The new luxury consumer is different than the previous generations. As the amount of millionaires and billionaires continues to grow at a rapid pace, the luxury market has more power than ever before. According to the 2019 Forbes List, there are 2,153 billionaires in the world with a combined net worth of $8.7 trillion. The 2018 Credit Suisse Global Wealth Report pegged the total amount of millionaires at 44 million and estimates that within five years there could be as many as 55 million millionaires.
Today’s millionaires are changing the way we think of wealth. Many of these individuals are self-made and there are more women than ever. Global wealth is expected to rise by nearly 26% over the next five years and a third of the growth is coming from emerging markets. These new wealthy consumers view the responsibility of money in an entirely new way and much of the thinking about how the wealthy behave is changing.
They want to spend, but they want to feel good about it.
Today’s wealthy consumers have a lot of economic power and they are very conscious of how they wield that power through their purchases. They are interested in sustainable design and companies that give back. For luxury consumers, the research is part of their everyday lives.
A recent survey by McKinsey & Company found that 70% of luxury consumers are willing to pay a premium for sustainability. Millennial consumers are very attuned not just to a brands’ ecological footprint but also to the commitment of its leadership on issues of social responsibility. Their expectation is that the brands they use and support are aligned with their values.
They spend their lives on their phones but they are also constantly seeking new experiences.
Today’s luxury consumer doesn’t see the online and offline worlds as being separate. Instead, they constantly interact. The smartest brands are taking advantage of this. New upstart brands such as Shinola and Warby Parker are creating physical locations, while established department stores brands and even malls Simon Premium Outlets are investing heavily in building their online platforms.
This can be seen in shopping behavior in which buyers switch seamlessly between visiting stores and shopping online. Increasingly, shoppers are purchasing online in stores or ordering online and picking up in the stores. Last year, Nordstrom began to test a service that allows customers to shop online and select items to try on in the store. Once they select their offerings, they can pay online in special dressing rooms outfitted with tablets.
They are global citizens and also homebodies.
Travel has once again become the most important status symbol for the elite. Travel is no longer confined to a small set of vacation days each year, it’s evolved into a lifestyle. High net worth individuals want to be seen as not just tourists but as people who are truly at home in every part of the world.
This dynamic has created a global cultural exchange and has also dramatically influenced the design of buildings and individual residences. As people travel the world they take part in a sharing of ideas. This has led to a flowering awareness of art, architecture, and culture in many places. These consumers tend to shop internationally as well, making sure each item they bring home has a story to tell.
When they are home, they like to entertain. The Luxury Portfolio International Report, “The Rise of the New Aristocracy,” which surveyed ultra high net worth individuals, found that over 50% of young people ranked commercial kitchen appliances and outdoor spaces as some of their essentials in a new home. New buildings coming online cater to the needs of these residents with large rooftop terraces with summer kitchens as well as dining rooms and commercial kitchens that can be used by residents looking to host larger gatherings.
To capture the attention of the luxury consumer it’s important to be able to tell a story that speaks to these elements, reflecting back to them a sense of thoughtfulness in design as well as a sense of forging a greater connection to the world at large. There is less focus on the need to acquire and more focus on the need to enjoy and experience. Memories captured and shared online are often seen as being most valuable. In real estate, this represents an opportunity to position property as far more than the place people put their belongings but more the place where they live their lives and create moments to remember.