- Why Steve Jobs And The Smartphone Changed Selling To The Super Rich Forever July 1, 2017
- Part 2: What Luxury Marketers Can Learn From President Trump June 10, 2017
- Fyre Festival Debacle Shows How Reaching The Super Rich Isn’t Easy April 30, 2017
- How The Super Rich Buy Private Jet Cards April 7, 2017
- The Super Rich Think Their Kids Will Blow Their Fortunes; What It Could Mean For Luxury Marketers March 13, 2017
- What Luxury Marketers Can Learn From President Donald Trump January 28, 2017
- Luxury Marketers Are Losing Their Grip On The Super Rich, Says Boston Consulting Group January 24, 2017
- “Secrets Of Selling To The Super Rich” Is Ranked #1 on Amazon New Releases September 3, 2016
- Surprising Passions Of The Super Rich: What Do They Mean For Luxury Marketers? August 21, 2016
- What Luxury Marketers Can Learn From Proctor & Gamble June 25, 2016
- New Things I Learned About Marketing To The Super Rich Online June 19, 2016
- “I Can’t Think Of Anything To Write, So Why Not Bash Rich People I Don’t Know” April 2, 2016
- How Do The Super Rich Make Their Money? March 26, 2016
- Why Oxfam’s Latest Research Is A Must Read For Luxury Marketers January 18, 2016
- Gallup: Mass Affluent Cutting Back On Spending January 7, 2016
- Luxury Marketers: Where The Super Rich Give Their Money May Be A Surprise January 3, 2016
- Stupidity Tops The Charts As MTV Mistakenly Reports The Super Rich “Are Responsible for Half of the World’s Carbon Emissions” December 5, 2015
- The Super Rich: The Good, The Bad, The Ugly and The Sad October 28, 2015
- Are Luxury Brands Overexposed To Arts And Culture? October 17, 2015
- The Chinese Visitor: Are Luxury Brands Losing Control Of Their CRM to Salespeople? September 24, 2015
- (Part 2 of 2) Are You Using WeChat Effectively To Target Chinese Visitors To The U.S.? September 18, 2015
- (Part 1 of 2) How Can Luxury Marketers Capture Repeat Chinese Visitors to the U.S.? September 13, 2015
- Does Hard Luxury Need To Redefine Itself? Or Is There An Easier Solution? September 12, 2015
- How Luxury Brands Should Look At Russia, China, Brazil and the Middle East Amidst The Turmoil August 23, 2015
- Why Being A Millionaire Doesn’t Mean Much In The Business Of Luxury August 8, 2015
- The Prince And Ryanair: Another Example On Why It’s Hard To Get A Full Picture Of The Super Rich Via The Media July 10, 2015
- Donald Trump: What Luxury Marketers Should Learn July 9, 2015
- Marketing To The Super Rich Is More Complicated Than Knowing Where They Go June 21, 2015
- The Wisdom Of Johann Rupert: Everything Not Reported From The Richemont Chairman’s Keynote Address June 12, 2015
- How Much Do The Super Rich Know About Luxury Goods and Services? June 6, 2015
- The Top 10 Things Rich People Buy June 2, 2015
- For Luxury Marketers, A Canary In The Coal Mine. But Which Way To Clear Air? May 17, 2015
- How Do The Super Rich Spend Their Money? Ask An Asset Manager! May 2, 2015
- Why The Rich Can’t Catch A Break (With a little help from The New York Times) April 26, 2015
- UHNWs Shell Out Big Money For Private Concerts April 24, 2015
- Some Advice For The Super Rich April 21, 2015
- The Super Rich Spent $234 Billion On Luxury; UHNWs Account For 19 Percent Of All Luxury Spending April 11, 2015
- Note To Editors: There Is A Difference Between “The 1%” and “Super Rich”…It’s Money April 5, 2015
- Is $300,000 A Reasonable Monthly Allowance For Private Jet Travel? April 3, 2015
- Pity the People Who Pity The Rich Kids of Instagram: Is Poverty the Pathway to Happiness? March 20, 2015
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If I were to believe what I read, which I frequently don’t, the luxury industry, specifically the makers of hard goods, need to look in the mirror as they face unprecedented hurdles, some they can’t control, others of their own making.
Amongst the headwinds are the challenges in Russia, Ukraine and China, plunging oil prices that could cut back on consumption from wealthy Gulf nations and spots like Nigeria, Azerbaijan, Kazahstan and Indonesia that have been over-delivering uber wealthy customers to the malls of Hong Kong and shopping streets of Paris, London, Milan, New York and Beverly Hills.
Questions continue about how strong the economic recovery in the U.S. truly is. Unemployment reports are structured so many that are looking for jobs aren’t counted, and there is little question that the lion’s share of economic gains go to the top of the pyramid. A recent Bloomberg article noted, “While the merely rich haven’t seen their share of society’s wealth increase since 2000, the Super Rich have seen their slice of the pie soar.”
A part of UHNW gains can be attributed that the cash rich wealthy are best positioned to jump in a buy low when there is a crisis, enabling them reap oversize returns when the curve ticks up as it inevitably does.
More troubling, the article described the overall middle class has been on a decline for a while now, like the two halves of the Titanic, the upper end white collar middle class at slower trajectory, but still the same downward track of their blue collar cousins.
If you want more bad news, a number of European economies remain shaky, and the situation in Greece and now with refugees isn’t exactly the type of news luxury goods executives wish for.
A macro-issue is when the occasional luxury consumer needs to make a choice on how to spend their limited discretionary budgets, money is apparently shifting to experiences, a boon to the luxury travel industry, at the expense of thousand dollar handbags and mechanical watches under $10,000.
A recent piece in The Guardian was titled “Luxury Brands Must Redefine The Way They Do Business.” The writer argued, “The silver bullet for luxury retailers isn’t e-commerce. It’s redefining the business they are in….With luxury consumption becoming global, digital and experiential, the role of luxury retailers irrevocably shifts from products to services and experiences. The core value unit that luxury retailers designed their businesses around isn’t a luxury item anymore – it is seamlessness, convenience, speed and quality of personal service.”
For luxury executives it must seem like driving a Formula One car at full speed with junk being thrown on the course in front of you.
My take is pretty straightforward:
- There is no new China or Russia ready to burst on to the scene and save the day so this time around, the answer won’t be rushing into new markets (although to be fair, many brands spent many years to ensure they were well positioned when the rush started.).
