YUPPIE SPENDING GETS SERIOUS Those conspicuous consumers are settling down, eating in, and stashing their cash in quality furniture and Detroit wheels. They're even giving some of it to charity.
By Faye Rice REPORTER ASSOCIATE Edward C. Baig

(FORTUNE Magazine) – BRACE yourselves marketers: The yuppies, those ambitious, self-obsessed, young baby-boomers who flaunted their affluence and fascinated Madison Avenue, are toning down the flash. After leading their generation along the path of conspicuous consumption and debt overload, the big spenders are trading their exotic vacations and expensive restaurants for charity work, takeout food, and cozy nights at home. Says Faith Popcorn, chairman of the marketing consulting firm BrainReserve: ''They are reaching for reality.'' The reality is that these acquisitive creatures are aging and moving into a period of their lives when they are setting up house and having children. They remain the spendthrifts they always were, but the money isn't going into BMWs, cocaine, and champagne. Now they get their kick from furniture, home computers, and gourmet carry-out meals. Says Leo J. Shapiro, whose Chicago market research firm spots new trends: ''Money is still the root of all yuppie happiness. They are just shopping more prudently.'' Yuppies, the acronym for young urban professionals, are the top-earning 3.5 million baby-boomers whose personal incomes average $51,000 a year. They are well-educated college graduates, often with a year or so of postgraduate study. The term originally described affluent city dwellers, but marketers quickly broadened it to include prosperous suburbanites. Traditional yuppies with the money to satisfy every consumer whim are still around. Take Larry Kent Woods II, 31, who lives in Birmingham, Alabama, and has zoomed up the ladder at Tele-Communications Inc., where he is now a divisional marketing director. A bachelor, Woods loves gourmet food, drives a Porsche 944, dabbles in the stock market, and recently bought a second home that he is furnishing with original art and ''quality'' antiques. Says he: ''Money is the only scorecard that people keep track of.'' But the trend is moving away from that scorecard. In a recent study conducted for Chivas Regal, two-thirds of yuppies claimed to prefer a less materialistic life. They also said they increased their donations to charity in l988. Says investment banker Andrew Lipman, 29, who does volunteer fund raising for Big Brothers: ''I've seen too many people on Wall Street who think that money and possessions are the only thing.'' Adds Suzette Brooks, 29, a lawyer who founded New York Cares, a volunteer group of young professionals: ''Times are changing, and many of them want another dimension to their lives beyond going out every night and partying.'' Focused on work and wealth, many upscale boomers delayed marriage and children, but the bulk have now crossed the 30 threshold. Yuppies today are more likely to be married, homeowners, and suburbanites than they were in l985, according to a recent demographic study by Peter Kim, a senior vice president at the J. Walter Thompson USA advertising agency. Three economic bumps in the night also encouraged profligate youngsters to wise up. The first was the tax reform act of 1986, which chipped away at write-offs for tax shelters and credit-card interest. Then the dollar dropped against other currencies, and the prices of foreign goods jumped. The final assault on the boomers' pocketbooks came with the stock market crash of 1987. While most Americans took it in stride, Wall Street yuppies earning six figures a year were jolted to their essence. Says a 32-year-old commercial banker who is married to an investment banker and describes herself as frugal: ''Before the crash we were shopping for a house in the $800,000 range. But entire departments at Wall Street firms were being wiped out, so we stopped shopping and began to save.'' In sheer numbers yuppies represent only 4.6% of the 76 million Americans born between 1946 and 1964, so marketers must also pursue yuppie copycats, those less affluent boomers who blew their wads on extravagant consumption and are now joining the switch to more sensible spending. Peter Kim has tagged the major copycats ''elite workers'' and ''would-be yuppies.'' The originals and the two groups of imitators make up 24.6% of baby-boomers (traditional blue- collar and clerical workers and homemakers account for the rest), but by l995, they will control close to 70% of boomer income. Elite workers, or ''electric blue collars,'' as they are sometimes called, are not college graduates, but they earn average incomes of $45,000, only $ slightly less than yuppies do, serving the high-tech industries. These data processors, medical technicians, and telecommunications repairmen don't fret about job security; they're in fields where qualified people are in short supply. Thus, they are dream consumers. They are just as likely as yuppies to spend freely on diamond rings, expensive stereos, and fancy cars, but they are even more willing to buy campers, snowmobiles, and wood-burning stoves. These acquisitive blue collars are also just a tad behind the trend. They are still smitten with powerboats, cowboy boots, and designer jeans, and, unlike the yuppies, the fitness fetish seems to have passed them by. They drink bourbon and beer, smoke cigarettes, and chow down such high-cholesterol no-nos as bacon and eggs. The would-be's are much closer to the affluent yuppies in spirit, but their bankrolls are weak. Though they