For more than a decade, since the Great Recession, traditional retailers have been warned that party was over. Now, during the Great Pandemic, they will finally pay the price for "over-building, overextending, and overestimating their importance in the lives of customers has now come due after the disruption caused by COVID-19," said Pam Danziger of Unity Marketing
According to Danziger, it’s been clear that retail needs a radical transformation. But too many established retailers failed to take heed, or if they did, they failed to act fast and decisively enough. Now retail’s dysfunction has finally caught up and its reckoning is due. The solution, of course, is innovation. But it may be too late for too many retailers who are struggling with store closures, bankruptcies and low-to-no foot traffic.
If retailers, tradtional and otherwise, hope to survive and thrive in this brave new world, they'll have to cater to the needs of the HENRY (High Earners, Not Rich Yet) demographic. According to Danziger, HENRYs represent the most powerful and empowered income segment are those in the $100k to $250k range, about 21% of the nation’s 131 million households. This group accounts for only about one-fifth of all US households but account for some 36% of all US consumer spending.
According to Danziger, overnight, consumer spending shifted from discretionary to necessity purchases and has remained that way throughout the months of the shutdowns. With luxury being the most discretionary of all consumer purchases, it was the first consumer segment to suffer cutbacks due to the coronavirus and is shaping up to be the last one that will recover. She notes that the luxury market drives on the psychology of affluent consumers. When they feel good about themselves and on solid ground financially, they give themselves permission to indulge. When they don’t, they won’t. It’s that simple. Looking across the luxury consumer market, luxury brands can count on their rich customers to come back, maybe not with the same enthusiasm short term, but return they will.
"That will not be the case for the mass-affluent HENRYs who occupy the space between the middle-income consumers ($50,000-$99,000) and the ultra-affluent elites ($250,000+)," warned Danziger. "The luxury market is going to be profoundly changed by profound changes to the HENRYs mindset, priorities, and values."
Unity Marketing has prepared an easy-to-read 35+ page report
that explores what the new-normal, post-coronavirus world will look like from the perspective of the HENRYs and ways that luxury brands can connect with them.