- Most luxury goods companies still have a country or regional approach, that ignores high-end travel is the common denominator of the big spenders. Even when an UHNW community takes a hit as they are in Russia, those that still have money are still traveling. There may be less, but they still have lots of money and still spend. Most luxury goods companies rely on local market advertising in home countries to hopefully impact those that are traveling. Just as luxury brands are spending more resources to digital, they need to shift more marketing focus on dollars to global print and airport (don’t forget private jet terminals), still the best way to be top-of-mind with the high-spending travel target.
- Travel’s gains in its share of the luxury-spending dollar didn’t happen by accident. After getting hammered in the American recession and not having the same flexibility to simply chase new markets (it’s hard to move a hotel, for example), they stopped selling beds and started to view themselves as “vacation stylists.” Groups such as Four Seasons created unique experience-led programs, such as being able to play basketball with retired Hall of Famer Hakeem Olajuwon if you stayed at its Houston hotel, or having a private dinner overlooking the Arne from the Ponte Vecchio if you stayed at its hotel in Florence.
I think The Guardian piece was maybe a bit too dramatic. Luxury goods in my opinion will always be closely aligned to the “It Bag,” the star designer, the celebrity who wore it, artisanal craftsmanship, heritage, limited inventory, innovation and great stories.
At the same time, by dedicating more resources to the high-end global travel market (beyond Duty Free) and taking a page from the travel industry to create experiential offerings exclusive to customers (there are dozens of on-brand, simple ideas as well as some very high-impact more complicated ones) I think the hard goods side of the luxury industry will find clear track ahead.
There are economic woes in Brazil, China and Russia, including political worries the latter two. With oil prices plummeting, what will happen to the big spenders from the Arabian Gulf? Needless to say, luxury brands and service providers can attest first hand there is less spending. So what to do?
For brands there are key issues. Much money was invested in opening retail in emerging markets, including staffing up, marketing, advertising and communications, including events and getting aboard national celebrities as ambassadors and endorsers.
Well, the good news, in my opinion, is all of the money spent into developing these markets was well worth it, even if they are seeing some bumps, valleys or ruts. Having spent 14 years as co-founder, President and Editor-in-Chief of Elite Traveler before leaving at the beginning of the year, I was intimately involved both first hand and through extensive research in what makes the Ultra High Net Worth (UHNW) consumer tick.
Globally, as much as 90 percent of the Super Rich (those with at least $30 million net worth) are self-made and most of them were not known outside their companies and families. While certainly there are UHNWs who are celebrities, athletes or celebrity CEOs, many made their money through mundane businesses such as manufacturing, services, logistics, retailing and real estate. I’ve seen several billionaire surveys that show more billionaires dropped out of college than graduated from Ivy League institutions. In other words, the general stereotypes of Oxford University, polo and museum galas represented a sliver of the Super Rich, as does the sports team owner who made his money through car dealerships. In other words, the UHNW community is exceptionally diverse in both how they made their fortunes and their interests.
At the time we coined the term “Driveway Celebrity” as the only places they were famous was at home or at their office. We also found like the general population, they were generally attracted to pop culture. When we wrote about top suites, we created a section “who slept here” listing the famous folks who had bedded down in that suite. Rich readers loved the fact they could spend $10,000 a night to sleep in same bed as Sharon Stone or Sylvester Stallone.
We also disproved the myth that rich people don’t respond to advertising. We tracked tens of millions of dollars in watches, jewelry, hotel suites and real estate sold directly through advertising in the magazine via our oversized, pictorial format that spoke to the way UHNWs consumed media aboard their private jets.
So as I said, for luxury brands that spent big bucks on marketing and public relations in regions and countries now under pressure, my belief is that it was money well spent.
The challenge now is that with sales sliding, the broad based approach needs to be refined. Wing-X, a company that tracks private jet flights, reports that so far this year private jet flights between Russia and Europe are down 20 percent and for the United States, the falloff is 18 percent.
This news shows that clearly the recession has hit even the upper crust as it did in 2008 in the United States. At that time, private jet use dropped by as much as 28 percent. The common wisdom was that most of the Super Rich had gone broke, and those that hadn’t had shut down the spending.
Looking back more than a half decade later, the truth was much different. Yes, like what is happening now, there were UHNWs who were overexposed and were no longer Super Rich. But when one examines the U.S. UHNW market, since 2010 UHNWs households have grown not only globally, but in the U.S., their wealth has grown, and in one survey by University of California-Berkeley it was show that 95 percent of gains as the stock market came back went to those in the top 1 percent, with a large part of that in the upper half of 1 percent. Billions were made on buying distressed real estate and investing in teetering public companies. In other words, for those UHNWs that had cash in the bank, it was a great opportunity.
I recall in the ‘90s being at a New York breakfast with a well-known financial titan who in the midst of the Asian financial crisis was heading off later that day to Seoul. Somewhat dumbly, I asked, why? He simply said, “Buy low, sell slightly above the middle” and laughed.
The common wisdom after the crisis, however, was the American UHNWs had stopped spending, as in an entire group, more or less stopped. Now the wife of a former UHNW doesn’t say, “I am not going to buy this because we have serious cash flow problems.” She says, “I don’t think it is appropriate in times like this.” The fact is, she couldn’t afford it anymore. And our research showed after a 90-day dip as the Super Rich tried to get a handle on how their fortunes had been impacted, spending on luxury goods and services by those who were still loaded rebounded and actually surged a bit, although not enough to counter those who were no longer rich.
So what do I think the takeaway is? I am currently working on a partnership development project with a leading broker of superyachts. The average customer has a household income of $20 million and a net worth of about $160 million. In addition to spending an average of $200,000 per week to charter a yacht, excluding food, fuel, port charges and tips to the crew, they own five homes, spend five weeks a year vacationing at resorts, spend hundreds of thousands of dollars on expensive watches and fine jewelry, and yes they rent villas too! Most of all, they are a global audience. One day Beijing, the next Dubai, then Monaco next month for the boat show there, Ft. Lauderdale in November, Miami in February and so on.
For luxury brands the latest turmoil underscores the need to develop a global strategy targeting the Super Rich wherever they may be from, and wherever they happen to be today, as well as however they happened to make their money. An important screen is travel, be it via yachts or just independent, affluent travelers. We know from prior experience those who continue to travel are those with the money.
One thing we will see again as recoveries take place in markets now under pressure, is that for every story of an UHNW meltdown, there will be 10 of people who are taking advantage of the crisis to amass huge wealth. Marketers need to make sure they are connected to these consumers more than ever.
