Indulge Splurging HENRYs

Bloomberg blog postings have been tracking the spending habits of HENRYs, defined as High Earners, Not Rich Yet, with an annual income between about $100,000 and $250,000. Bloomberg calls these shoppers, who are in the top 20% by income, the “heavy lifters” of the consumer economy. 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 luxury stores like Tiffany and Restoration Hardware.
     Last year, HENRYs were buying cautiously, concerned that their insulation of high income might disappear without a moment’s notice. In their state of perceived threat, their spending dropped about 8% during 2012.
     This year, HENRYs are spending again, but more often on premium brands than on the higher-priced luxury brands. To attract this demographic, have in your store the equivalents of Coach and Ralph Lauren.
     However, if you get HENRYs coming by your store, also have a few equivalents of Prada, Armani, and Gucci—the top-of-the-line, highest-prestige versions of whatever it is you sell. Do this because the current shopping patterns of HENRYs is to splurge on a few items from the top-of-the-line, then go a touch downscale for the remainder.
     To move the luxury goods, indulge the shoppers who are considering them. Spend extra time in explanations. Praise the good taste of those who show interest. Put special attention into wrapping the item after purchase. And do it all with show so that the other shoppers looking on get tempted.
     The showiness also increases the attractiveness of the less-expensive items. Stanford University researchers found that when a higher-priced alternative is added to the list of choices, the alternatives which cost less become more appealing to the shopper. Soon after retailer Williams-Sonoma added a $425 bread-making machine to their merchandise line, sales of the $275 unit doubled.
     People buy luxury items for many reasons. A top one now is functional. Consumers are willing to pay premium prices to ensure long-term value from products which are designed by craftsman, manufactured well, and customized to the purchaser’s characteristics. According to the current Bloomberg blog post, competition with your store for HENRYs’ dollars now comes from real estate—historically, a model of long-term investing.
     So maybe you’ll choose to win those dollars by gently reminding your luxury shoppers about how many house-flippers got torpedoed a few years ago.

Click below for more: 
Assess Shoppers’ Cloaks of Confidence 
Anchor Browsers onto Higher Prices 
Stay Ready to Sell Luxury