Luxury Society gathered C-Suite executives from the private jet, superyacht, haute horlogerie & luxury hotel sectors to discuss the UHNW luxury consumer at Bloomberg’s London bureau
CONSUMERS
UHNW Population Reaches All-Time High in 2013
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Credit: This is the featured image credit
Over the last decade, collaborations between luxury brands and contemporary artists have gone beyond mere artistic partnerships towards a new kind of luxury branding.
PARIS – Art and fashion have always developed side by side, for fashion, like art, often gives visual expression to the cultural zeitgeist. During the 1920s, Salvador Dalí created dresses for Coco Chanel and Elsa Schiapparelli. In the 1930s, Ferragamo’s shoes commissioned designs for advertisements from Futurist painter Lucio Venna, while Gianni Versace commissioned works from artists such as Alighiero Boetti and Roy Lichtenstein for the launch of his collections. Yves Saint Laurent’s vast art collection, recently auctioned at Christie’s in Paris, testified to his great love of art and revealed the influence of a variety of artists on his own designs.
In the 1980s, relationships between luxury brands and artists were advanced when Alain Dominique Perrin created the Fondation Cartier. In the Fondation Cartier pour l’Art Contemporain, a book marking the foundation’s 20th anniversary, Perrin says he makes “a connection between all the different sorts of arts, and luxury goods are a kind of art. Luxury goods are handicrafts of art, applied art.”
The Fondation Cartier pour l’Art Contemparain building in Paris
Luxury Society gathered C-Suite executives from the private jet, superyacht, haute horlogerie & luxury hotel sectors to discuss the UHNW luxury consumer at Bloomberg’s London bureau
Burgess Yachts
Luxury Society gathered C-Suite executives from the private jet, superyacht, haute horlogerie & luxury hotel sectors to discuss the UHNW luxury consumer at Bloomberg’s London bureau
Based on the success of our 2013 event series, in partnership with Bloomberg, Luxury Society was thrilled to present the second edition of Understanding the Ultra High Net Worth consumer in London on Wednesday May 28th 2014.
Over the course of an afternoon, we discussed the needs and desires of this elite consumer group with C-Suite executives from Starwood Luxury Hotels, Clive Christian, Burgess Yachts, The Macallan, Shangri-La Hotels, Chapman Freeborn Jets and Greubel Forsey.
We were thrilled to welcome 150 luxury executives, from brands such as Chanel, Harrods, Cartier, Dunhil, Edmiston Yachts, Oscar de la Renta, Graff Diamonds, Patek Philippe, McLaren, Louis XIII, Roland Iten, Richemont, Quintessentially and Rizon Jet to name but a few.
Here we share with you the key insights from the day, and look forward to welcoming our delegates in New York City on Wednesday 25th June.
“ UHNW growth in the U.S. & Europe & outpaced that of Asia – Wealth-X ”
Record UHNW Population
According to Michael Byrne of Wealth-X, there have never been so many UHNW individuals around the world – over 200,000 to be exact, with a combined wealth of more than $28 trillion. It was interesting to hear that in 2013, population and wealth growth in the Europe and US outpaced that in Asia, as Latin America slipped.
Although GDP in Europe is on the decline, major wealth indicators such as currencies, equities and UHNW population & net worth are all on the rise. Europe bounced back after Eurozone troubles, in that the UHNW population had fallen 1.9% in 2011-2012; whereas in 2012-2013 it grew by 8.7%.
Wealth growth in Asia is being hampered by the slowdown in China, where the UHNW Population grew by only 3.8%. Without China, growth in the UHNW population would have been 6.9%, which was still lower than Europe’s in 2013.
“ The market for yachts over 120 metres ($200 million+) never slowed – Burgess Yachts ”
UHNWI’s Are Becoming Younger
The average UHNW individual (on a global scale) is male, with an average age of 58 who has roughly 2 children, according to Wealth-X. Though both Wealth-X and luxury brand executives believe that this will change in the coming years, particularly as more parents begin to distribute wealth to their children.
