THE CHALLENGE OF AFFLUENT BOOMERS

If you had to name the most desirable potential customers, you’d probably choose the most affluent. After all, they have the most money to spend.

But they might be tighter-fisted than you think &endash; especially when it comes to buying jewelry.

That’s one of the findings of the eighth annual “U.S. Trust Survey of Affluent Americans.” U.S. Trust Co. of New York, N.Y., commissioned Financial Market Research to conduct the survey, which this year involves only Baby Boomers who are among the top 1% of the wealthiest Americans. Participants were born between 1946 and 1964 and have adjusted gross incomes of more than $200,000 annually or net worth greater than $3 million.

While the survey posed questions on a range of financial matters, the one of most interest to jewelers is how these affluent Boomers spend their after-tax income. Jewelry ranks sixth on listed items they buy often and second among items they rarely or never buy.

In fact, these Boomers indulge in few luxuries. More than half have cheaper vacations in the U.S. rather than travel abroad, two-thirds own only one home (the homes are valued under $500,000), two-thirds own one or two automobiles (the average value is under $30,000), only two in 10 employ full-time domestic help and more than half send their children to public schools. When it comes to indulgences, they mention fine dining most often.

“Considering the wealth they have, their responses indicate they lead lifestyles closer to the middle class than to the `rich and famous,'” according to U.S. Trust Co.

Where does their money go? They’re socking it away for retirement. That’s not surprising &endash; those who are concerned about ensuring a comfortable retirement now comprise 69% of respondents, up from 31% as recently as the 1993 survey. Other concerns include the ability to maintain income level, to provide children with a first-rate education and to protect the return on their investments over the long-term.

While the most affluent Boomers don’t buy fine jewelry often, the survey also points to some factors jewelers can turn to their advantage. In addition to their conservative fiscal views, these Boomers fear that inflation will eat away at their investments, and they think money allows them to live comfortably and enjoy life’s luxuries. This suggests that a jeweler who teaches affluent Boomers about the value and lasting quality of jewelry could reap the rewards of their business.

HOW THE MOST AFFLUENT BABY BOOMERS SPEND THEIR MONEY

	Often	On occasion	Rarely or never
Fine dining	39%	46%	15%
Luxuries for children	24%	49%	25%
Expensive electronics	15%	35%	50%
Luxury vacations	15%	51%	34%
Expensive clothes	13%	49%	39%
Fine jewelry	11%	35%	53%
Fine art &collectibles	10%	23%	67%
Source: U.S. Trust Survey of Affluent Americans, 1995

FAMILY-CARE WORRIES AFFECT WORKERS

Employees’ concerns about the care of their children or elderly parents can have a dramatic effect on work performance. Yet many employers don’t consider this in evaluating workers’ morale or productivity.

These are the major findings of the Reid Child/Elder Care SurveySM, a new study conducted by Reid Psychological SystemsTM. The study addresses employee problems as they affect managing a career and caring for a family.

Ninety percent of employees with family-care responsibilities say worries over adequate care for ill children and/or ill or elderly parents create high levels of stress that affect job performance. Indeed, they cause a significant number to miss work or even consider quitting (see the list above for a breakdown).

A significant number also admit to absences and work interruptions due to family-care responsibilities and inadequate care options. Accordingly, these cost businesses significant amounts of money and productivity.

The study’s results are important because “most employers fail to identify family-care responsibilities as a critical issue that can have adverse effects,” says Stephen Coffman, president of Reid Psychological Systems. It not only affects teamwork, morale and turnover, he says, but also lowers productivity when employees leave early, are interrupted or miss work entirely.

The solution, he says, is for employers to correct problems early. It’s harder to recover from low morale and productivity than to avert them in the first place.

HOW PROBLEMS WITH CHILD/ELDER CARE AFFECT WORK

• 33% of employees had their work interrupted by concerns about child/elder care two or more times in the previous six months.

• 32% missed work sometime in the previous six months because adequate child/elder sick care was unavailable.

• 30% often left work early to tend to their child/elder-care responsibilities.

• 55% believe their employers should provide some kind of assistance with their child/elder-care responsibilities

• 69% believe better child/elder care would increase their work productivity.

• 20% have considered quitting their job because of child/elder-care concerns.

FUTURE VIEW

Edith Weiner has seen the future and it’s quite different from the present. New lifestyle arrangements, new technologies and new beliefs about what life should hold will all affect jewelry design and consumption, says Weiner, a noted futurist who spoke at the recent semiannual Women’s Jewelry Association/Allure magazine breakfast in New York City. Among the trends to watch:

· Technology. Advances that have enabled us to do more at a faster pace have left many people who used to be passionate about their professions burned out and bored. Raise their interest by tapping into their passion for new information. Take time to explain how a gem is formed, where it’s from, how it’s mined or who owned it before.

· Shrinking middle class. (Weiner stresses the difference between middle class, which deals with certain values and beliefs, and middle income, which deals with finances). She notes a decline in the middle-class beliefs that our children will do better than we did, that a good education entitles us to lifelong employment on a rising salary scale and that stable family relationships are the norm. In the absence of so many “absolutes,” consumers appreciate a retailer who represents trust and stability.

· Prejudices. We’re moving away from prejudices based on race to ones based on class. Even within racial segments, the elite distance themselves from the poor. People increasingly want to be with like-minded and like-appearance people. That’s good for referral business.

· Households. The next 10 years will see a proliferation of new types of households, such as senior citizens living in group situations and grandparents sharing even more in the emotional and financial burden of raising grandchildren. Depending on the situation, this could mean more or less disposable income.

· Age. Two trends to watch are the rapidly growing “very old” segment (those age 85+ who are living healthier as well as longer) and the Baby Boom generation (which comprises very different submarkets). The oldest Boomers carved a niche with an entrepreneurial spirit and technological adeptness. The middle of the generation has had trouble escaping the shadows of older siblings, and the youngest Boomers have found life much tougher and more competitive. Understand these differences when marketing to them.

GOLD JEWELRY SALES RISE 6% IN HALF

Gold jewelry posted its 14th consecutive quarter of sales increases in the second quarter of 1995, says the World Gold Council. Total gold jewelry retail sales topped $3.8 billion, up 6.3% from the first half of last year. Unit volume grew even more, rising 9.4% to 43.6 million units. Meanwhile, overall U.S. retail sales (non-auto) rose 5.2%.

“Gold’s success in an inconsistent retail climate attests to its enduring consumer appeal,”says Michael C. Barlerin, WGCchief executive officer. “Its tradition of innovation, quality and value position it as the metal of the 1990s.”

Sales were up across all retail channels of distribution, based on reports from more than 4,000 retailers. First-half sales rose 19% in value in discount stores, 6.5% in independent jewelry stores, 5.2% in chain jewelry stores, 3.8% in department stores and 2.3% in catalog showrooms.

All merchandise categories also showed increases. Sales of charms rose 15.9%, earrings 13.9%, non-wedding rings 9.4%, bracelets 6.2%, non-chain necklaces 5.6%, gold wedding rings 5% and neckchains 3.2%.