To say we are living in uncertain times may be an understatement. With the economy, trends and ever fluctuating business models, what we as individuals dislike the most is what may, in fact, keep us afloat: change. We need to ask ourselves, will we develop new solutions to overcome existing obstacles or will we resort to our old ways? Regardless of the tactics used, we will all (hopefully) seek renewal and rejuvenation along the journey.
It’s apparent that the classes and masses are united in one boat that is traveling in a sea of constant ebb and flow, minus a navigation system to ensure we reach our desired destinations. One thing is certain: that in these uncharted waters the affluent have the bigger and better vessels. The affluent consumer is aware of the choppy current but only feels the gentle rocking of a steady hull. This however, is still affecting their spending habits for several reasons. Investments are not bringing in the same returns, investing across other ponds is unfamiliar and the lavish consumption of old may move aside for less indulgent purchases.
We are seeing a shift in luxury spending by the affluent consumer and it is becoming “a bit more practical.” Will they still purchase a Birken Bag? Sure, but perhaps not one for every season. Will they continue to invest in luxury vacation getaways? Of course, but most likely a $75,000 family holiday to Africa will take precedence over weekend shopping sprees in London, Paris and Madrid. Spending is still prevalent; however, it seems that selectivity is growing more and more popular with the affluent consumer. We see an increase in affluent spenders investing in stable purchases, such as fine art and wine; for example, the $25.7 million dollar sale of American artist Jeff Koons’s sculpture “Balloon Flower” or a record breaking $345,000 for six bottles of Bordeaux. Consumption may be down but ownership, power and the ability to buy life-enriching experiences has reached record highs.
As marketers in this changing environment, we need to adjust our approach when targeting the affluent consumer. Perhaps focusing on the investment value of a product or service far outweighs the popularity or price point regardless of whether the item is a $7,500 couture handbag or a $3.1 million vineyard in France. Luxury products that have longevity can be positioned as cherished items and services that can be packaged as one-of-a-kind experiences may be more appealing in today’s economy. The affluent consumer, although paring back, is the driving force of our socio-economic pyramid. Cater to and nurture your clients and the little black card with big spending power will prevail.
So what is on the horizon for the remainder of 2008? It seems that consumers, especially those with expendable incomes, will continue to purchase because their needs and wants are a reality and they can afford to capture their bliss. What they purchase and how they consume will fluctuate according to the trends and economic outlook. Appealing to and understanding the buying patterns of the truly affluent can make for a profitable business model during times of economic fluctuation. As our unchartered journey becomes clear, it will only further stimulate profits when the economic cycle turns the proverbial corner and spending becomes the “norm.” So whether you choose to ride the wave of doubt and hope to stay afloat or commandingly take the helm with a decisive tack, keep your course, there is always a rainbow after the storm.