I am always on the lookout for research on Ultra High Net Worth (UHNW) consumers, who are commonly defined as having a $30 million net worth as an entry point. However, many times I have to settle for a broader cut, which is why I was interested to see Shullman Research Center’s Insights Into Luxury, Affluence and Wealth published about a week ago.
The Shullman report looks at three slices: Consumers with a household income of at least $500,000 which in the U.S. represents the vaunted 1 percent of households; those with a personal net worth of $1 million + making up 11 percent of adults, and those with a personal net worth of $1 million + in liquid assets, or six percent of U.S. adults.
The executive summary is succinct: “The good news for luxury marketers, their agencies, and the media alike is that consumers with really deep pockets are digging into those pockets with gusto, even more so than their merely affluent counterparts. These extremely high-income and wealthy luxury consumers are also purchasing with greater frequency, and this also bodes well for the entire luxury category. At the same time, challenges remain, as quality and service continue to be important for these deep-pocket consumers as well as for other luxury purchasers.”
By the same token, I was surprised to see that only 40-44 percent of the three categories said they had made 6+ luxury purchases over the past 12 months (even if it compared favorably to 5 percent of all adults). Again, 29-30 percent said they had bought at least one piece of fine jewelry at $500+ in the past 12 months. For watches valued at $500 + (not generally what the industry considers high watchmaking) the range was 18-26 percent, and while that is impressive compared to the 3 percent of all adults, it is not in line with research on spending by UHNWs.
Shullman’s research is important because it contrasts the difference between High Net Worths (HNWs) and the Super Rich. Recent research by Northrop & Johnson, a leading broker of superyachts shows 85 percent of their customers (Net Worth Average $160 million) buy fine jewelry annually and 50 percent by high-end mechanical watches annually. Research I have been involved in with private jet owners showed similar numbers. Wealth-X research shows the average UHNW household spends $117,000 annually on watches and jewelry, and the Super Rich account for 35 percent of all global purchases in these two categories.
I think the message marketers can take away from Shullman is if they want to sell expensive products with price tags in excess of $10,000 and find customers who can buy regularly, $500,000 is not high enough in terms of a household income target, and low single figure millionaires are probably of limited value.
The Prince And Ryanair: Another Example On Why It’s Hard To Get A Full Picture Of The Super Rich Via The Media
According to a recent email from Travel + Leisure Prince William flew Ryanair while traveling on business for his new employer, an air ambulance service. The brief goes on to note “insiders” say his wife Kate Middleton and Prince Harry fly budget airlines too! I am sure the report, taken from sister Time magazine is correct, since there are pictures. At the same time the source article notes Angelina Jolie and Brad Pitt were recently spotted flying coach on Air France, forgetting to mention that they had flown in from the U.S. in first class and there was no first or business class on the domestic connecting flight to Nice. Tickets for the family on that trip likely ran well over $100,000.
A quick Google search would have found a June 23 Daily Mail article that members of the Royal Family spent nearly $8 million on travel in 2014 billed back to the state. Among the highlights was a $150,000 trip by Prince Harry to the World Cup, including about $60,000 on commercial airlines and another $60,000 for private jet charters, hardly Ryanair type fares. Prince William also rung up a $120,000 trip to Japan and China, including $30,000 for pre-trip planning trips. Prince Andrew visited Kuwait via private jet at an expense of $90,000, and in total there were over 60 trips that cost at least $15,000.
The point of this is not to say the spending was right or wrong. The aforementioned trips were as part of the Royal’s official role to generate tourism and investment in the UK, plus sales for homeland companies.
I think it’s fine that William flies Ryanair. I suppose his company won’t pay for a private jet, and he doesn’t want to pay the difference, or perhaps the Queen won’t allow it. In fact, it’s not unusual for private owners and user to mix in commercial airlines for long-haul flights or sometimes a quick hop, although Teterboro to Washington D.C. is one of the most heavily traveled private jet routes.
The point is that looking at the Super Rich through the lens of the media rarely provides an accurate picture, particularly if looked at in a singular way. Does William ever fly privately when hopping up to Scotland? The full ledger of trips shows there are plenty of domestic trips made by the Royal Family by private aviation.
That said, while flying a private jet doesn’t necessarily mean one is ready to shell out hundreds of thousands of dollars for a watch, it generally does mean they have the money. On the flip side, getting a glimpse of an UHNW on discount airline may not reflect their normal lifestyle.
While the piece by Travel + Leisure didn’t try to portray William’s Ryanair flight as anymore than a matter of fact, it just shows how it’s critical not to make assumptions from a single piece in the puzzle, particularly if you are in the business of selling and marketing luxury products to UHNWs. After all, maybe William’s private jet had a mechanical problem?
Dick Fuld was named by Time magazine one of 25 people most responsible for the 2008 financial meltdown. The last chairman of Lehman Brothers, who despite losing as much as $900 million in stock he owned at the time of his company’s bankruptcy, is thought to still have a net worth of at least $500 million.
He’s kept his toe in the waters of finance with his own advisory firm since and various SEC filings show he has been able to gain a few high profile clients, including AT&T. When it came to light a few days ago that he will probably pocket $30 million and possibly $50 million in August auctioning his 71-acre Sun Valley Ranch, it barely made a ripple, outside of reports by The Wall Street Journal, CNBC Wealth Reporter Robert Frank, Fox Business, CNN Money, some local Idaho newspapers and real estate. He wasn’t available for comment, and he has kept away from the media since 2008.
Of course he is not running to be POTUS. Then again, neither was Jeff Green when he made comments during the World Economic Forum that it might make sense that Americans don’t spend more than they earn. Forgetting that he came from a blue collar household, worked his way through college and started his first business by saving instead of partying, he was widely flamed in the media for the lavish estates he owns today and his expensive lifestyle. Yes, he arrived in Davos with wife, children and nannies aboard a private jet. Since then, we haven’t heard much from the billionaire.
Donald J. Trump may yet rue the day he decided to join the Republic primary for President. So far, he has stood his ground, slightly qualifying his comments about illegal immigrants. But first let me give you a disclaimer. In his 2005 book, “Think Like A Billionaire” Trump dedicated a chapter to me and the magazine I co-founded Elite Traveler. I had only met him a couple times and frankly didn’t know I was even going to be included until after the book was published and somebody told me. He kindly described me as somebody in the know about all the best places to go, although he did add that he prefers his own hotels. He also described the magazine as a must-read or something to that effect. It was very nice of him, and indeed it was terrific publicity for which I will always be grateful.
