The average household income for the San Francisco-Oakland metropolitan area was incorrectly stated Sunday in an article on the Washington area economy. The figure is $42,484. (Published 7/28/87)
By a variety of standards, Washington is far and away the most affluent and educated metropolitan area in the United States today.
With the growth of the private sector, the stability of the federal government and the increasing number of lawyers, accountants and other professionals, the Washington metropolitan area has consolidated its 27-year-old position as the nation's wealthiest city -- making it an increasingly attractive market for retailers and consumer-products manufacturers alike.
One after another, retailers are rushing to set up stores in what many now call the center of conspicuous consumption. Meanwhile, consumer-product testers, who for years have dismissed this area as a community of faceless government bureaucrats and poor minorities, are beginning to come to Washington to test a variety of high-priced merchandise.
As M. Davis Herriman, Giant Food Inc.'s vice president for grocery operations, succinctly noted: "This is the height of yuppiedom here."
For Giant, being in the center of yuppiedom means being bombarded daily with requests to sell new products. Every week, Giant reviews more than 150 new products to see if they should be stocked in the stores. "Only one in four makes it," Herriman said.
"There's no other major American market that comes even close to ours in terms of spendable incomes," said demographic researchers George and Eunice Grier in a report on Washington's market power for the Greater Washington Research Center.
The latest statistics compiled by the marketing research firm Sales & Marketing Management show that the average after-tax household income in the Washington area last year was $47,273 -- 42 percent above the $33,252 average of all U.S. households. Washington also is 11 percent higher than second-ranked San Francisco-Oakland, where the average household income, after taxes, totaled $33,252.
"We consider 55 percent of the households in the area to be affluent," having, among other things, income greater than $50,000, said Winthrop H. Smith Jr., a Merrill Lynch senior vice president and regional director for the mid-Atlantic states. "By comparison, in the United States as a whole, only 16 percent of the households are considered affluent. That's what makes this market significant to us as a financial services firm," Smith said.
Black Incomes Rank High Black households also have higher incomes than the other top 10 cities. According to the Griers' latest statistics, the median income of black households in 1985 was $24,200. "This median income is higher by thousands of dollars than any other of the top 10 metro areas. In fact, Washington is the only top-10 area where the median income of black households exceeds $20,000," the Griers noted. Detroit has the second-highest median black household income of $19,900.
Additionally, the proportion of Washington-area black households with incomes greater than $35,000 is "higher by far than in any other of the top 10" markets," the Griers said. In Washington, 29 percent of black households have an income of $35,000 or more; Detroit again ranks second, with 24 percent of its black households having incomes above $35,000.
The Washington metropolitan area -- which first gained the rank of the most affluent city in the 1970 census -- is also the nation's best-educated, with the 1980 census reporting that nearly one-third of its adults (those 25 or older) hold college degrees. That rate is virtually twice the national average and substantially higher than other major markets. San Francisco had the second highest number of college graduates represented in its population -- 26.5 percent -- and Boston was third with 23.6 percent.
Washington also tops the nation in the number of women in the work force, with more than two-thirds of all women working. In the United States, about 54 percent of the women are in the work force, the Labor Department reported in 1985.
At the same time, Washington is very adult-oriented, with fewer children under 5 years old than any other large metropolitan area and more singles than any city other than San Francisco.
Combined, these statistics "translate into a level of taste and spending power significantly higher than the average," said David Boxer, director of marketing analysis of the Taubman Co., a Michigan real-estate development firm that owns three large shopping malls in the Washington area as well as Woodward & Lothrop Inc. These statistics "also mean Washingtonians will buy a better category of home furnishings and apparel," Boxer said.
That is readily apparent in the bottom line of most retailers. "This has got to be the most affluent clientele we see anywhere in the country," said Kay Jeweler's President Michael R. Lavington. "Nationally, our average ticket is $190; in Washington, it is closer to $250."
Smaller Chains Moving In Consequently, it is not hard to understand why out-of-state retailers are establishing stores here.
"Washington has all the things we need: lots of people, high income and good growth," James F. Nordstrom, president of the successful Seattle-based specialty store Nordstrom's, said when he announced two years ago that Nordstrom's would open its first East Coast store in Tysons Corner shopping center. The store is scheduled to open next March.
R.H. Macy & Co., already nearby with stores in Baltimore and a new store in Anne Arundel County, will open a store in the Tysons area shortly after Nordstrom's. Both chains plan to open stores in the Pentagon City mall that is currently under construction.
Smaller chains are flocking here as well, including two other prominent West Coast retailers: Recreational Equipment Inc., better known as REI, and Egghead Discount Software.