Stephen Forsey, co-founder of Greubel Forsey, explained that in the 10 years since he launched his haute horlogerie business, the average age of the customer has dropped from around 60 years of age to 40 years of age. The youngest collector of his six-figure extremely limited handcrafted watches, is just 21 years old.
Paul James, Global Brand Leader for Starwood’s St. Regis, W and Luxury Collection hotels, shared a similar anecdote. When the St. Regis New York opened after an extensive $100 million renovation, the first guest to book the $35,000-per-night Presidential Suite was 18 years old.
Furthermore, the global UHNW population is already ageing – almost 75% are over 50 years of age. The two most dominant groups are 50-59 (30.6% of population) and 60-69 (24.8%), followed by 40-49 (19%) and 70-79% (12.7%).
Wealth-X believes that we will soon witness one of the largest wealth transfers in economic history, as Baby Boomers pass on their inheritance to their children – up to $4.1 trillion in the coming decade. As this begins to take effect, UHNW individuals are set to become younger and younger, and will perhaps interpret ‘luxury’ in a different way to their parents.
St. Regis New York
Don’t Judge Their Demands
The era of cliché is becoming less relevant when it comes to the expectations and demands of the UHNW luxury consumer. Overall our panelists agreed that their UHNW clients are seeking value in less complicated ways and are best served when their individuality is clearly understood.
An increasing number of ultra-affluent individuals are self-made and in many cases, time-poor. Alex Berry, Group Sales and Marketing Director of Chapman Freeborn private aviation, explained that the majority of his clients are looking for ways to buy themselves time, instead of trying to reap the status benefits of flying on a private jet.
The private aviation market is also becoming increasingly important in efficiently servicing locations that are lacking in commercial infrastructure. As wealth exponentially increases in far corners of the Middle East and Africa, private jet travel can often save significant hours on particular routes.
Alex also explained that luxury for his busy customers is often having access to the same bacon sandwich and cup of tea that they have at home, rather than flooding the cabin with champagne and caviar on a 9am business flight. For Paul James’ UHNW hotel guest, luxury is fast WiFi and a great shower.
“ Our 1st NYC Presidential Suite Guest ($35,000 per night) was 18 years old – St. Regis ”
You Can Reach The UHNW Consumer Online
Whether or not digital marketing tools are effective in reaching UHNW individuals was a key point of discussion throughout the day. In the first edition of the Luxury Sentiments Survey, Wealth-X reported that (of luxury executives surveyed) only 25% were engaging with their UHNW clients via online portals.
75% of respondents were not engaging with clients through online services at all, or consider their use to be insignificant. The main sub-sectors using online portals were the hospitality & services; information services and yachting & boating sub-sectors.
Many of our panelists begged to differ. Paul James of Starwood luxury hotels was adamant that his consumer is “100% online” and that the majority of bookings within his portfolio are coming through each of the hotel brand’s websites. His customers “breathe wifi”.
Stephen Forsey of Grebuel Forsey highlighted the importance of social media and a fantastic website, in allowing watch collectors to anonymously discover his brand and to educate themselves about a highly technical product. For his brand, this has been integral in sharing the rich story of craftsmanship and excellence that justifies his six-figure price position.
Finally, Alex Berry of Chapman Freeborn revealed that 65-70% of his marketing budget is being spent on digital, 50% of which is allocated to SEO. Whilst most ‘big ticket’ luxury manufacturers agreed that selling online is not yet feasible or appropriate, most are investing heavily in building their brands online.
To further investigate wealth and affluence on Luxury Society, we invite your to explore the related materials as follows:
– Luxury Executives Expect Growth From UHNW Segment in 2014
– 5 Key Insights from The 2014 Wealth Report by Knight Frank
– Key Insights from the 2013 World Ultra Wealth Report
Creative Strategist, Digital
Sophie Doran is currently Senior Creative Strategist, Digital at Karla Otto. Prior to this role, she was the Paris-based editor-in-chief of Luxury Society. Prior to joining Luxury Society, Sophie completed her MBA in Melbourne, Australia, with a focus on luxury brand dynamics and leadership, whilst simultaneously working in management roles for several luxury retailers.