Back to Trump’s current situation. Since his initial announcement, he has lost a number of business relationships. Were their ends mutual decisions? Was it because executives at those companies, who had been profiting from the relationship all along, came to the sudden realization that Trump has strong opinions they disagreed with, not always articulated with feel-good flowery prose? Was it they felt like they were going to lose customers if they didn’t cut ties? It’s impossible to really know. Either way, they’ve cut their losses soundly sleeping with the knowledge previous profits are safely banked.
The relevant part is I am sure that many other Super Rich and Ultra High Net Worth folks are watching Trump’s current plight and taking notes. Clearly, if you want to be in the public profile, you better make sure you are really well coached so you articulate controversial opinions in the most palatable way. Even better, you might want to stay clear of these type of divisive issues. Worst case, the message is that you should support issues covertly. Just donate money to folks who will get out the pitchforks and keep quiet and hide behind the scenes.
Douggollan.com is dedicated to marketing and selling to the Super Rich, so I want to look at it from that perspective. The other day on Bloomberg Television, they dedicated a segment to Trump’s company 401k plan. It is something that you can get details of through public records. But we can be sure, as things move forward, there will be more things that will come to the surface, and they will be reported without context in the race to get headlines.
For luxury sellers, I think the lesson is quite straightforward. As private jets became a lightening rod for critics of the rich during the Great Recession, if you are selling or marketing to UHNWs remember privacy is paramount, not just for today but for 10 years from now. While it is fine if they post pictures of their yacht or earrings on Instagram or Twitter – some do, most don’t – building a successful relationship means honoring that what you and me do and don’t think twice, for the Super Rich is a potential land mine. What do I mean? Did you take a vacation to a luxury Caribbean resort the same year that you had to restructure your team. Did you buy your partner a nice watch three months after you had to close the branch office in Cleveland, forgetting that you offered everyone transfers and actually opened new offices in Buffalo and Cincinnati. Oh, and did you get a new car at the same time people in your company had their wages frozen. Yes, your wages were frozen too and certain workers got raises per contract. But lots didn’t and you got a new BMW!
In a Google search world, it’s relatively easy to dig up stuff on anybody and put it in a bad light. That’s not what happened to Trump. But luxury marketers should make sure they have “best practices” in making sure they don’t provide any fodder when customers get caught in a firestorm. Now critics of this column may get a bit irate, but the worst thing is to “scare” down Super Rich purchasing, particularly when one considers that their lifestyle spending alone creates over 5 million jobs, many that simply are lost when their money stays in the bank.
Robert Frank is one of the foremost trackers of the Super Rich. The New York Times is the paper of record. Wealth-X is one of the best sources of market information about where the Ultra High Net Worth are from, how they made their money, and what they are spending it on. Thus, I have to say I was a little disappointed to read, “For The New Super Rich, Life Is Much More Than A Beach” in the gray lady.
While nothing in the story was inaccurate, not much was new, and further, if your business is about marketing and selling luxury products and services to the rich, it missed a few key points, in a forest through the trees sort of way. Then again, if you just happened to be enjoying a lazy weekend and never gave a thought about the lifestyles of the very rich, it would have served as a good primer.
Frank’s notable book, “Richistan,” published in 2007 was and still is a must-read if your business depends on luxury consumers. If you put that together with “Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else,” by reporter turned politician Chrystia Freeland, you will be a few miles ahead of many of those you are competing against. If you are looking for a third read, that takes focuses on where the rubber hits the road when it actually comes to selling your products and services to UHNWs, the 2007 book I co-authored with Russ Alan Prince, “The Sky’s The Limit: Marketing to the New Jet Set,” was based on over 600 interviews with owners of private jets. In it, we created three pyschographic buying personalities designed to help marketers better target their efforts in both audience, messaging and content.
So where was Frank’s NYT piece spot-on? Identifying the Super Rich as a global species that is constantly on the move, hopping from one spot to the other and hard to pin down, is something I have been on my soapbox about for more than a decade, so to have two top figures in such prestigious media stating this, brings me to a happy place. It is a key reason traditional media strategies are not effective in targeting the UHNW segment, which Wealth-X notes accounts for $234 billion in luxury lifestyle spending, about 20 percent of the total luxury market!
To give you a two-sentence recap of the article: Today’s Super Rich fly around the world in their private jets, mainly keeping within the same circuit that includes New Year’s in St. Bart’s, Davos, some winter weekends in Palm Beach, The Milken Institute Global Conference in Beverly Hills, Art Basel in Basel, New York art auctions, The Masters golf championship in Augusta, Cannes Film Festival, Royal Ascot, dividing your summer between the Hamptons, south of France and Sardinia, and then onto the fall winding down with Miami’s version of Art Basel. Frank and David Friedman, President of Wealth-X, accurately point out that off the highway are many side routes, such as The Kentucky Derby, Wimbledon, the media confab in Sun Valley, the car collector’s delight at Pebble Beach every summer and so on.
Here is where the article from my perspective is a bit off course. Even at the headline events, there is only a small fraction of the global UHNW population in attendance. At the World Economic Forum in Davos, the grand daddy of elite hobnobbing according to the hosts, there are only 2,500 participants. St. Bart’s between its hotels, villas and yachts can only handle a couple thousand of the Super Rich at one time, if that. At the same time, Wealth-X pegs the global Super Rich population at 212,000 households, and since households include a partner and children, you are talking about around 800,000 actual people. While this may not be relevant to the general consumer readership of The New York Times, if you are involved in selling or marketing to the Super Rich it definitely is. If you are selling luxury travel or hard goods, again, reaching the spouse and kids is often critical in getting the sale!
In media and marketing, they talk about Reach. Reach is simply the percentage of your target audience your activity has a chance to connect to. If you are running an ad in a magazine that reaches 50,000 people with a $1 million + Household Income, there is a chance they will read that issue and perhaps see you ad. That’s the reason in the world of media, there is another metric, Frequency. Most people agree, that one ad or being at one event has little impact, so the key is to have enough Frequency against your target that you get noticed.
Research by Ogilvy & Mather back in the Eighties suggested your target consumer needs to read or hear about you (TV, radio, billboards, editorial, events, POP, word-of-mouth, etc.) about a dozen times before they were likely to seriously consider buying from you. Now I don’t want to equate advertising for dish soap to marketing to the Super Rich, but the theory is something worth keeping in mind. For the last decade, many marketers were hoping the Internet would solve the problem of figuring out what part of their marketing was actually working and driving ROI. Of course, we now know that over $6.3 billion per year of whatever is being spent to drive clicks is actually fraudulent, picking your pockets with such agility that you actually thought those were real people who were interested in your message.
