If you want to fish in a new pond, you may need to change bait—something luxury brands should consider as they explore new markets, according to a new report.
Luxury brands must adjust tactics to attract the new wealth in emerging economies over the next decade, as consumer preference moves from conspicuous consumption to refinement, according to Decades of Wealth: The Next 10 Years in Wealth & Luxury, a report from London-based Wealth-X.
In the next 10 years, the wealthy are going to be anxious about finances due to recent financial crises, but will also be wary of the spread of prosperity around them — experiences and products once reserved to a few consumers in primarily Western settings will be shared by many peoples from diverse backgrounds, according to the report.
The study says the affluent are becoming more discriminating in their buying, focusing more on quality than quantity. The new contingent of millionaire consumers in the global market presents opportunities for luxury brands, Wealth-X suggests, but reaching these consumers will require awareness of the wealthy and their tastes in various sectors.
Wealth-X argues that over the next 10 years, ultra-high-net-worth consumers will be less interested in international brands, opting for high-valued products on the national, regional or local level. The wealthy will also place more value on privacy and closeness and desire more intimacy among their trusted providers.
In the coming decade, Wealth-X projects that high-net-worth individuals will put more emphasis on experiences than products, and particularly on new frontiers such as space travel or underwater travel. These preferences will apply to finance as well, as established stock markets will be viewed as safer plays, according to the study, while growth-focused investors will turn to riskier markets and newer sectors.
The wealthy are also more likely to be drawn to exclusivity, according to the study — but exclusivity based on high prices alone will no longer be sufficient as the number of high-net-worth individuals surges. Thus, in the coming decade, fundamental rarity and personalization will drive wealthy consumers. That demand will be met through unique products, one-off experiences, and personalized communications, services, and products developed through relationship management and data analytics.