High-Spending HENRYs Will Pull Out Holiday Retail Sales This Season
I’m the first to admit that I am skeptical about the overly optimistic holiday sales forecasts that are filling my inbox. This year I am particularly surprised by how many forecasts top NRF’s predictably rosy predictions, which this year range from 3.8 percent to 4.2 percent. That’s why I nearly went into auto-delete mode when this one, 2019 Deloitte Holiday Retail Survey, with a predicted 4.5-5 percent sales spike this holiday season popped up.
But then it was from Deloitte’s Rod Sides, an analyst plus a consulting firm I respect, and when I scrolled down a bit, I found something that caught my attention.
“The 20 percent in the high-spender category (those spending $2,100 or more) will account for 60 percent of the total holiday spend.”
That means the HENRYs.
Those at the top
That the high-spending consumers will contribute that much to retail growth this holiday didn’t surprise me, having studied the purchase behavior and spending power of those at the top income levels. Today those $100k+ households represent 30 percent of the nation’s 129 million households.
In whatever category of consumer spending one looks at, the top $100k+ income households typically spend two-to-three times more than the average income household. Attracting these high-spending customers can make a real difference to any retailer’s top and bottom line.
But before moving on, I already hear the objections: $100k+ income hardly counts as affluent. Admittedly a $100k income doesn’t go as far in some places as it does in others, but the country is big and diverse. People making $100k+ are still doing better than the bottom 70 percent.
And within the top 30 percent, there are only two segments that any retailer needs to worry about: the top 5 percent with incomes $250k+ (the Ultra-Affluents) and the Mass-Affluent $100k-$249.9k HENRYs (high-earners-not-rich-yet).
Both of those segments – Ultra-Affluents and HENRYs – are included in Deloitte’s survey sample of 4,000, but Ultra-Affluents are a tough bunch to capture in any statistically-representative survey sample. Given their representation is so low in the overall population (5 percent) and they are notoriously survey-adverse (unless the survey oversamples this segment which this one didn’t), any results from Ultra-Affluents are going to fall into the margin of error and not be significant. So, for practical purposes, Deloitte’s high-income segment is overwhelmingly representative of the HENRY demographic.
How HENRYs will shop this holiday
HENRYs are going to do the heavy lifting this year in boosting retail spending. As shopper’s level of income rises, the amount they plan to spend nearly doubles from the expected level of spending from those one rung beneath them.
So, for example, the lowest-income shoppers (