Assess Shoppers’ Cloaks of Confidence

“Keep watching HENRYS’ cloaks!” That admonition is my adaptation of a warning currently appearing on the Bloomberg blog. A HENRY is a “High Earner, Not Rich Yet,” and the Bloomberg analysts say it is HENRYS whose retail purchases gave promising signs of an economic recovery during 2011. But it may have been a misleading comfort.
     HENRYS are those with an annual income between $100,000 and $250,000. They’ve been accounting for about 36% of total consumer spending. The Bloomberg posting refers to HENRYS as the “heavy lifters” of the consumer economy.
     Still, it’s HENRYS’ psychographics more than demographics which draw special attention from retailing analysts. HENRYS interact with a broader range of retail brands than do other target populations. They’ll shop at premium mass brands like Ann Taylor, Banana Republic, and Williams-Sonoma as well as upscale stores like Tiffany and Restoration Hardware.
     What’s energized their buying has been a cloak of confidence containing an insulation of income. They believed times were bad but that they had a sufficient cushion to make it through until things got better. It’s what consumer researchers call the “relative wealth effect.”
     The retailing analysts are saying there are signs the insulation of income is now wearing thin to the point where HENRYS might become scared they’ll get caught out in the cold financially naked. These consumers’ desire to make upscale purchases depends on them thinking they are relatively wealthy.
     Many of the retailers catering to the luxury markets are noticing that sales are coming from the incredibly wealthy more than from HENRYS. The uber-rich do trust the thickness of their protection against penury.
     As you service your customers, assess their cloaks of confidence and steer the customers toward merchandise and services with which they’ll be comfortable.
     The luxury shopper can be a significant source of profitability for you. In deciding how your merchandising can appeal to the luxury segment, consider the different meanings that indulging in luxury carries for shoppers. Some years ago, SRI Consulting Business Intelligence identified a set of major motivations. Here’s my update of that list:

• Luxury as show. Be sure the luxury brand name is conspicuously displayed whenever the item is used in public. 
• Luxury as a password. Subtle cues allow the rich to recognize each other while not tipping off the outsiders. 
• Luxury as functional. Your shopper pays more in order to guarantee lasting value. 
• Luxury as a sudden celebration. 

Click below for more: 
Satisfy Desires for Luxury 
Curb Your Enthusiasm About Economic Recovery