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How and why to reach the affluent

May 30, 2014

The affluent aren't that different from you and me, except that they ... well, have more money. As I listened to a presentation from James Dean (he's heard all the jokes), SVP at Wealth Engine, at a Florida Luxury Marketing Council meeting recently, I wondered why more mainstream retailers don't do more to attract the wealthy as customers. With the U.S. middle class shrinking, it seems all retailers could use an influx of shoppers who actually have discretionary money to spend.

A recent article in The New York Times cited stats showing that the top five percent of earners accounted for 38 percent of personal consumption in 2012, up from 27 percent in 1992. Moreover, inflation-adjusted spending by this group is up 17 percent since 2009, while the spending of the bottom 95 percent has risen just one percent.

According to Mr. Dean, the average annual household income of the top one percent is $306,000, which may not seem astronomic, but is certainly significantly better than the average retail customer. And there are 13 million U.S. households with $1-5M in investable assets (the affluent); two million with $5-25M (super affluent); and 150,000 with $25M plus (ultra affluent). About 92 percent of the affluents are 50 and over, while two-thirds of the ultra affluents are. Three-fourths of affluents are married, as are 80 percent of the super and ultra affluents.

The affluent tend to be more educated than average consumers and less likely to have kids at home. Their interests include the usual suspects such as travel (60 percent), gourmet cooking (55 percent), golf (30 percent) and boating (30 percent). Meanwhile, 95 percent of marketers say data about their customers remains untapped, and 96 percent of wealthy customers report being mis-targeted with inappropriate offers.

Mr. Dean says the best approach to reaching these wealthy consumers is multi-touch and includes e-mail, direct mail, referrals and intros, online research tools, SMS targeting and display ads. Among those tactics, he is highest on text messaging at the moment because it still commands attention. He advocates starting small, using a test and learn approach while aligning tactics to each segment's value. The key, he says, is to use big data and analytics to find prospects who are exactly like your best customers.

Bottom line: Sure, it makes sense for yacht and real estate brokers to spend a lot of time researching and contacting wealthy prospects, as it does for Saks and Nordstrom. But perhaps there is an opportunity for mainstream retailers to identify and cater to the one-percenters, too. After all, we've all heard stories about the wealthy liking to shop at dollar stores. Perhaps with a few extra nudges, even discount retailers can attract more of the affluent and their affluent friends.

Discussion Questions:

Should mainstream retailers make a bigger effort to attract and cater to the affluent to help offset loss of income from the shrinking middle-class? What do you think is the best way for mainstream retailers to connect with affluent consumers?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How effectively are mainstream retailers marketing to affluent consumers on the whole?


Few retailers make good use, let alone even use, the massive amounts of data that they have about their customers. The affluent look for deals and value, just like the shrinking middle class.

Appealing to any segment requires knowledge about what consumers want, and a dedication to bring it to them. Target has worked for years to brand itself as cheap chic, yet that brand has been tarnished through constant out-of-stocks, lack of knowledgeable employees, and a massive data breach. Retail brands need to make a promise and deliver on it.

All that said, rather than targeting a small segment of the population, retailers should be paying a living wage to their employees so the middle class expands, rather than contracts. Then there would be more money to go around for all classes of trade.

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Max Goldberg, President, Max Goldberg & Associates

If you are in an area with affluent customers, and have not been doing this type of networking, than you are already behind the curve. Since there are zero affluent people in my area, this does not really apply, but I play golf at our local club, and landed a handshake catering account, just thru a conversation I had on the 8th hole, about 8 years ago.

Big money or small money, you must network within your community on a regular basis. Join a chamber of commerce, or a BNI group. Volunteer as a school speaker, or sponsor a luncheon, or with a children's reading group at the local library.

Be yourself and always be a great listener, as opportunity is just around the corner to meet an influential client. If your lock one in, much more positive word of mouth business will come your way, IF you treat them well. Business in its simplest form is about building relationships, one client at a time, and all the technology in the world can not fight that bond you have with your special clients.

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Tony Orlando, Owner, Tony O's Supermarket & Catering

Positioning is everything. Selling to the affluent and the middle class simultaneously probably destroys both positions, but certainly wastes a lot of money. In the U.S., 8 of the top 10 prestige brands are automobiles. Even if Chevy could target the Mercedes buyer (or Audi buyer, or Lexus buyer), would they be at all successful.

That is why there is a Macy's and a Bloomingdale's. Macy's can do all they want, but they are not going to get the same shopper as Bloomies.

Remember, despite this shrinking Middle Class, 100 people are more likely to spend $100 each than one affluent person spends $10,000.

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Gene Detroyer, Professor, Independent

The middle is shrinking. Therefore, retailers and brands of all stripes need to capture their share of the marketplace by flanking both the high end and the low end. The high end is a high margin, low volume business, while the low end is the opposite.

Brands which have done this successfully include fashion houses like Tommy Hilfiger and Ralph Lauren. Kroger has banners ranging from Food4Less to Marketplace. Even private label brands within a house like Target, have a range of products for different wallets. This is the way forward.

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Liz Crawford, SVP, Strategy & Insights, Head of ShopLab, Match Drive

The wider the audience for a merchant, the more opportunity to sell to them. That includes the affluent. If you watch reality TV (I don't...well, I do, because my wife does and I like her, so I watch what she wants to watch), take a look at the "mainstream" products in their homes. The national CPG brand grocery items in their kitchens. Their brands of athletic shoes, their child car seats...anything with a brand that middle- and even lower-income people buy. You may be surprised to learn that the wealthy buy many of the same products that we all buy. Target them!

