According to Oxfam wealthiest 1 percent of adults will soon control over 50 percent of world wealth. While there are many social implications, there are also implications for luxury brands. In other words, which segments of the world’s consumers have the money to be dependable customers for the luxury industry?
Credit Suisse’s Global Wealth Databook 2014 published in October, noted that “global household wealth totaled $263 trillion in mid-2014, equivalent to $56,000 for each of the 4.7 billion adults in the world.”
Quickly taking 50 percent of $263 trillion gives us some $131.5 trillion that the 1 percent controls if we agree with Oxfam. One percent of 4.7 billion nets out to 47 million adults worldwide in the top 1 percent. This means a net worth of $2.7 million per adult.
Depending on where you live a net worth of $2.7 million is a comfortable amount of money to have. However, for luxury marketers it is at best the outlying suburbs of where one will find “heavy users” of luxury. As an example, Honda Jet’s entry level private jet will run you $4.5 million. Last year over $22 billion in new private jets were delivered, most in the tens of millions of dollars.
Back to the average 1 percenter: Unless one has a robust Household Income of $500,000 to $1 million or more adding to that net worth, after taxes, schools and colleges, mortgages, insurance and such you have a consumer who can treat themselves to luxury but have to make choices.
Super Rich researcher Wealth-X shows via their research that 212,000 Ultra High Net Worth individuals worldwide (those with a Net Worth of at least $30 million) together control nearly $30 trillion. I have seen figures that go as high as $50 trillion for UHNW wealth.
If we merge the Wealth-X numbers with the Credit Suisse research, we find 212,000 individuals out 47 million (about 4/10ths of one percent) control about 23 percent of that 1 percent wealth Oxfam is focused on.
In 2007 I co-authored the book “The Sky’s the Limit: Marketing Luxury to the New Jet Set. In it, we interviewed over 600 private jet and fractional private jet owners. In it we found that the average spend per year for various luxuries was impressive:
- $248,000 spent on fine jewelry
- $147,000 spent on luxury watches
- $117,000 spent on fashion accessories
- $157,000 spent on leisure stays at hotels
- $224,000 spent on events at hotels
- $107,000 spent on spas
- $98,000 spent on adventure travel
- $29,000 spent on wines and spirits
- $542,000 spent on home improvements
- $168,000 on villa rentals
Wealth-X released their luxury spending data late last year finding that the UHNW universe cumulatively spent $235 billion a year on luxury purchases. According to their data the Super Rich account for nearly 20 percent of all luxury purchases from handbags to luxury autos and spirits. In categories such as watches and jewelry, the UHNW sliver accounted for as much as 35 percent of all sales. (For full data click here.) Of course, mechanical watches and jewelry retailing for $10,000 or $25,000 are not everyday purchases even for those in the leaf lined suburbs of Oxfam’s one percent.