Back to the Super Rich: The challenge with the circuit described in The New York Times article is at even the largest of these stops, as a marketer you are reaching a very small percentage of the universe you can buy your product. If your business is based on getting a half dozen or less new UHNW customers per year, each of these events alone may provide a broad enough platform. However, the reverse challenge is that most companies that fit this profile (the guy who does six-and-seven figure home theaters, the specialist in landscaping, an independent financial advisor, etc.) is not a brand, therefore the obstacle is like the old McGraw Hill grumpy old man ad (see top of story), where he brings you down to earth, by reeling off, “I don’t know who you are. I don’t know your company. I don’t know your company’s product. I don’t know what your company stands for. I don’t know your company’s customers. I don’t know your company’s records. I don’t know your company’s reputation. Now-what was it you want to sell me?”
While I totally buy into Frank and Friedman’s Super Rich on the move thesis, let me add, where it gets more complicated is there is lots to add beyond the several dozen events they mentioned. Big college football games can attract more private jets than Art Basel Miami. Don’t forget the NBA All-Star Game and of course the Super Bowl, which draws over 1,000 private jets. There is the Olympics, the World Cup, and the list obviously goes on and on and on. Hot spots such as Ibiza and Turkey are drawing the Super Rich from traditional Med destinations. There are major fishing tournaments like the Bisby in Cabo that draw dozens of private jets, and today’s more active UHNWs can be found running in triathlons, fishing in Scotland, hunting in Mexico, hiking in Nepal, kite-surfing off Puerto Rico, riding big wave surf of Costa Rica one week and Indonesia, maybe today at the U.S. Open Golf Championship, or just somewhere with family celebrating Father’s Day.
In other words, where I think the story misses, is the insinuation that a large percentage of the Super Rich can be found in any one place at one time. Numerically, that is just not true. At certain times there are more than normal, but still not a significant portion of the UHNW population. This doesn’t mean that it doesn’t make sense to set-up a pop-up shop in the Hamptons as Hermes has done (of course most people know the Hermes name, if not all of the products they make), and explore opportunities to sell your services at these places.
Just keep in mind, you’re as likely to find the Super Rich at Levi’s Stadium to watch the San Francisco 49ers as Art Basel Miami. Finding them amongst the throngs is not often as straight forward as one would hope. Moreover, each of these events will only bring you to a small segment of the population. The larger challenge is 90 percent of this target audience, having not necessarily come from money, and being first generation wealth, is not as familiar with what you are selling as you may think. To create an effective UHNW strategy there is a lot of work to be done before you meet your prospect face-to-face, as our friend from the Mc Graw-Hill ad suggests.
The headlines out of the talk by Johann Rupert, Executive Chairman of Compagnie Financiere Richemont SA were big ones. Speaking at the Financial Times Business of Luxury conference, he said what keeps him up at night is the destruction of the middle class and coming mass unemployment driven by technology. That will lead to class warfare. The other big news was he invited Kering and LVMH to take an equity stake in the Internet shopping platform he is creating by merging his stake in Net-a-Porter with Yoox. In 55 minutes, those two points alone are quite a boatload, and in fact, it was interesting most of the follow-up questions in the audience were from reporters pursuing those topics.
Having had the chance to view the entire talk thanks to Youtube.com and the FT posting it, I thought it would be of interest to cover other points he made, which to me were also valuable, and I hope you will find worthwhile as well. Below is my summary of key points.
- His viewpoint: His view is as “insider outsider.” While outside South Africa he is know for luxury goods, in his homeland he is known for the bank he started in the 1970s that today employs 32,000 people, and diversified holdings in finance and medical. He was the first importer of Apple computers to South Africa in the mid-80s and he started a mobile phone company he sold to Vodafone. He has owned a business that lays underwater cables. It’s a bit of an unusual perspective as I often find top executives across various industries have grown up in the silo of their industry, coming to the top spot, sometimes without leaving their narrow segment, be it cruises, watches or airlines.
- How he got involved in luxury: His entrée into luxury in the ‘70s was at a time “luxury wasn’t sexy.” It was a period before the Internet, mobile phones and even portable music – the Sony Walkman. Entertainment was Studio 54. While there is debate about how much he paid for a stake in Cartier at the time, $7 million or $9 million, it was a deal that many other’s passed up. “You couldn’t fill up a room like this in 10 years.” He said there was simply no interest. “Automobiles were a serious business. Luxury was a joke.”
- Why the financial crisis? The problem with financial institutions running rampant dates back to changing from partnership structures to corporations. With the corporate structure came leverage. He said working in a partnership structure, “The partners regulated us. If you messed around, the partners went bankrupt. Trust me, you didn’t need regulation.”
- How To Fix The Financial System: The current problem is “not the free market system. It’s the lack of the free market system. If they allowed (companies) to go under, people wouldn’t have these one way bets. But we kept on supporting (and) interfering.”
- Are his products overpriced? Addressing whether pricing is inflated, he relayed that a customer told him, if you look at the cost of an A. Lange & Sohne watch, and look at how much labor it takes, it costs less on a per hour basis than getting your oil and spark plugs changed.
- How is the pace of change changing? Change will be exponential. The difference between walking 30 real yards and walking 30 exponential yards is a trip to the moon and two roundtrips around earth. “What’s happening today with artificial intelligence isn’t science fiction.” It will create structural unemployment where jobless that are no longer employable. Hundreds of millions of jobs will be impacted. The jobs that will be impacted by the robot revolution go beyond what’s apparent, such as driverless cars. He says while hairdressers and florists will flourish, diagnostic doctors will be replaced by robots. “It’s going fast than I every thought. Everything will be squeezed into faster and faster.”
- Technology behind the scenes is critical: He paid homage to former CEO Norbett Platt for his leadership in data management. “We know where our stuff is, and we know what it costs us at all times.”
- How he manages his brands: “We have maisons that are centuries old. Our role is to protect their DNA and brand equity because if we can have desirability and brand equity we have pricing power…One of the greatest compliments you can give me is that we don’t innovate at all. We remain so true to the brand you don’t notice (yet) 25 percent of the products must be new, but you need to stay within the DNA. If you don’t stay within the DNA it won’t sell and won’t retain value.”
