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HOLIDAY JEWELRY PURCHASES WILL HOLD STEADY AMONG AFFLUENTS | October 17, 2012 (0 comments)
Alpharetta, GA—Last year's holiday season was a significant success for luxury jewelers, and a new study just released by the American Affluence Research Center says affluent consumers will continue to buy jewelry or watches this holiday season at about the same rate as last year. AARC’s findings diverge from other recent studies that take a more Scrooge-like approach and suggest jewelry and watch purchases may decline this year in favor of more “practical” gifts.
The AARC, which has conducted twice-yearly studies of affluent consumers’ attitudes and purchase intentions for the past 11 years, says the fall 2012 study shows a very slight dip in the jewelry/watch purchase index—one point—which is considered statistically even with last year. (AARC’s survey was sent to an affluent audience only; a random sample of more than 4,000 Americans in the wealthiest 10%, defined as those whose income and net worth were $800,000 or higher.) Meanwhile, a study from the National Retail Federation reports wealthier consumers are planning to increase holiday expenditures by 7% this year over last year.
While AARC’s study does show higher purchase indicators for a number of categories that could be considered more “practical” than jewelry, it does not indicate jewelry is less desirable than it used to be. Jewelry came in third among affluent women’s most wished for gifts last year, and ranks third again this year. Indeed, this year’s one-point drop in the jewelry index is a significant improvement over fall 2011 when the jewelry/watch index fell nine points from 2010.
Ron Kurtz, president of AARC, told The Centurion, “22% of affluent female respondents hope to receive jewelry as a holiday gift. That’s a nice number, and pretty consistent with last year.” The incidence of women who say they would like to receive jewelry is skewed higher for both those under age 50 and those in the higher income levels on the survey.
Overall, the number-one gift preference among affluent women is still some kind of “currency,” i.e., cash, check, or a gift card that allows them to choose their own gift, says Kurtz. Second choice is clothing, and jewelry/watches are third. An iPad or other tablet computer came in fourth—9% below jewelry and watches. Among men, the top choice is clothing, second is books/CD’s/DVD’s, and third is a gift card. For men, sports equipment came in fourth, while the tablet computer came in fifth. Jewelry and watches did not figure prominently among men as a holiday gift wish—only 4% of male respondents want either one, tied with home furnishings and photography equipment.
This chart from AARC's latest research report shows jewelry in third place on affluent women's holiday wishlists. 48% of women polled (far right column) said they'd like to receive some kind of "currency" (check, money, gift card, etc.) to choose their own gift; 29% are hoping for some kind of clothing gift; and 22% would like to receive jewelry. But add in the 4% who said they'd like to receive a watch, and the combined jewelry/watch category comes to 28%, only one point behind apparel.
Separately, the latest figures from the Wealth Report, published by The Luxury Institute in New York, show jewelry is among those luxury categories that appear to have “bottomed out” during the recession and are now clearly in recovery. Ready-to-wear apparel and private jet travel also fell into that category. According to LI’s figures, a greater percentage of U.S. luxury consumers plan to increase spending across all 26 categories of luxury goods and services this year, vs. those who planned to increase their spending last year over 2010 figures. Rising optimism and an improving jobs picture have contributed to increased retail sales, said the Wealth Report.
Interestingly, 20% of AARC’s respondents said they don’t expect to receive a holiday gift, and 7% don’t plan to buy any. But before retailers think “Scrooge,” Kurtz says those numbers need to be explained. Respondents to the survey skewed heavily male, who often don’t expect gifts.
“That’s why we break everything out by gender, age, and income,” says Kurtz, as well as reporting an aggregate total. When broken out by gender, those figures changed: only 8% of women don’t expect to receive a gift, vs. 25% of men.
Among those who don’t plan to buy gifts, that stated intention often changes as the season draws near.
“Every year, my wife and I agree we’re not going to exchange gifts. Then I still end up giving her a piece of jewelry,” he laughed. But among those who carry through their intention of not buying gifts, Kurtz speculates the reason is probably more a lifestyle decision than an economic one. Older consumers, especially, may be less materially driven and more likely to feel they already have enough “stuff,” or they may even feel pinched—relative as “pinched” is—by lower interest rates on their investments. That said, however, Kurtz hasn’t seen a huge increase in shifting expenses from things to experiences for holiday. The AARC survey doesn’t list “travel” as a category for holiday gift purchasing, but there is an option for respondents to write in “other” categories that aren’t listed. A few entered “travel” or other experiential gifts, but that percentage was only about 1% to 2%, said Kurtz.
Overall, almost ¾ (71%) of respondents said they plan to spend about the same for holiday gifts this year as last year, and affluent consumers will spend an average of $2,154 on holiday gifts, a figure that’s about four times as much as the U.S. average household will spend for holiday, says the study. Affluents age 50-59 will spend the most, followed by those under age 50, and finally, those over age 60 will spend the least.
In several areas, AARC’s fall survey showed a decline in affluents’ views of things. Respondents’ views of both current and future business conditions and the stock market showed some decline from the spring survey, which was conducted right at the end of the first quarter. This drop in expectations in the fall survey vs. the spring survey also was seen in both 2010 and 2011.
“In each of these years, the first quarter started off positively, but during the summer there was negative news that affected consumers’ mood and outlook,” Kurtz told The Centurion. The fall survey is conducted in September and this year was concluded prior to the release of some positive government data on retail spending and unemployment figures, so it’s possible that consumers may feel more confident now than at the time they answered the survey. But Kurtz says the single most important driver of affluent consumers’ moods is the stock market, so what matters more is how the economic data affects that than what they personally think of it.
The rich don’t change. Looking at AARC’s research over the years, Kurtz has not seen any significant new trends among affluent consumers. Since the recession, and continuing even after it ended, he’s seen an increase in the number of respondents who say they’ve cut back on purchases and amped up savings, but he cautions that in any survey, a quarter’s fluctuation does not a trend make. Some pundits, he says, will jump on any slight deviation and call it a trend—but he says that long-term, affluent behavior doesn’t change much.
“Thomas Stanley [the author of The Millionaire Next Door] has been studying the affluent since the 1970s. While there’s been turnover in the composition of the affluent market, their attitudes as they’ve matured through the different stages of affluence have stayed pretty consistent. They’re careful spenders, aggressive savers, not conspicuous consumers, and they live within their means,” he told The Centurion. Indeed, when respondents were asked to check off all the retailers where they’ve made a purchase in the last three months, value brands like Costco, Target, and Macy’s far outnumbered luxury brands like Tiffany, Gucci, or Ralph Lauren.
Additionally, says Kurtz, total net worth is a far better indicator of affluent consumers’ ability to spend than income alone.
Top image: Corbis/Debebians.com