are well educated, they work in low-paying professions like teaching and social work and so earn an average of only $18,000 a year. Keeping up with the yuppies has thrust the would-be's into more credit-card debt per capita than all the other boomers. The crash had an enduring psychological effect on these people, and they are worrying about their highly leveraged lifestyles in an uncertain economy. At the same time the sagging dollar is forcing them to reevaluate their beloved foreign cars and clothes. Like yuppies, they continue to prefer Perrier to booze and travel abroad less often. Would-be's, like all boomers, are turning into sofa spuds and are losing interest in going out to the ballet, theater, and rock concerts. SINCE THE YUPPIES set the trends, what they are buying now will soon be taken up by the copycats. Today's prestige purchase is a house, and when it comes to his castle, this prince wants a palace. The homes that are moving fastest are in the 4,000- to 5,000-square-foot range, which usually translates into six or seven bedrooms and a median pricetag of $500,000. Says economist Michael Sumichrast, publisher of Real Estate Perspectives: ''They are simply not satisfied with a house. They want a statement.'' Though the copycats will never be able to afford half-million-dollar statements, they are doing the best they can in less expensive neighborhoods. Furniture is the next spending priority. During the past three years sales have risen 23% to $161 billion -- with most of the trade being in antiques and reproductions. ''Affluent yuppies are very much influenced by instant tradition. That's why they like Ralph Lauren and Laura Ashley,'' explains Carl Levine, senior vice president of Bloomingdale's. Copies of l7th- and 18th- century English and French furniture and 19th-century American reproductions have been flying out of his stores. Says Levine: ''They say they are looking for their roots, but their ancestors probably lived much more simply.'' So did their parents. All three boomer groups are springing for oversize bathrooms with whirlpool tubs, and lavish entertainment centers -- that's the room Dad called the den -- packed with CD players, tape decks, VCRs, stereo TVs, and electronic diaries. Kitchens bristle with automatic breadmakers, pasta machines, food processors, and contraptions that dispense cappuccino. Boomers who never baked a potato are buying industrial ranges with microwaves and restaurant-size freezers. Says Frederick Elkind, director of Ogilvy & Mather's Consumer TrendSights division: ''Home has become the mother ship. It has all these exciting things to entertain and sustain them.'' Of course, some young families cannot afford a home at all (see Politics & Policy). For others, the expense of buying and furnishing a house leaves little in the kitty for anything else. Economist Edward L. Yardeni of Prudential-Bache Securities says the restaurant business has been flattening after two years of rapid increases. High-priced eateries in major U.S. cities are suffering most. In New York City, for example, yuppie haunts like Cafe Seiyokan and Joanna have closed. The spenders have not forsaken status food altogether, they're just eating it at home. Business is so brisk at gourmet grocery stores that their numbers have tripled. In 1980 there were about 4,000 specialty food shops nationwide; by 1988 there were about 12,000. Says Phyllis C. Richman, food critic for the Washington Post: ''Fancy carryout stores have become the adjunct kitchens for the young professionals with ambitious tastes.'' At FBC Foods International, a gourmet shop in Denver, sales increased in each of the past two years even though the local economy has ptomaine. ''We have fewer people shopping with us, but the ones that remain have elevated tastes,'' says owner Jane Dorsey. ''I don't see yuppies cutting back at all.'' Hot sellers include beluga caviar at $58 an ounce, raspberries that recently sold for $6.79 a pint, and all types of takeout dinners, such as stuffed prawns at $12.95 a pound. Says Dorsey: ''Even the kids of yuppies have developed sophisticated taste buds. They never pass up a chance to sample the pate.'' Meanwhile some food favorites are being forsaken according to Peter Kim. Yuppies are scooping up 60% less Haagen-Dazs than they were in l985. Now they're into Breyers ice cream, which is cheaper ($1.69 a pint vs. $2.19) and lower in calories (160 per 4-ounce serving vs. Haagen-Dazs's 270). The oenophiles are swilling California Chardonnays, and sales of imported wine and champagne have declined 23% over the past three years. Hit hard by changing boomer spending patterns -- not to mention the wilting dollar -- is the European car market. Total sales downshifted 27% during the past two years, including a 48% plunge at Porsche, 24% at BMW, and 15% at Mercedes. There is a new elasticity in yuppie demand: The good life is still possible even if ''the ultimate driving machine'' in the garage is a Ford. Affluent boomers are buying the sleek Taurus sedan, the sporty Lincoln Mark VII, and the macho Bronco II truck. Copycats are driving American also. Most were never able to afford European cars, so they bought Japanese autos, but those prices shot up too. EUROPEAN CAR manufacturers are fighting back. ''We're in a war,'' says Robert J. Sinclair, president of Saab-Scania of America. He has raised Saab's ad budget 30% and is stressing the car's family-oriented features, like roominess and its top safety ranking from the Highway Loss Data Institute, a nonprofit auto research firm.

