Tuesday, April 5, 2011

Living Above Our Means (Part 2)

The following article, entitled "The 'Aspirational' Consumer:  R.I.P." appeared on the internet this past November:  

It wasn’t very long ago that marketers were assured that most consumers were still willing to trade up. You remember, don’t you? Average Joes and Soccer Moms splurging for that extra “little” something—be it a $6 latte or a $300 Coach handbag—just because they worked so hard and deserved some of life’s finer things. A good many starry-eyed marketers predicted that, even in a recession, this be-good-to-yourself dynamic would somehow hold true.  
It hasn’t. While no headlines have announced the official passing, it’s become clear that the “aspirational” consumer—that cherished demo of marketers everywhere—is dead.
According to a just-released study by the American Affluence Research Center, the spending habits of the utmost tier of earners remains robust, but everyone below has cut back and plans to stay there. “If you look at the 10-15% [sales volume] declines for upscale retailers and brands, it was [due to] people spending beyond their means and not being able to sustain it,” said AARC president Ron Kurtz. Even within the sphere most would consider well-off ($250,000 average annual household earnings), 41 percent reported they’re making a conscious effort to reduce expenditures for the next 12 months. 
Isolated data? Hardly. Consumer Edge Research recently found that skipping top-shelf brands in favor of lower-end ones is most common in households with incomes of $100,000 or higher. A study conducted by PriceWaterhouseCoopers/Kantar Retail earlier this year revealed that 93 percent of shoppers say they’ve changed their shopping behavior—with 17 percent opting for cheaper brands. “Although we’re starting to see signs of shoppers getting tired of trading down, they remain cognizant of today’s economic realities,” said a Kantar official in a statement. These findings are in line with last year’s McKinsey study, which revealed 41 percent of consumers think that premium brands are “not worth the money.” 
So much for life’s little indulgences. In fact, the whole affordable luxury pitch has lately been the target of various poison arrows, such as one recent posting on Families.com: “Aspirational marketing is a technique in which the goal is to sell items to people who can’t afford it.” [emphasis added] Ouch. 
“Marketers have long known that we have an aspirational society, and they’ve gone heavily after those consumers,” observed Claire Ratushny, a brand-positioning consultant based in Eastford, Conn. “Now, ‘aspirational’ is a dirty word.”
It was nice while it lasted. 

Although this article declares the "aspirational" shopper to be dead, it isn't around here.  Often I see low-income women toting high status handbags, as well a sunglasses and other articles of apparel with status symbol names.  Granted, many of these items are probably black market knockoffs, but I suspect a good number of them are the real deal.  

This past winter a new outlet mall opened about 45 minutes to an hour south of our community.  A number of the stores at the outlet mall are moderate- to high-end stores such as Michael Kors and Coach.  A friend and I decided to go for one of the grand opening events:  Stacy London of "What Not to Wear" was appearing and we wanted to get a chance to see her in person.  Of course, the entire area was a zoo!  Before we even got to the mall parking lot, we estimated our odds of getting a parking space and decided to gamble by parking on a side street and walking to the mall.  The place was packed!  And the most shocking thing for me was that there were lines to even get in some of the stores!  The line at the Coach outlet was crazy as it snaked around the corner and across pedestrian walkway.  There were guards strategically placed to make sure the lines moves smoothly and didn't impede pedestrian traffic.  

Of course my girlfriend and I refused to get in any line and chose use use that day to people watch.  First of all, as we looked at the potential consumers with a critical eye, we realized most had no business purchasing the high-end items (but there was evince of shopping by the hoards of shoppers carrying multiple shopping bags sporting various logos).  Secondly, the prices were not deep discount, WalMart-type prices.  They were the equivalent of a regular sale - at a high-end store.  Not really that great of a bargain, certainly not justifying the shopping frenzy we witnessed.  Finally, this was a time when unemployment in our area was continuing to rise as employer after employer announced closings and layoffs.  But none of that seemed to deter our shoppers.

Another sign that aspirational shopping is alive and well in our community is the outstanding success of Starbucks here.  We have a stand-alone store and one in our local Target; they are both essentially across the street from one another.  Starbucks is crowded, always.  And in the afternoons, it is filled with teenagers and school children with their parents.  For me, Starbucks is a treat.  I live 30 minutes from town and when I'm in town, I sometimes like to get one of their iced teas for the road because the fast food chains do not know how to make good iced tea.  However, many of Starbucks patrons are regulars; the staff knows what they want before they even order.  It seems that our community has not gotten the word that aspirational shopping is dead.

Source:  http://affluenceresearch.org/category/uncategorized/


Shona~ LALA dex press said...

Earlier this year The NY Times had an article on the death of austerity (2010's word of the year) and the rise in first quarter luxury brand sales.

Cherie said...

Shona, wow! Hard to believe since the economy does not seem to show signs of recovery.