"The Washington demographics are just wonderful," said Victor Alhadeff, Egghead's founder and chief. "There is a pretty high correlation of PC use and high income and education levels. In Washington, there are tremendous pockets of both. We see a major opportunity here," he said, noting that the chain, which opened its first store here in early June in Seven Corners shopping mall, hopes to open nine more by Christmas.
The large number of working women has made Washington additionally attractive to apparel merchants. Carson Pirie Scott & Co., for example, chose Washington as the first city to expand its specialty apparel chain, Corporate Level, outside of its hometown of Chicago. The store, which caters to executive women, opened earlier this spring in downtown Washington. "As a percentage of the population, more of our type of customer lives in Washington than in any other city -- even more than Chicago -- and in a more concentrated area," said Dennis S. Bookshester, who heads Carson Pirie Scott's retailing division.
Similarly, Alcott & Andrews chose Washington as the first city to launch its specialized clothing chain, opening two stores here in 1984. Today, the chain has 11 stores in seven cities. Washington has the highest proportion of working women in the country -- 22 percent higher than the national average, Alcott & Andrews President Michael Jeffries noted. Atlanta, at 17 percent above the national average, comes in second.
More Product Tests Just as retailers are moving quickly to Washington, food manufacturers are turning to the area to run limited marketing tests, particularly if the product is designed to appeal to affluent consumers.
When Dannon Yogurt was considering where it should test its new yogurt drink last year, it quickly settled on Washington as its experimental market. Here, Dannon officials figured they would be dealing with a college-educated, health-conscious consumer who would be more inclined to eat yogurt than the average American.
"Washington is very high on the yogurt-consumption index," said George Ward, Dannon's mid-Atlantic district sales manager. Only in New York and Los Angeles do more people eat yogurt.
Similarly, when Campbell Soup Co. was thinking about selling a new fish product -- a frozen salmon steak with bearnaise and other gourmet sauces -- it selected Washington to test the product. "The reason we tested it there was the cost of the product -- about $5 to $6 a unit," said Bill Baundy, senior marketing research manager for Campbell's. "The people in Washington could afford it."
According to Matt Freeman, president of the consulting division of the Marketing Corporation of American, "one of the current trends in food is that more and more people want and are willing to pay for tasty, convenient food. In Washington, there is a disproportionately large number of people that fit that description."
As a result, Freeman predicts Washington "will become a veritable hotbed of vitality tests" for the more expensive, time-saving food products to see if a product is, at the very least, truly convenient and tasty enough to merit a company's further attention.
"That's what Campbell's did when it tested its seafood products" and its freshly prepared entrees "Fresh Chef." "They wanted to see if consumers really wanted and needed to buy those products over and over again," said Freeman. "If these products don't play in Washington, they sure as hell won't play in Peoria. So you can learn a lot in a place like Washington even though its demographics are nothing like a conventional test market."
Although Washington has not been a test market for Pepperidge Farm products, the city's upscale consumers will make "it a prime candidate" in the future, a company spokesman said recently.
In supermarkets and restaurants, Washington households spend about $5,640 a year, according to the Griers. But even more significant, they note, "Washingtonians put more money into their cars than into their stomachs. They spend $6,081 per household" on auto dealers and service stations yearly, the Griers said.
"Only Detroit has a higher ratio of spending on cars versus food per household than Washington," the Griers noted.
This high level of spending makes the Washington area one of the most competitive automotive markets in the country, as more and more large dealers -- those with more than one showroom -- compete for sales.
"We have 23 Ford dealers around the Beltway," noted Dick Valenti, assistant district manager for Ford Motor Co. "They are among the most successful dealers around the country -- all good, solid, profitable and strong.
As for taste, automotive manufacturers say Washingtonians are very split in their purchases, opting for either the less expensive subcompacts and compacts or the luxury imports. "We're very strong at the high and low end," noted Lance E. Westerlund, the Washington branch manager for the Chevrolet division of General Motors Corp.
On the one hand, "small cars do extremely well here, given the traffic patterns: People drive a long way to and from work and want a basic commuter car" with few frills, Westerlund said. That is why Chevrolet's smaller cars -- the Sprint, Spectrum, Nova, Cavalier and Chevette -- fare better here than the Monte Carlo, Caprice, Celebrity and Camaro, he said.
Similarly, the Escort has been Ford's best selling car here, and the large number of single, working women makes the Escort's sportier two-seat EXP one of the biggest sellers within the Escort line here. "We don't see that elsewhere in the nation," Valenti said.
Imported Cars Are Popular At the same time, however, Washingtonians also favor the expensive imports. According to car registration statistics compiled by the marketing firm R.L. Polk & Co., Washingtonians last year were 70 percent more likely to buy Volvos than the average American; 62 percent more likely to buy a Saab; 39 percent more likely to buy a Volkswagen or Peugeot; and more than 30 percent more likely to buy an Audi, BMW, Mercedes Benz or Porsche.
