Last week, my colleague, Abby Killorin, wrote that younger generations will account for 80% of the global luxury market by 2030. Abby’s timing was impeccable, as we are seeing generational changes across several of Ramey’s clients right now. And we are having conversations about established and emerging Affluents.
We are asking our clients: do you fully understand the impact that Affluent consumers have on your revenues and profits? And are you watching how this audience is evolving?
In their report, Affluent Outlook 2024, published earlier this year, Ipsos noted that “the U.S. and world economies depend heavily on the out-sized buying power of Affluent households, who spend more than twice what non-Affluent households do each year.” In some categories, such as education, personal insurance, and entertainment, the delta can be as high as 5.1x. So it’s important that marketers get it right with this group.
As a reminder, many research and consulting firms generally organize Affluent consumers into three groups: high net worth (HNW) individuals, with wealth in excess of $1m, very high net worth (VHNW) individuals, with wealth between $5-30m, and ultra high net worth (UHNW) individuals, with wealth above $30m. In the United States, Affluents make up approximately 20% of income-earning households. Said another way, one out of five U.S. households spend, on average, 2.5x more than the other four households.
One of the biggest trends that we are seeing among our own clients at Ramey is the emergence of a younger and more diverse group of Affluents. As our research partner, Mintel, points out in a recent report, “This new generation will define current and future trends with a new and refreshed point of view that values self-identity, expression and cultural heritage. Although aspirational demand has softened amid inflation and economic pressures, this zeitgeist toward luxury favors a shifting focus on accessibility, inclusion and sustainability to expand the limits of what “luxury” means.”
For one client, the implication is that the way we promote the brand to their established buyer must differ (sometimes dramatically) from the way we promote the brand to their emerging buyer. As Mintel points out, premium brands “will be challenged to meet the needs of both affluent traditionalists and the emerging consumer, requiring a balance between an exclusive and prestigious past and a more innovative future.”
We’ve said before that Affluent consumers are not a homogenous group. They shouldn’t be marketed to in the same way. We are helping clients analyze their customer databases and creating lookalike modeling to help them go find other prospective customers with similar demographics and psychographics. And it’s amazing to see how those customer bases are segmented into multiple different groups with different worldviews and needs.
This process is not overly complicated (or expensive). But it can yield out-sized results in a brand’s ability to connect with and convert consumers.
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