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Michael Kors Is Beating Everyone By Targeting 'HENRYs'

10:05, 1/4/2013 .. 0 comments .. Link
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Kors just announced it quadrupled profits in the last year, an amazing feat in the struggling economy. The brand utilized consumer one insight that helped it excel while aspirational competitors like Tiffany & Co. and Coach have struggled. Michael Kors succeeded because it was the first retailer to hit the market's sweet spot: people with money to spend but who aren't rich. Luxury marketing expert Pam Danziger calls these people HENRYs, for "High Earners Not Rich Yet." They are the people who make between $100,000 and $250,000, she says. HENRYs are a growing segment, while the wealthiest people are making less than they used to. Danziger explained the concept to us in an emailed note: Ultra-affluent (i.e. those at the top 2 percent of U.S. households with incomes starting at $250,000) cut their spending by nearly 30 percent from 2010, while the HENRYs (High Earners Not Rich Yet with incomes $100,000-$249,999) increased their spending on luxury by some 11 percent from 2009 levels. Even though HENRYs individually have a far lower spending threshold than ultra-affluent customers, there are nearly ten HENRY households for every ultra-affluent. That is why with a total of 21.3 million households, the HENRY segment is a critically important part of the consumer market. With Michael Kors' $450 handbags and $250 watches, HENRYs can show off their success without feeling like they're going overboard. Kors, like his competitor Tory Burch, wisely chose the right audience. It's paying off.

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