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Affluents Lead Way to E-Commerce Recovery

More confident about economy, affluents will drive online spending

June 21, 2010 | Retail & Ecommerce | Demographics

US retail e-commerce sales were resistant to the recession, but growth in spending was at a flat 2% for 2009, according to eMarketer estimates. That growth is set to resume at a double-digit clip this year, rising 12.7% to over $152 billion.

Affluents are expected to contribute to that growth by beginning to satisfy pent-up demand. Online consumers have long been more affluent than the average American, and studies suggest affluents are recovering from economic problems more quickly than the general population.

L.E.K. Consulting found in April 2010 that households with annual income above $100,000 were more likely than average to have recovered already—or even to have experienced no effects of the recession. The rest expected their household’s finances to recover more quickly than average. Among those earning at least $150,000, the effect was even more pronounced.

Timeframe for Personal Financial Recovery According to US Affluent Households vs. General Population, by Household Income, April 2010 (% of respondents in each group)

The recession also affected household spending levels less among affluents, L.E.K. reported. While the general population had decreased spending by 4.4% since the onset of the downturn, households making more than $200,000 annually upped spending slightly, by 0.7%. Those highly affluent respondents expected to be spending 3.9% more once the recession was over, compared with flat spending planned by the general population.

Recession-Related Change in Overall Household Spending According to US Affluent Households vs. General Population, April 2010 (% change)

When comScore reported major double-digit grown in US retail e-commerce sales during Q1 2010, the firm attributed much of the upswing to affluent consumers. According to L.E.K., households above the $150,000 mark were 7 percentage points more likely to be “passionate” about online shopping.

US Retail E-Commerce Sales, by Quarter, Q1 2007-Q1 2010 (billions and % change*)

“While these spending gains provide reason for optimism, we should note that upper-income households are currently shouldering much of the growth,” said Gian Fulgoni, comScore chairman, in a statement. “Should the economy falter in the second half of the year and upper-income consumers return to a savings mode, we could still see growth decelerate. But for the time being, this momentum is encouraging.”

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Check out today’s other article, “What Brand Fans Are Worth.”



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