With the global luxury goods market expected to reach $1.3 trillion and over 55% of spending originating from Millennials and Generation Z by 2025, we were delighted to be part of The Luxury Business Sphere’s 2019 Summit last week to discuss the Luxury Zeitgeist for 2020 and beyond. For those who missed this year’s event, we have prepared a snapshot of the discussions on the day.
The last year saw 0.7% increase of UHNWI (Ultra High Worth Individual) while their global wealth rose to a total of $32 trillion dollars. The highest growth in UHNWIs was across the UK, Europe, the US and Middle East with New York regaining its status as the number 1 city for UHNWI, London’s position rose to place it above Hong Kong. Another growing segment is the number of female UHNWIs, that now represents 31% of 265,490 UNWIs in the world today.
With the increase in Millennials and Generation Z to the list, this brings a challenge to luxury brands to penetrate this market as consumers are increasingly intelligent and sophisticated in their approach to investments. The impact of digital is undoubtedly the largest growth sector for brands to reach consumers with a fifth of all luxury purchases predicted to be online by 2025 according to McKinsey’s Luxury Report in 2018. Meribeth Parker, Head of Business Transformation at Times LUXX dubbed Instagram as the new storefront and highlights the importance of brands placing the customer at the heart of their new brand positioning formula with storytelling and co-creation of content with customers being one of the most powerful tools to engage.
When looking at the UHNWI in relation to property, the emergence of younger buyers to the global super prime property market there has been a shift away from Ivory Towers to developments that are part of a wider genuine community and a desire to give back to society. The younger UHNWI also places less importance on ownership and the implications of stamp duty at the super prime end of the market there is a real opportunity for developers to become landlords. ‘Next-level living’ is the new buzz word for both the sales and lettings market with consumers expecting next-level amenities from world-class wellness centres, cutting-edge technology and curated experiences.
And it is experiences across the board that will undoubtedly change the luxury landscape the most over the next decade with self-improvement and self-fulfilment becoming a key motivator. According to Stylus, 77% of Millennials are buying fewer but more meaningful experiences and the sabbatical is having a renaissance amongst 30-40-year olds keen to explore the disappearing natural landscapes, something that we have identified at One Menagerie as Super Nature.
Be it tailored experiences online or offline, the rise in the conscious consumer is at the forefront of the new luxury landscape. UHNW consumers are redefining the meaning of luxury into a unique omni-personal experience that puts a sense of wellbeing, culture, craftsmanship and sustainability at its core.
References include 2020 white papers and reports from Boston Consulting Group, Reuters, Bain & Company, McKinsey & Company, Deloitte, Euromonitor, The Future Laboratory and Forbes.