It's All About The Henry's
Companies like Prada, Coach, Rolex and Mercedes have dominated upscale retail for decades, but ‘the times, they are a-changing,’ says Unity Marketing founder and luxury brand consultant Pam Danziger.
Today’s marketplace is about new buyers with new priorities. Their focus is less about traditional high-end luxury brands and more about products or services that express their values and identity.
“I call them HENRYs or “high-earners-not-rich-yet,” she says.
Post-recession research shows this digitally-powered demographic – almost 24 million households with annual incomes of $100,000 to $249,999 – is often overlooked by traditional brand marketers. To ignore them is a mistake, Danziger points out, because these up-and-comers are “aspirational” and will spend money.
The key to attracting these emerging consumers: embrace what motivates them. “HENRYs are poorly understood by marketers who traditionally sell to the masses and … by those targeting the [smaller] luxury affluent segment,” she writes in a 2015 white paper, What Do HENRYs Want?
Danziger describes these “heavy-lifters” as accounting for about 40 % of the nation’s personal consumption expenditures. Surprisingly, they view themselves not as affluent or luxury class but as “middle class.” Most are Millennials born since the early 1980s who had Baby Boomers for parents. They grew up with plenty of ‘things’ and realize that the pursuit of consumerism doesn’t necessarily lead to happiness. Instead HENRYs live a more virtual life, using a handset as a third arm and relying on extensive networks of Facebook friends they seldom see face to face. They also show signs of being environmentally conscious.
Research shows the best way to reach HENRYs is to be vigilant about service, to showcase quality and to tell inspiring brand stories. It also means playing to an educated shopper (two-thirds have a college degree or better) and hitting the premium pricing “sweet spot” between mass and class.
These discriminating shoppers like doing business with socially responsible firms that promote community advancement through sponsorships, events and special incentives. Think Starbucks, Trader Joe’s or TOMS. Coach earns high marks for its men’s and women’s accessories and gifts that appeal to “aspirational” rising stars – as do Costco and Nordstrom,” she says.
Nordstrom – recently named one of Fortune’s “World’s Most Admired Companies” – was recognized in part for its HENRY-friendly strategies. It is doubling the number of Nordstrom Rack outlets that feature premium merchandise at a discount in the next few years. The company’s owners have also invested millions of dollars to upgrade e-commerce options and to maintain a reputation for excellent customer service.
Here in the Pikes Peak region, HENRY shoppers can be found checking out top running shoes and name brand apparel at stores like The Colorado Springs Running Co. The retailer opened in 2000 and is located today near a key UCCS demographic in University Village. As part of its customer service, shoppers can depend on trained staff to provide in-depth product knowledge and a wide range of brands and price points. Clients are also offered custom foot analysis and the opportunity to connect with fellow runners and walkers says John O’Neil, co-owner and store manager. The store regularly sponsors three running events each week and joins its customers in supporting community giving. When it’s time to buy new, for example, clients can bring in used running or walking shoes and O’Neil’s team will recycle them.
“We work with nonprofits like Springs Rescue Mission to provide less fortunate folks new soles. Some shoes are better than no shoes,” O’Neill says. “It’s part of our company culture to give back.”
So whether it’s taking time to build a relationship and explain “the why of the brand” or to offer a smart value proposition with an upscale flair, Danziger says her research predicts that HENRY-wise retailers hold a distinct advantage over their mass market competitors.
“It’s all about tailoring the brand message to the unique psychology of younger consumers on the road to affluence,” she says.