When we announced the findings of the 2015 Survey of Affluence and Wealth back in April, we knew that the topline figures – a 6.6% increase in luxury spend among the affluent driven largely by travel, dining out / home entertainment, and automobile spending – would draw the most headlines. However, as with most things pertaining to data, further insights can be gleaned when you look just beneath the surface.
Here are the deeper qualitative themes and trends that have been uncovered. We hope they provoke thoughtful discussion within your business and benefit your brand and your customers:
The Global Affluent Culture
The global Top 10% are transcending nations and borders as they evolve into a homogeneous culture, one informed by shared occupational requirements, consumption and values. The affluent and wealthy are connecting with each other on a global stage, forging and nurturing social and business relationships as they seek to spend time with people who are more like them. Sharing a common nexus of success in their personal lives and careers, they increasingly possess a universal view that expresses what it means to live a fulfilled life, where health and home command central importance and where politics take a back seat. These passions and self-perceptions help bind the global elite together—and likewise inform their brand engagement and choice.
Ask yourself: Is a single global brand message possible for your brand?
Fear of Edges
It is apparent that the Top 10% remain chastened by the events of the first quarter of 2009. The resourcefulness, financial independence and spending constraints that arose from the fear of the recession are now enduring attitudes of family financial management. The speed with which disaster change this wording the economy feeds a continuing fear that it can happen again. As a result, affluent families do not expect stability and are prepared to react when something goes wrong. Top fears include geopolitical strife overseas, political corruption at home, and a sense that the economy will react very quickly – and irrationally - to seismic events. So today, they fear Edges, taking a sensitive step backwards from the risks of cultural and economic shocks that they believe can propel them off the edge and down the cliff, back to 2009. Fear drove them to step up their savings, cut spending, and retool their household budgets, and to become more resourceful and independent when evaluating and making significant purchases. Over time, panic has given way to confidently applying these practices to their purchasing habits, to protect themselves from the edges. As a result, discretion has become a governing principle.
Ask yourself: How do you balance stressing the merit of ownership with the need for discretion?
The Time Has Come
All that being said, with the waning of recession-driven fear and turmoil and the waxing of resourcefulness and wealth, it is clear that the time has come to spend again. After postponing acquiring big-ticket items during the recession, the affluent and wealthy are giving themselves permission to move forward with replacement purchases, and to reward themselves and others for special occasions and achievements. Their resilience in the face of uncertainty has paid off in the form of healthy household balance sheets. This is especially true among One-Percenters in the US, 43% of whom have no mortgage, which allows them to balance fiscal responsibility with spending their wealth surplus.
Ask yourself: Are you communicating why your brand is an investment in quality in life?
Blind Consumption to Enlightened Choice
Finally, it is imperative to note that the purchase paradigm has shifted. Consumers today are attuned to the resources at their disposal to ensure that the luxury goods they purchase reflect what they value. Resourcefulness drives the purchase experience, and brand identity, as a result, has taken a back seat, dealing a blow to the ‘power of the brand’. Technology has granted consumers the ability to compare intelligently.
Still, luxury consumers desire personalization and reciprocity – defined as a customer relationship built on mutual interest, sharing of information, caring and trust that retailers can leverage to effect. The in-person (and online) experience provides critical touch points to connect with the consumer and build their understanding of the relevance and importance of your brand’s attributes and its position in context of your competition.
Ask yourself: Are you leveraging the one-to-one experience (whether in-person or online) to effectively build understanding?
As we approach the time of year when brand marketers are strategizing about how to position new and existing products and services for next year, and are proposing budget requests to execute these strategies, the themes mentioned above should be considered as a glimpse into the mind of a luxury consumer that while demonstrating an air of caution, and armed with a new-found sense of rigor, is ready to spend – as long as it is on their terms.
If you would like to talk about what it means to become a client of the Survey of Affluence and Wealth and have your brand represented in our program, please email us at firstname.lastname@example.org. We’d be happy to brief you on the merits and costs of participation.