'Contradictory' Luxury Consumer Growing Since
SAN FRANCISCO The post-9/11 consumer in search of luxury products, including high-end kitchens and baths, is a consumer who is characterized by "deep and confusing contradictions" although the home has taken on a renewed importance and the desire to spend on the luxury "experience" remains as strong as ever.
That was the message conveyed to kitchen/bath dealers, designers and manufacturers by Steven Kleber, CEO of the Atlanta-based Kleber & Associates, an advertising and public relations agency with strong ties to the kitchen and bath market. Kleber was one of the featured speakers at the recent Luxury Kitchen & Bath Collection trade event in San Francisco.
During his speech, Kleber provided some enlightening statistics regarding the growing number of luxury consumers in America. Among them:
- Millionaire households have quadrupled in the past 10 years.
- Households with $5 million net worth have increased in the past five years, to two million.
- High-net-worth households ($500,000+) are expected to reach 31 million by 2004, a three-fold increase over the past 10 years.
- Generational transfer over the next 20 years is projected to reach $12 trillion.
He also pointed out that there is a growing number of "mass
affluent" individuals in the U.S. that is, people whose net worth
exceeds $100,000, Kleber noted. In fact, there are currently some
19 million of these individuals in the U.S., dwarfing the number of
ultra-rich, he said.
Citing a recent House & Garden magazine survey of affluent Americans, Kleber said that most luxury consumers are "much more negative" about current business conditions than they were six months ago. Moreover, fewer than half of those polled expect business conditions and the stock market to be better in 12 months, he further added.
Despite this relatively negative mindset, luxury consumers have not significantly altered their approach to spending, Kleber observed. Nor do they generally believe that their personal income will materially suffer as a result of the sluggish economy, he said, adding that these contradictions should spell good news, overall, for the housing and remodeling markets.
In fact, 4% of the luxury consumers surveyed plan to buy or build a primary residence in the next 12 months representing about 400,000 housing units, half of which will be new (see graph, below), Kleber further explained. At the same time, 4% plan to buy an existing vacation home (representing another 400,000 housing units), and 2% plan to build a new vacation home (representing about 200,000 units). In addition, nearly one in four expect to have major remodeling done to their home over the next 12 months.
Kleber elaborated that the events of 9/11 have, in fact, strengthened the luxury consumer's focus on the home.
"What's different since 9/11 is that there's significantly more focus on family, more focus on the home as a haven and as a 'cockpit' from which to run one's life," Kleber said. "There's a quest for stronger relationships, a psychological balance in people's lives, a desire for security and a focus on keeping the family safe. We are seeing people placing a higher value on relaxation and we also see them searching for knowledgeable services."
The impact of 9/11 on the luxury consumer was "emotional and psychological, but it did not affect their feeling of financial well-being," Kleber continued. "Luxury consumers are searching for a new equilibrium [in their lives]. . . a balance between their emotional landscape and their current position in the social, political and professional milieu. They're emerging from their cocoons and looking for a new meaning in their life.
"[By comparison] what hasn't changed since 9/11 is that we still see affluent consumers enjoying the privilege and scope of their wealth, the feeling of financial well-being, the need for meaning and self-expression, and the desire for luxury and experiencing products that are well made."
Ultimately, said Kleber, "luxury is all about a feeling and an experience. It isn't about cost, but about how much a product means to you. It's the freedom to pursue one's passions."
Kitchen and bath product manufacturers and designers should keep
that thought in mind, and "must focus on the experience customers
have while using their products," Kleber