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Wealthy to cut back on pricey stuff, spend more on experiences

June 10, 2013|By Shan Li
  • Wealthy consumers will be reining in their spending on discretionary items, such as this Hermes Birkin bag.
Wealthy consumers will be reining in their spending on discretionary items,… (Timothy A. Clary / AFP/Getty…)

Wealthy shoppers will refrain from scooping up expensive handbags, shoes and other discretionary items even as the economy recovers and the stock market soars, a study found.

In the second half of 2013, the rich will rein in their spending on material things and seek out experiences that may garner more satisfaction, according to a Luxury Institute survey.

"People are less interested in watches and more interested in building lasting memories," said Milton Pedraza, chief executive of the Luxury Institute. "Even among the wealthiest customers, luxury goods and services are considered less important in today's economy."

The study found that among 500 or so pentamillionaires, which is defined as people with a net worth of $5 million or more, about four in five say that pricey designer splurges such as purses and jewelry have lost some of their appeal.

Instead, about a third said they planned to shell out more for travel and another 20% will spend more on eating out, the study found. Compare that with the minuscule 4% who said they will up their spending on watches and jewelry.

As the economy slowly recovers, the wealthy are apparently more amenable to shopping at big-box or discount shops. They're also adopting a frugal approach not just to uber-pricey goods but also on basic items for the home. Many also reported that price tags on designer items are simply too high.

"They go to mainstream retailers to save money" now, said Pedraza. "They buy items at Staples and T.J. Maxx, they buy in bulk at Costco."

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