Wherever they reside, the affluent are likely feeling “frugal fatigue,” says Kraus, noting that this factor is most likely behind the increase in luxury goods and prestige beauty sales. “We see a direct correlation between the Dow and the luxury markets,” he says, noting that the Dow Jones Industrial Average has risen 40 percent since the so-called end of the recession, when it hovered in the 7,000 or 8,000 range. “Even with the recent slide, it’s up 35 percent,” Kraus says, “so if you have $1 million invested in the market, that’s an extra $350,000.”
While the affluent are willing to spend — witness the double-digit growth year to date in prestige beauty sales — the way they are shopping has changed considerably. “People do feel a little more free with their money, but they want something that speaks to value. In the stock market, people are looking for safe, blue chip stocks,” Kraus says, “and the same thing is happening with spending. When people are treating themselves, they want something that is of very high quality.”
A recent Mendelsohn survey showed that when it comes to beauty, the Affluents gravitate to brands including Nars and Fresh; the Wealthy to Laura Mercier, La Mer and La Prairie, and the Rich to Orlâne, La Mer, La Prairie and Jo Malone.
The experiential side of the purchasing equation is equally important. “Boy, do you have to take care of them. The Affluents won’t put up with any nonsense, especially if you want them to pay full price,” says Liebmann. “You have to make sure the experience is of the highest quality to justify why they are shopping. That is a really big moment — the recognition that you’re not going to get as many feet in the door, but the ones you are going to get are the ones who you really want.”
Being on the cutting edge of technology is crucial with this group as well. “The more affluent you are, the more digitally engaged you are,” says Scribner. “Getting technology right is crucial for the younger emerging consumer, who won’t take you seriously unless you’re digital, and the richest customer, who is buying technology as a sign of their sophistication and an enabler of their mobile and global lifestyle.”
Scribner also notes that the rich pride themselves on being early adopters and experts in myriad areas, a fact he says is underleveraged by marketers today. “The rich love to share what they’ve learned and what they know,” he says. “They index very high on questions like, ‘People often ask my advice about...,’ whether it’s about fashion, finance or health care. We’ve noticed this dynamic when interviewing premium travelers. Because they fly a lot, they feel like experts and insiders. So they want to be treated that way, not as passive passengers, but as fellow professionals,” he continues. “There is something interesting in acknowledging the sophistication and expertise of your consumer.”
At the opposite end of the spectrum lies the Hispanic population. The sheer figures — the number of Hispanic Americans has grown 40 percent since 2000 — and their propensity for beauty makes it a group impossible to ignore. However, it’s also a community that has been adversely impacted by the recession. “The Hispanic spending dollar is tremendous, but with larger families and overall lower household income, they’ve been hit hard by the increase in housing prices,” says Fay. “But Hispanics and Blacks do tend to over-index on apparel and beauty. They don’t necessarily spend more dollars than other people, but they are probably spending more of their income.”
Rich or poor, one thing is clear: Consumers will continue to shell out for beauty products — as long as retailers and marketers meet shoppers on their terms. “Americans are great at blurring the line between need and want,” says Fay. “As long as they don’t feel like they’re being taken advantage of, women will continue to buy the products that make them look and feel good.”