- Will the $17,000 Apple watch displace his luxury products? The answer is a resounding no. He tells about when Cartier executives eight years ago proposed to make a mobile phone. His response was that phones are thrown away. People keep Cartier, even the box. They don’t throw it away. He also asked, for your wife’s birthday or daughter’s 18th birthday, will you buy her an Apple watch or something she will remember the rest of her life. He said, he likes the Patek campaign about passing down your watch to the next generation.
- Marketplace challenges: “We have lots of competition from mispriced capital. When people misprice something it’s abused. It starts with landlords who take us to the cleaners, especially in Asia.”
- What he is doing to keep luxury creative: “We’ve amalgamated luxury and luxury can’t be ubiquitous…We need style, design and creativity…Taste, design, culture and luxury goods are strengths of Europe.” New UHNW/Super Rich have forgotten their money quicker in the past, and they didn’t stop past the culture part en route. The craftsman who make luxury items sometimes feel affronted in the ways they are being asked by today’s luxury customer to apply their skills. In June, he will announce a platform with Net-A-Porter and Yoox that will enable “the little artisans who sit in the little village” so they remain employed in the second machine age.
- The minnow and the whale: Luxury is still a small business. Richemont at $5 billion Euros is a hiccup compared to Apple, IBM and other players. The costs of big data are huge and too much for any single player.
- Why Switzerland is a good place to do business: There was a vote at his factories in the French part of Switzerland. Should workers get extra paid holidays? The Swiss workers said, no, we have enough. The French workers said they were crazy. “Do you not like working in a place like that” Swatch didn’t just fall out of the sky.”
- Is luxury buying coming back in China? There are 90 million people in the Communist Party out of over 1 billion population, so as a minority, the crackdown of corruption in the party “is a very wise thing to do.” However, the normal status symbol of a mistress “or four” is coming back, “which is great for our business. The Chinese are smart, work like hell and save. There are more men than women…They have to be very generous with the women.”
- On the global luxury market: “We have five engines and five continents. Coco Chanel said money is money. It’s only the pockets that change…Oil prices go up, sales go up in the Middle East. We just have to remain true to the brand equity.”
Today, more than ever, marketers of luxury products and services have more choices than ever.
What are you doing to target Millennials? How about the exclusivity seeker? I also hear indulgers spend 15 percent more than exclusivity seekers! What about them? The bridal market is good. After all, don’t people get married whether the economy is good or bad?
If you are a marketer in the luxury segment with any sort of budget, I am sure glad I am not on your side of the table. Everyday you have a line of people at your desk talking up some segment and why you need a higher profile with that group.
However, having been there and done that for over 15 years, I can safely say there is one segment many luxury marketers believe their brand has covered, and I can tell you first hand they don’t.
“The Super Rich already know us.”
During my tenure running a magazine that specifically targeted this group via distribution to private jets it was an answer I would hear quite a bit when I spoke with purveyors of luxury goods and services.
There is an urgency to get the word out to a broader audience of aspirational consumers with the belief that Ultra High Net Worth prospects already have some type of intimate knowledge of what they are selling. It’s as if billionaires and centimillionaires wake up in the morning wondering what new luxury products have been launched lately.
Now that I don’t have a dog in the fight, I thought it might be useful to list off why luxury marketers and sellers need to re-think about whether or not they have enough focus on the UHNW segment. And by the way, hosting a couple “collector” dinners, sponsoring a polo tournament and assuming/hoping that today’s Super Rich are also reading regularly the media on your current plan is not a strategy.
First of all, around 90 percent of Ultra High Net Worths (UHNWs) are self-made, first-generation wealth. In The Sky’s The Limit only 2.9 percent of private jet owners we surveyed became rich via inheriting their money. Many came from middle class households. (See five Super Rich Americans who started out super poor). Dad might have been a bus driver or factory worker, mom a teacher or nurse. Wealth was created via business success or innovation. There were no father and son trips to Hermes to buy new saddles before heading to the club. More likely mom was taking the future UHNW to soccer games in a minivan while dad was painting the house.
Today’s UHNW was never the aspirational consumer flipping through fashion magazines in their cubicle. As they built their business, every extra dollar was plowed into the business. During school breaks, vacations meant the kids came to work in the warehouse. The spouse helped in the business, and her shopping was probably buying new computer equipment online, not shoes. There are many stories about today’s very rich having to borrow money from friends and family to make it through the early years.
Somewhere between age 30 and 50 these folks crossed the chasm that separates being UHNW from aspirational wealth. Today’s UHNW didn’t grow up shopping to impress other people. There was no need to wear Gucci loafers at the factory. Now they are the ones with the money. In fact, since 2009 the Top 1 Percent, the rich have gotten richer, having gained 95 percent of income increases, according to UC Berkeley researcher Emanuel Saez. Their new found lifestyle means they are active in luxury, having time and taking time to vacation, often working it in with business and investment opportunities, flying on their private jet, pursuing hobbies and passions, going to places where a nicer wardrobe and some upgrades are needed. Research by Harrison Group suggests this socialization into luxury trappings and preferences is a five to 15 year process, providing a nice window of opportunity for marketers. In some cases it never stops. Carl Icahn was in his 60s when he bought his first super yacht although he could have afforded to buy one for many years before.
The Super Rich know less about your product or service than you think. While they weren’t thinking about you as they were making their money, you have been busy the last decade or so churning out innovative products and experiences, line extensions and so forth. After all, it wasn’t that long ago Montblanc, as an example, just made pens. Now a large part of their business is mechanical watches, they have a jewelry line and accessories such as briefcases and luggage. It’s only in recent years Louis Vuitton launched high jewelry, high-end mechanical timepieces and menswear. The Super Rich don’t wake up in the morning and think about what new product launches you just had. So while UHNWs may know the brand, they might not know everything you do.
At the same time they are the segment with the most money. They already spend lots of money with you or your competitors, but they have the depth of wallet to spend more. To me, that’s an opportunity. This goes for every segment. How many people who have the money have chartered a yacht? How many Super Rich people know the full range of spa experiences? It seems like there is a new concept every month. For that matter, destinations are constantly evolving their offerings. Fine dining in Australia? How many rich people have never had an Italian hand stitched suit made custom? Why doesn’t Bill Gates appreciate the complex mathematical concepts behind mechanical watches? After all, Microsoft and minute repeaters are both the works of genius.
