust salespeople, according to Taylor. That statistic is “costing market share that’s going online.”

How You Can Bring in Business

If you want to be successful in today economy, Taylor says, “Character is what counts. It’s about the depth of your heart.” He says there’s been a’ return to an old fashioned morality; it’s more like the 1880s America than 1980s America.”

Tipping his hat to American Express, Taylor suggested that magazine advertising is important because it sends people to your URL. But he made it clear that it’s a digital world we’re living in, especially among those with the most money. Retailers have to be ready to sell through mobile.

They also have to:

1. Show passion
2. Communicate details in distinction through advertising and personnel
3. Treat customers with the respect of survivors
4. Make sure that pricing rationalizes the quality or allows buyers to feel they’re rewarding themselves for the hard work they’ve done.

Want more ideas about bringing in business? I can help. I’ve been a retail reporter at Women’s Wear Daily and Home Furnishings News, a columnist at the Miami Herald and a correspondent at People magazine.

I’ve also handled the marketing and public relations at major corporations a small businesses. Need a speaker or a consultant? Get in touch at ringupmoresales@gmail.com. Or, for easy and effective ways to bring in more business, read Ka-Ching! How to Ring Up More Sales.

Copyright © 2011 Laurel Tielis