Infamously, when he was asked why he kept robbing banks—and getting caught—Willie Sutton answered, “Because that’s where the money is.”
In this tough retailing environment, merchants might wish to ponder his advice, which has come to be known as “Sutton’s Law.”
Should you keep advertising the way you always have, or should you start targeting the people with the money?
According to TNS Media Intelligence, due to economic pressures, the number of affluent households in the US (defined as having a net worth over $500,000) dropped last year, falling from 16.4 million in 2007 to 15.6 million in 2008.
Nevertheless, the rich still have money to spend, which is more than many customers can say.
“A household with $1 million in investments that has lost even 30% in value has by no means slipped to middle-class status,” says Lisa E. Phillips, eMarketer senior analyst and author of the new report, Affluents Online: Living the Luxe Life in Private. “But many of those households are reining in spending and evaluating purchases carefully.”
And they are going online to shop.
“On PCs and mobile devices, affluent Internet users are more active than ever,” says Ms. Phillips. “Their numbers continue to grow, even in a severe recession.”
comScore found that over 50 million people with household incomes of $100,000 or more were online in March, up 3.4% over March 2008.
More importantly, they represent more than one-quarter of the total US Internet audience. Merchants should not have too much trouble locating them, but…
In January, the Spectrem Group announced that one-fifth of millionaire households had sustained declines of 40% in their asset values. Respondents anticipated a prolonged economic downturn and 55% feared they would not have sufficient assets to maintain their present lifestyles.
Bain & Company predicts that global sales of luxury goods will slide 10% in 2009, to $201 billion.
“Luxury brand marketers must stay top-of-mind with wealthy Internet users by offering superior customer service, personalized products, and exclusive offers and invitations,” says Ms. Phillips. “Other marketers hoping to catch the affluents who are ‘trading down’ must raise the bar in their online efforts—not merely by advertising, but by explaining how their products or services fit in with the ‘new’ affluent lifestyle.”
For online retailers, keeping up with the Joneses will not be easy.