I think it’s important to state luxury industry and brands have done a phenomenal job developing lots of infrequent buyers, the aspirational consumer, who spends money they really don’t have to create an image of status not matched by their bank accounts. According to Boston Consulting Group there are 350 million aspirational luxury consumers worldwide that account for $620 billion in global sales, or about $1,700 in total luxury purchases annually per household.
In terms of growth opportunities, my point is there are untapped opportunities with UHNWs. According to Wealth-X, the global UHNW audience spends $234 billion on luxury goods and services despite a population barely breaking 200,000 households. With wealth possibly exceeding $50 trillion, more than the GDP of the 15 larges economies in the world, they have more to spend.
While every brand has its fans and advocates, there are lots of Super Rich folks out there that could spend a lot more. The opportunity is only matched by the depth of their pocketbooks.
What do the Super Rich spend their money on? When we interviewed over 600 Ultra High Net Worth (UHNW) private jet and fraction jet share owners for “The Sky’s the Limit: Marketing to the New Jet Set” Home Improvements was number one.
Of course, when one considers those surveyed average three homes, spending just over a half million dollars a year can go quickly.
Spending nearly a quarter million dollars on fine jewelry was a combination of six figure purchases and ongoing buying at accessible price points. You know, pop into Neiman Marcus, pick up a couple new outfits and then accessorize with a new $2,000 bracelet and $4,000 earrings. When one considers the cost of flying privately is somewhere between $5,000 and $20,000 per hour, all of the other spending equates to you or I popping down to Starbucks and splurging on a large premium coffee.
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If you don’t follow the sales numbers of new private jets and the companies that make them, you probably missed that both Embraer and Bombardier, two conglomerates that as part of their portfolios manufacture private jets, both cited the segment as performing weakly.
In fact, a few days ago, a top columnist at Bloomberg ran a story titled, “Billionaires Aren’t Buying Enough Private Jets.” He referenced a press release from the Canadian manufacturer that read “current economic conditions and geopolitical issues in some regions such as Latin America, China and Russia, have impacted order intake levels industry-wide. As a result, Bombardier Business Aircraft will reduct its production rate of Global 5000 and 6000 aircraft.”
There is no question that even the very rich are being impacted in these places just as they were in the U.S. after the recession. The key thing is not all of them are being impacted, and only a minority are being effected. I monitor the monthly private aviation operations (actual flights) between Russia and Western Europe and they have been tracking in the negative 20 to 30 percent range for some time. After the U.S. crash, flying dropped by about a quarter as well. Again, this is flights, not new aircraft sales, which also dropped.
Everyone has already heard about various luxury brands retrenching in China, either closing boutiques or cutting expansion. In Russia, there is a retreat as well. Having run a media company during the period of the U.S. recession, I can report first hand most companies took significant parts of their budgets here and reallocated them to emerging markets to take advantage of the growth, something they were successful with. Certainly anyone who bet on the former Soviet Union, certain Latin countries and China over the past decade have seen for the most part handsome results.
So the bloom is off rose when it comes to these countries. What’s next? Yes, we hear Africa. But where in Africa, and now with oil prices dipping, is some of the growth sustainable? Will affordable energy in the West mean less lavish spending in the Middle East.
From what I am seeing many luxury companies are putting renewed hopes and dollars into the U.S., and while for many personal reasons, I am delighted to hear this, in the dark confines deep in the coal mine I think they may be headed down a dangerous shaft instead of towards clear air as they chase the elusive aspirational consumer and hard-to-understand millennial market.
While U.S. sales for luxury brands have been increasing and are indeed a bright spot, my question is where are the sales coming from? Digging into economic data and studies, it’s clear that over 90 percent of income gains in the U.S. since 2009 have gone to those in the one percent, a group of under two million households in a nation of over 100 million. And while it only takes a Household Income of $400,000 to get into this group, digging further shows most of the gains have really gone to the the upper echelon of the 1 percent, so perhaps several hundred thousand households, the proverbial needle in the haystack. There are also plenty of studies – I reference in particular to one done by The Washington Post – which shows that even at $250,000, the typical family of four in a major city has very little money to contribute to the coffers of the big luxury brands. Beyond taxes, rents and mortgages, huge amounts of money go to various insurance payments, costs of maintaining a home, car payments, parking, gas, the kids and so forth, there is little left for luxury goods and services. In the example of a Long Island, New York-based family, they would need $290,000 to lead a life that included no luxury cars and no designer fashions, spending under $4,000 a year on vacations.
At the same time, regardless of whose research you look at the number of Ultra High Net Worth (UHNW), be it Royal Bank of Canada, Wealth-X, Wealth Insight, CapGemini, Knight Frank, the number of Super Rich households globally have expanded dramatically, as well as in the U.S.
My belief is a large part of the U.S. sales growth luxury brands have seen the last several years is not from the aspirational segment who today has even more “look for less” choices but from High High Net Worth ($10 million + Net Worth) and Ultra High Net Worth U.S. based consumers and global UHNWs and other affluent visitors.
So what does what’s happening in Russia, Latin America and China mean for luxury brands? I look and see that from Russia to Western Europe the number of private jet flights are at about 70 percent of where they were a year ago. That means more than two-thirds of the Russian Super Rich market is still traveling and has some money to spend. If we look at the U.S., this was true in 2009 and beyond. While many had written off the U.S., the top end of the market with those UHNWs who had liquidity were busy buying at a bargain, making more money and spending. One drag at that point on new airplane sales is one could go to the desert and buy a recently parked 737, 757 or 767 at a fraction of the cost of a new jet, spend tens of millions on new avionics, dining rooms, showers, lounges and have a larger and more luxurious jet at a lower cost than what the top manufacturers could provide new.
For those luxury companies and groups that have yet to create a global UHNW marketing strategy and organization tying together assets from around-the-world, in my opinion they are missing the next emerging market, the Global UHNW. After all, there are still plenty of Chinese, Russian and Latin Super Rich, however if you want to sell to them it will be increasingly outside their home nations. What’s more, most research shows in total, between over 100 far flung countries, the population of Super Rich – those with over $30 million in new worth – will grow by 50 percent by the next decade.
