How a Woman Spends Her Money

She earned it, so she's more empowered to use it, and as the family purchasing officer, she thinks big, says author Michael Silverstein

Women's increasing buying and decision-making power is the driving force behind many of today's big retail trends, says Michael Silverstein, a director at Boston Consulting Group and co-author of Trading Up: The New American Luxury. Two of the biggest such phenomena, he believes, are home-improvement fever and the "mass luxury movement," whereby even middle-income consumers are buying designer names once accessible only to the affluent.

Silverstein points out that although more females than ever are working outside the home, 75% of housework is done by women. These busy women, earning their own money, are now inclined to buy things they might have once considered extravagant -- say, a $5,000 Viking cooking range vs. a $400 model from Sears (S ), or a $300 leather Coach (COH ) handbag vs. one that costs $50.

Silverstein recently spoke with BusinessWeek Online reporter Pallavi Gogoi about why and how the female consumer is changing the world of products and marketing. Here are edited excerpts of their conversation:

Q: You've said women are powering up today's retailers and changing the way everything is marketed. Who are these women?


These are the 55 million working women, many of whom, especially those under 50, have a child or two. Almost all of them work full time, an average of 40 hours a week, in stressful jobs with unpredictable hours. They're also responsible for all the household chores. They do a predominant amount of the laundry, help their kids with homework, and are the chauffeur service for the kids' soccer or music classes. They have relatively little time for themselves, usually an hour or so after their kids have gone to sleep.

Q: And why is she important?


About 25% of them make more money than their husbands or boyfriends. She's the chief purchasing agent of the family. She's extremely brand-attuned and does a lot of research before buying. She can't afford to buy everything and will decide where to trade up or down. She decides when her family needs a vacation and where they should go. She's the dominant influence in a two-person household.

Q: But hasn't she always been the chief purchasing agent of the family?


Her power has dramatically increased because she calls it her money. And that's a big difference from 1970, when it wasn't her money, it was his money.

Almost all of the 100% of growth in family incomes from 1970 to 2003 came from a woman's income. And she knows that her family is leading a more affluent life because of her, and it's not an option to stop working.

Q: What are the major trends that she has been responsible for?


These women are totally responsible for today's mass luxury movement. It's coincident with the growth in her income, without which there would be no fire. The aristocratic luxury movement of the '90s, when top-class Mercedes (DCX ) and Jaguars (F ) were selling like hotcakes, was a nongender event that came from increased wealth from the tech and stock market boom.

Q: And she's also into home improvement in a big way? A: She looks around, and she has a hierarchy of things that she wants to do. Her top priorities are a new bath or kitchen. Her bathroom is her sanctuary, a Jacuzzi (JJZ ) gives her the chance to be alone and relax. And the Viking oven will help her be the heart and soul of the family by helping her prepare meals better, faster, and to perfection when everybody gets together at the dinner table.

Companies like Home Depot (HD ) see this new woman as a huge opportunity, a buying force out there in the marketplace. She's a source of inspiration -- she thinks big in wanting to improve the quality of life for her family. Her ideas and big-ticket purchases have completely turned around the home-improvement business.

Q: What role has technology played in this change?


She's on the Internet looking at consumer reviews and researching alternatives, creating spreadsheets, purchase lists, and acquisition models. She takes her job as family purchasing officer seriously.

Her sense of ethics is very strong, and if a product is faulty, she will not only never buy from you again but also tell all her friends.

Q: Have tech companies adapted to the new reality that women are as much buyers of electronics as men?


Consumer electronics are just now getting to know women and have a long way to go. The old Gillette (G ) story is that when they wanted to target their razors to women, they just colored them pink. That's too simplistic, and tech companies need to know that a lot can be done to identify women's needs, satisfactions, and wishes.

Q: Any examples of a tech company that hasn't gone after the female consumer?


TiVo (TIVO ) is a great example of a company that hasn't really got it. There are 55 million working adult females who would love to come home and watch Oprah. But the company hasn't discovered that marketing opportunity to women that says: "TiVo equals Oprah."

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