On the other hand, Washingtonians buy fewer Chevrolets, Chryslers, Pontiacs, Lincolns, Cadillacs and Buicks than other American car buyers. Buicks received the lowest rating, with Washingtonians buying them about 43 percent less often than the average American.
"The Buick has an image more suited to an older person -- perfect for someone like a country doctor -- that just doesn't represent Washingtonians," one area automotive representative said.
Despite their high level of affluence, Washingtonians "are more value conscious and better shoppers," noted Don Minogue, Ford's sales manager for the Washington area. "They don't just compare the basic price of one car to another; they may opt for a car that costs $1,000 more, because they realize it's a better value."
Perhaps the single most notable characteristic about Washington car sales, though, is the consumer's strong desire to buy the car and drive it off the lot on the same day. "The traditional way to buy cars is to come in and shop around, think about it, think about options and then order the car," said Minogue. "But here, people drive it off the lot. About 50 percent of the sales are instant deliveries," where buyers can take possession of the cars immediately -- even though the financing may not have been completed. "That's completely different from the rest of the country, where instant deliveries average well under 10 percent," Minogue said.
Why is the Washington area so different? Minogue thinks it's a result of affluence. "With much higher income here, financing is instantly available because everybody's credit is consistently good."
Affluence also means good business for financial-service companies. According to a 1985 New York Stock Exchange study, the Washington metropolitan area has the nation's fourth-largest number of shareholders -- behind New York, Los Angeles-Long Beach and Chicago -- with 1.1 million shareholders. As a proportion of households, the large number of shareholders makes Washington number one, with 863.2 shareholders for every 1,000 households. Boston ranks second with 771 shareholders for every 1,000 households.
"It is one of our very best marketplaces," said David Boyer, a Dean Witter senior vice president and Wasshington regional director. "We do a good business in mutual funds, but we probably do a somewhat larger percentage of stock business here than we do in any other place in the country. I guess that would be because the people in Washington are a little more sophisticated, affluent and willing to take more of a risk and pick selective stocks."
According to statistics by CACI Inc.'s advanced marketing systems division, Washington area households are 25 percent more likely to buy stock than other Americans. Even more notable, local households are 44 percent more likely to buy corporate bonds and 33 percent more likely to invest in gold, metals or gems.
On the other hand, Washingtonians are 6 percent less likely to take a personal loan for a vacation.
CACI figures also show that Washingtonians have a penchant for classical music, with area radio listeners twice as likely to listen to classical-music stations as the average American.
That statistic comes as no surprise to Russ Solomon, head of the Tower Record chain, who noted that in his one District of Columbia store, classical records account for 25 percent of the store's total sales. By contrast, classical record sales nationally account for 16 percent of Tower sales, Solomon notes.
Washingtonians also like jazz (50 percent more than the average American according to CACI figures) and, not surpriSUN2,ROSENFELDS,HT,ACT,WALKERJIM,ROSENFELD,,eded Taiwan's Progress TAIWAN HAS DECREED an end to the martial law that the ruling Nationalist Party imposed 38 years ago when the communists chased its forces off the Chinese mainland. It is not instant democracy. The powers the military has administered are not being abolished but are being put into civilian hands. The system is set up to ensure that most of those hands are the Kuomintang's; four-fifths of the seats in the legislature, for instance, are held by people elected in mainland China districts in 1947 or by their party-appointed successors. Still, civilians are henceforth to be tried in civilian courts, and the way has been opened wider to a system of legalized political parties. Psychologically and politically, it is an important step forward.
President Chiang Ching-kuo's new gesture demonstrates to Americans and others that the Republic of China is staying ahead of the pressures that have convulsed other authoritarian regimes. It also reflects real changes on the island itself. Socially and economically, Taiwan has modernized impressively in the past four decades, rendering authoritarian rule increasingly anomalous and creating a popular demand for a more relaxed and dignified system. Wary as it is, the Nationalist Party, which speaks principally for Chinese who came from the mainland, has seen liberalization as a way to make itself more popular to the majority (80-plus percent) of native Taiwanese. It offers the prosperity and stability it has already delivered, plus the promise of political relaxation, not just as values in themselves but also as substitutes for the self-determination that many Taiwanese have on their minds.
In moving toward a political opening, nonetheless, the government on Taiwan deserves respect. Its pace may be slow and its relaxation of its grip tentative. But it is edging into uncharted terrain where the liberalization it now is exploring could be used to challenge its political dominance. The democratic cause is advancing on a global front, and this is President Chiang's contribution to it.