Luxury Insights

NYT: Hey, Big Spender, You Want Value?

Interesting article in the New York Times on the growing luxury concierge business.  Affluent clients are turning to concierges for convenience (of course) and also to help ensure that they are getting good value for their money spent.

...The economic downturn has not stopped the world’s wealthiest from spending, but it may have made them focus more on value. And as the market gets more crowded with luxury brands, products and services, the rich are increasingly turning to concierge companies for information, recommendations and what they hope will be better deals, because of partnerships with luxury suppliers the world over...

Perhaps less obvious, some of the newly affluent are turning to concierges for their knowledge of luxury products, services, and culture, knowledge which the client may lack.

“Twenty years ago, wealthy people typically inherited their wealth and grew up being surrounded by luxury brands,” Mr. Cohen said. They had well-connected family and friends to help them navigate through high society. But newly wealthy individuals today are less likely to have inherited these experiences and networks. Concierge services provide entry into the luxury world, as well as guidance and advice.

Findings from the Future Wealth Report

The world’s future wealthy are optimistic, sensible, family-focused

Scorpio Partnership is a London-based strategic consulting firm which took on the task of going out and finding the world’s future wealthy and asking what makes them tick.  They identified the usual suspects – professionals, business owners, early-stage entrepreneurs, and used some “creative profiling techniques” to broaden their search.  The study's findings were published this month in the The Future Wealth Report (PDF 400k).

Those contacted were asked, “Do you plan to be wealthy one day?”  The average wealth of those who responded was $2 million USD. They aspire to a total wealth goal of about $7.4 million. Achieving four times what they are worth today is how most future wealthy define “making it.”

Of the group surveyed, the future wealthy in North America reported having taken the biggest financial hit during the last 12 months. 

• 40% said their net worth had decreased
• 24% said their wealth had stayed the same
• 36% reported a wealth increase. 

They are optimistic about their ability to maintain their assets.

• A full 80% of the North Americans do not expect to lose any money in the next 12 months.
• Only 4% thought their wealth might decline in that period.

The world’s aspiring wealthy are contributing to their coffers as a result of these “very important” income sources (they could identify three):

•     Jobs (83%)
•     My business (25%)
•     Listed investments (21%)
•     Marriage/partner (19%)
•     Sale of real estate (17%)

Here is a broad brush list of a few other key findings from "The Future Wealth Report (PDF 400k)," published this month.  The world's aspiring wealthy:

• Focus on brands that deliver quality experiences with a hint of understated luxury
• Simple pleasures, rather than up-market brands, appeal to this group
• Want to be known as generous and hospitable more than known for professional and financial acumen
• Are willing to talk about money openly with their friends
• Prefer to make donations anonymously
• Choose a car that feels great to drive over one with a Wow factor
• View money as a means to an end
• A majority view being a good person as the top priority for how they want to be remembered
• Home life is the source of greatest happiness and fulfillment
• Measure success in terms of achieving specific personal and professional ambitions
• Ethical, moral and family values matter

Asked what they’d spend their money on if their income doubled, the report says the “only lavish glint in the eyes of the future wealthy is the desire for a second or perhaps third home.  Only property moves seriously up the list of spending whims when buying power is boosted.”  Good news for those in real estate. 

The Sky's the Limit

There's a brief but very positive review of a new book on the affluent--The Sky's the Limit-- on Dick Baker's Life Style Marketing of Luxury Blog.  Here's a excerpt:

The Sky's the Limit is a new book about the "elite affluent." The major findings are about two sub-sets: Those with >US$10M in net worth and those with >US$20M in net worth. The book will repay with interest the time you invest in reading it...If you serve the very high end of the luxury market, you should read The Sky's the Limit as soon as possible. It should influence your marketing strategy beginning with your 2008 budget.

I think this might be another one for the holiday reading list...