Let’s start with the simple fact that most wealthy Americans don’t really think of themselves as wealthy. In fact, according to Gartner’s research, the majority of high income and affluent consumers think of themselves as middle-class. Now, this mindset comes from a variety of complicated factors, ranging from economical and sociological self-perceptions, to the allure of a middle-class mentality that’s baked into the American ethos. But regardless of the catalysts, one by-product of this middle-class mindset is that most high-income shoppers aren’t striving for what they’d classify as a luxurious or opulent lifestyle, but rather a “comfortable” one – freedom from financial worry with enough money to do the things they want to do.
But we’re not living in very comfortable times, right now. The COVID-19 pandemic has cut off consumers from being able to engage fully in the marketplace and do all the things they’d like to do with their money. Inherent, elevated risks now present in the environment make activities like dining out, travel, and entertainment either less desirable or less accessible. And having money doesn’t immunize consumers from these COVID concerns; quite the opposite… In fact, more than three-quarters (78%) of high-income and affluent consumers are concerned about the coronavirus outbreak, a slightly greater proportion than consumers with lower annual household incomes (75%).
Thankfully (for them) high income consumers have the means to continue pursuing that comfort, even amidst the broader challenges and concerns of our day. Their higher income professions may be more likely to allow them to continue working from home. And they have the means to stock their lives and homes with what they need to continue living a comfortable life while minimizing their exposure to elevated risk. They can bring the office, the gym, the restaurants, grocery and retail to them. Or put even more simply, high income consumers can afford to participate in the marketplace on their own terms.
Unfortunately, this approach on the part of high-income consumers equates to less spending overall. According to spending data from Harvard-based Opportunity Insights, this group’s spending has declined the most of any income level, down 11.5%, as of Aug 2nd, from pre-COVID numbers. And while this is a marked improvement from April lows of -37%(!), it still represents a significant challenge for brands, and especially for those in more discretionary categories.
While high-income shoppers maintain that their spending from home has remained the same or even increased, luring this group back to physical locations will require extra special care and attention. According to a Gartner quantitative study conducted at the end of May, fewer high-income consumers (compared to lower-income consumers) felt comfortable engaging in nonessential activities like eating at a restaurant, shopping at a mall or going to a theater. And when it comes to safety and health precautions, high income and affluent consumers have higher expectations than their lower income counterparts, with over a quarter (26%) saying they want “Strict” safety measures, and an additional 51% saying they want “some” safety measures.
And due to continued outbreaks and resurgences in the virus, these concerns haven’t abated. In fact, following a slight improvement in June, consumers overall concern surrounding the virus returned to early spring-time levels again in July. Given this, the implications for brands and marketers is clear: above and beyond safety measures are key to wooing high-income shoppers out of their comfortable homes and back into the physical marketplace.
For more, check out:
Survey Analysis: Satisfy the New Priorities of Anxious Yet Adaptable High-Income Shoppers (subscription required)
The Marketer’s Guide to Attracting Affluent Consumers (subscription required)