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Ralph Jacobson, Global Retail Industry Analytics Marketing Executive, IBM

It makes sense to target the affluent if you are a luxury brand. I'm not sure it makes much difference for mainstream brands. After all, the affluent need to purchase groceries and household items like everyone else. There aren't any luxury brand laundry detergents, are there? The toys their kids want are probably the same as most other kids, based on the latest movie franchise.

The affluent already know where and how to shop for a bargain when they want to and many do. Some even buy second-hand clothes at thrift stores. Of course, they also have waterfront property with boats and a dock and drink the finest wines....


The secret is to zero in on the relevant portion of your perfect customer prospects, not all. In a recent blog post, "The 2% Solution," on our website at Upstream Commerce, about pricing and predictive analytics, the secret, according to analyst, Phani Nagurjuna, is to be aware that "about 2% of all big data stream, not 100%, are actually relevant to solving a given business problem ... (Retailers need) ... tools that enable them to quickly identify this 2% of data and apply that to solving a given problem; then, move on to the next 2% for the next problem."

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Naomi K. Shapiro, Strategic Market Communications, Upstream Commerce

Yes there are some wealthy people. Yes they still have some money to spend compared to the rest of us. But as others have pointed out, the affluent shop for the necessities of life really very much like everybody else, at very much the same places as everybody else. It's the luxuries and special occasions they allow themselves and can afford without blinking an eye that separate them. Since those luxuries are always personal and often regional or seasonal, or celebratory in nature, marketers who try to zero in on "what rich people want" very frequently miscalculate and waste their firm's ad dollars while annoying the potential customer.

In my opinion, there is also much more reluctance to show conspicuous consumption (for safety and other reasons) than there may have been in the '90s and early 2000s, which has further narrowed sales of luxury goods to the affluent market.


If a company chooses to limit the geographic range of the middle class marketing for their products and services, the 21st century will hold many disappointments, not the least of which is the bottom line. Planet Earth is migrating, ready or not, to a one world economy with vast changes in terms of redistribution of wealth and class memberships. Latin America, Asia, and Eastern Europe have been pulling resources, employment opportunity and wealth from Western Europe and North America at a breakneck pace and will continue to do so for a good portion of this century. Western businesses are all busy looking to compete in markets and with methods they can no longer cost effectively engage.

At the same time there is little or no attempt to reach out and expand marketing efforts in newly developing nations. The West, with all of its abundance, seldom effectively reaches out to the new members of the middle class in the Eastern nations. Advertising and communication, if properly designed, will create public demand in markets that have more money with little to buy.

The rich and middle class has not gone away at all. As a result of free markets, the upper and middle classes are much larger and now spreading out all over the world. This is the reality of redistribution, whether we like it or not. The time to join them — or should I say, sell them something they want or need — is now.


If the affluent class is growing as more people are opting into higher income situations, then of course mainstream retailers need to adjust. Upper middle class is becoming the new middle class.

David Livingston, Principal, DJL Research

It's not THE economy, it's YOUR economy, and your economy is local. Marketing strategy should go after everyone with disposable income in your market.

Then the real problem begins - how does your staff treat the customer? Too often, the management and associates don't understand or relate well with affluent customers. They don't recognize who they are, and if they get hold of an affluent, they are intimidated (although they may act the opposite) and don't engage them appropriately.

Sid Raisch, President, Advantage Development System

Retailers need to understand the desires of their customers and identify where the biggest growth opportunities lie. In some instances, significant growth opportunities may exist for some retailers where they only get a portion of their affluent customers' retail expenditures. By analyzing these affluent customer's past purchase behavior, it is possible to build up a rich understanding of their needs and identify actions that would allow the retailer to capture a greater share of these affluent customer's retail spend.

For example, if affluent customers shop the center of the store but not the power perimeter, then this indicates that affluent customers are going to another retailer to have these needs satisfied. Enhancing the offering in the power perimeter to appeal to affluent customers while not diminishing the core offering that appeals to non-affluent customers would be an ideal way to capture a greater share of the affluent customer's spend. But if a retailer does not currently have customers who are affluent, it is probably because there is something about their core value proposition that doesn't appeal to this section of the population. In situations such as this, it could be harmful to alter the core value proposition to chase these potential new customers - the result could be that the retailer alienates their core customers without winning over the new affluent customer.

JC Penny experienced this phenomenon last year, which had a disastrous impact on sales.

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Graeme McVie, VP & GM, Business Development, Precima

Myths about the affluent are pervasive. A couple compelling truths are that >80% of the affluent come from a middle class background. Their formative values never go away. To that point, many think the wealthy are cheap. But, that's not necessarily true. They just don't see themselves as wealthy. A quote from my close friend Ron Kurtz, "The one commonality amongst the affluent is they save money." Lastly, Harrison Group tells us that the number one passion store for affluent women is Target.

To increase sales, a retailer has to understand the code. There are differences in merchandising, marketing & messaging, and how you serve the affluent.

The opportunities for mainstream retailers is obvious. On the other hand; they're likely already serving a reasonable number of them - they just don't know it.

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Christopher P. Ramey, President, Affluent Insights

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