The Young and the Rich: The New Thrifty
The term new affluent may seem synonymous with the young, wealthy set, whose constituents lavishly spend their inherited riches. According to recent Visa Signature New Affluent poll, however, individuals within the 35 to 54 age range with household incomes of least $125,000 are detaching themselves from traditional stigmas of high roller spending and adopting a more pragmatic approach. This shift in consumer behavior may send marketers scrambling for new methods to appeal to these consumers.
The Visa Signature poll, conducted by research firm Fabrizio, McLaughlin & Associates, is based on the responses of 800 adults with annual household incomes of $125,000 or more, and an equal sample size of adults that demographically represents the country, to help Visa Member financial institutions and merchants increase the effectiveness of programs and benefits geared toward wealthy customers.
The new affluent consumers' frugal mindset may stem from most of its members' middle-class backgrounds. "A lot of these new affluent grew up middle class, [with] middle class roots," says Michael Weiss, president of Weiss Micromarketing Group. "They really work very, very hard to do well in their careers so they've emerged as a very level-headed group. They know how hard it is to make it, so they are very vigilant about spending their money wisely." In fact, study results indicate that new affluent consumers value instilling their children with traits like honesty and integrity--ranking these two qualities at the top of things that they want to pass on to their children--over money or status, which ranked at the bottom.
Additional findings imply that many new affluent consumers are uncomfortable with even being considered wealthy. Nine out of 10 new affluent consumers surveyed consider themselves to be middle- or upper-middle class, and 72 percent of respondents admitted that they are embarrassed by or dislike being identified as wealthy or well off, even though they acknowledge these terms are an accurate description of their financial status.
Perhaps even more surprising, this customer segment may be on the hunt for bargain basement prices, more so than the general population. According to the poll, about three quarters (72 percent of respondents) stated that they clip coupons--seven percentage points higher than the national average. Sixty-six percent reported that they regularly shop at club discount or warehouse stores, while less than half of the general population choose these shopping outlets, and thirty-four percent admitted that they have gone to garage sales. "[They are] not the Rockefellers of our parents' generation in how they spend in the marketplace. Businesses don't have to think that just because they are especially boutique they can't go after these new affluent consumers," Weiss says.
As these consumers continue to look for ways to cut costs and maximize their resources, marketers may need to retool their strategies. "They're into getting value [and] are more likely to respond to less-is-more promotions," Weiss says, such as frequent flyer miles. For instance, 78 percent said they have a payment card that allows them to earn rewards and enjoy perks. Additionally, 57 percent responded that they select midrange hotels with reasonable prices, while just 13 percent contend that they opt for high-end hotels.
The new affluent cohort is applying more middle class sensibility when in the marketplace, Weiss says, but they have not completely abandoned lavish spending. "Yes, owning a nice home is considered part of the good life, and yes, they describe themselves as early adopters of consumer electronics and they're buying luxury sedans and SUVs at higher than average rates. But after that, so much of what they do is almost commodity behavior," he says. "It's a flip side to the old line of F. Scott Fitzgerald that the rich are different from you and me. Today's affluent isn't so different than Joe and Jane Average in America today."
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