Some forecasters believe that the yuppies will soon return to their extravagantly improvident ways. Says Fred Elkind of Ogilvy & Mather: ''There has only been a tempering of the extreme flaunting of affluence. That same euphoria could easily repeat itself if the dollar rebounds.'' But even he thinks that some of the shift may be permanent. The big spenders are having babies, and there tends to be a dramatic dropoff in trivial purchases after the arrival of children. Chicago consultant Shapiro figures that the more yuppies make, the more they spend on their children. If the household income is $40,000, parents shell out an extra $1,000 a month beyond their normal expenses for the upkeep of a child. The $50,000 household spends an additional $1,360 per month on a kid, and for parents earning $100,000 the tab is $3,000. A young Philadelphia lawyer has discovered that his $70,000 salary is just enough to cover the mortgage on his ''humble twin,'' the due bill on his old % student loans, and shoes for his children, ages 5 and 2. He shares a 12-year- old BMW with his wife, who has not worked since the children were born. ''I'm not trying to paint us as impoverished, but the cash is very low,'' he says. ''With two children, we can't afford a flashy lifestyle.'' The vanguard of the baby boom, always quick to change, will continue to lead its generation into new spending opportunities. But they've got 20 years of orthodontia, private school tuitions, and Princeton educations ahead of them. Goodbye, Haagen-Dazs.

BOX: WHAT'S HOT . . . Minivans and Ford cars Furniture Gourmet takeout food Personal computers Original contemporary oil paintings Diamond engagement rings California Chardonnay Breyers ice cream Compact discs

WHAT'S NOT BMWs High-priced women's fashions Expensive French restaurants Sailboats Rock concert tickets Running shoes Champagne Haagen-Dazs ice cream LP records

SOURCES: OGILVY & MATHER CONSUMER TRENDSIGHTS, J. WALTER THOMPSON USA, PRUDENTIAL-BACHE ECONOMICS GROUP, LEO J. SHAPIRO & ASSOCIATES

CHART: CREAM OF POPULATION INCOME THE BOOM in millions Annual average

All baby-boomers 76.0 $16,753 Yuppies 3.5 $51,000 Would-be yuppies 12.7 $18,000 Elite blue-collar workers 2.5 $45,000

SOURCE: J. WALTER THOMPSON USA