The challenge I always found is many luxury companies think there is a silver bullet to reach the rich people, usually a sponsorship here and some private dinners. Their marketing mojo when it comes to truly tackling the UHNW market lacked real commitment. Unfortunately, in 15 years monitoring the market I can report there are no silver bullets, although like any market, there are plenty of sellers making promises. What’s needed is a true global UHNW strategy, including all elements of sales, marketing and merchandising from media to public relations, VIP services and so forth. According to Wealth-X, 211,000 Super Rich households spend over $235 billion on luxury goods and services annually. Based on their wealth, unlike lots of us, they also have plenty more to spend. For luxury companies, the opportunity is to understand that getting more share and growing sales from the Super Rich probably won’t fit into the marketing structure they have. That said, just like investment in digital, with commitment and focus, the payoff can be huge, particularly as one understands the new reality is the world’s richest consumers are rarely found in one place for very long.
So back in January, Jeffrey Green got pillored for saying during an interview in Davos, people shouldn’t spend money they don’t have. Even though the billionaire is self-made, came from a financially challenged family, worked his way through college and saved to start his own business when he was in his early twenties, I suppose there is nothing we can learn from someone who is rags to riches anymore, particularly if the advice is not what we want to hear.
Recently The New York Times had a piece where Steve Balmer, the Microsoft billionaire, noted he flies by private jet to see games played by The Los Angeles Clippers, the NBA basketball team he bought for $2 billion. Now when it comes to the environment, there is no doubt each private jet flight burns “thousands of extra gallons of jet fuel that would not be burned if you flew commercial” as the paper published. Balmer explained his private jet usage, “Time is our most precious commodity, and there are conveniences wealth brings to essentially get your more time.”
Wealth being relative, Balmer is exactly correct. For the rest of us, it is also faster, more expensive and uses more gas to take our car rather than walking someplace or taking the bus for that matter. If our finances allow, and time constraints make it so, most of us hop in the car.
Back to the private aviation industry. In the U.S. alone, the industry employs over 1.2 million people and contributes 150 billion to the economy. In places like Los Angeles, Van Nuys Airport, used only for private aviation supports 12,300 jobs, generates over $700 million revenue into the community and pays over $80 million in state and local taxes.
Now true, the quotes I was referring to about wasting gas weren’t from a reporter of The New York Times. Even worse, they were from a letter to the editor the paper published which appears in full below:
Re “Speaking Loudly, Carrying a Big Wallet,” April 22: The Los Angeles Clippers owner Steve Ballmer justifies his use of a private jet to commute to his basketball team’s games with the statement “Time is our most precious commodity, and there are conveniences that wealth brings to essentially get you more time.” No, Steve, a habitable planet is our most precious commodity. Using your wealth to put an extra airplane in the air, exhausting the result of burning thousands of extra gallons of jet fuel that would not be burned if you flew commercial, is not a convenience; it’s selfish and shortsighted.
– DON ALLEN, Carlisle, Mass.
Using its valuable real estate to forward a misguided hypothesis that Balmer’s actions are somehow going to lead to the end of earth as we know it is just, well, irresponsible and not fair to Balmer or the many who make their living and pay their bills working in private aviation. It’s hard to imagine that the gray lady is short on letters to the editor, so why choose something so wacky? If one wonders why many of the Super Rich try to put a protective shell around the themselves, look no further than the way much of the media portrays them.
The Super Rich seem to have no problem spending into the millions for 60 minutes of enjoyment when marketers create awareness and desire. Look at your favorite rock star.
Greg Furman, the former CMO of Bergdorf Goodman who founded The Luxury Marketing Council, talks about depth of pocket with the Top 0.01 Percent. In other words, the high net worth crowd is a deep well that has more to give savvy marketers. I tend to agree with his viewpoint, that properly motivated, the Ultra High Net Worth segment will spend even more than it currently does on hotel suites, watches, designer fashion, jewelry, home and so forth.
Part of the problem in my opinion is that most luxury marketing is focused on budget constrained aspirational consumers, when the UHNW segment doesn’t even have a clue what’s on offer from some of the best brands out there. The Super…
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With the UK elections coming up, this I believe, continues to be relevant.
I’ve never created, directed or produced a television commercial but here it goes.
Like tens of millions of other heads of households around-the-world our protagonist opens the front door to the morning sunshine ready for a productive and long day at work.
I am thinking there are going to be several versions.
One will have a white male. Another version with will feature a woman. Maybe there will be a few ethnic takes.
After taking a deep breath to enjoy the fortune of perfect weather, our principal walks down the front path towards the driveway. For background music I am thinking about “Something Great” from LCD Soundsystem. They also have a song “North American Scum” but for this commercial that would be a faux pas.
Here’s where we add the first unusual element. Trailing our protagonist is a line of people. With suspense building we try to make out who is…
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Some 211,275 Super Rich households spent $234 billion on luxury purchases last year, accounting for 19 percent of all global luxury spending, according to data just released by research firm Wealth-X.
In a press interview Wealth-X President David Friedman said luxury brands shouldn’t look at what is being spent but untapped potential. He noted mass affluent consumers continue to pull back on spending yet luxury goods companies still are not taking advantage of additional spending power the Super Rich present. The report showed that share of luxury expenditures by Ultra High Net Worth (UHNW) families increased from 17 to 19 percent from 2012 to 2013.
Travel/Hospitality was top in spending at $45 billion, followed by automobiles at $40 billion, fashion (apparel and accessories) at $28 billion, jewelry/watches and art tied at $25 billion. Private jets totaled $23 billion in the report, followed by yachts at $22 billion, home and wines/spirits both…
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My morning began as usual scanning news headlines and coming across the typical “for” and “against” stories about the very wealthy, their spending, the businesses they started or now own and how they accumulated their fortunes. This one from The Daily Beast was titled, “Hate Private Jets? You’re Just Jealous. The 1% want planes that can fly NYC to Hong Kong nonstop,” was not particularly unusual.
In the media “1%” and “Super Rich” are seemingly used interchangeably. It is a disturbing mixed use of names for a subgroup (Super Rich or Ultra High Net Worth) of a larger group (The One Percent, 1%, 1 Percent) where the subgroup really has very in common with those outside its limited circle. In fact, even within the “Super Rich/Ultra High Net Worth” subgroup there are vast differences.
Considering many of these articles revolve around the divisive “wealth gap” issue, it is time…
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The median price of a home in the United States is $189,000, according to the National Association of Realtors. Then again the median net worth of the American household is $56,335.
Of course, when your soon to be ex-husband gave $150 million last year to Harvard University you might decide your lifestyle should not be compromised. It is what led to the Daily Mail headline, “Hedge fund billionaire’s estranged wife demands $300,000 a month for an around-the-clock private jet in bitter divorce.”
While $300,000 may seem excessive, according to Fractional News, 25 hours per month on a Gulfstream 200 would run nearly $280,000. A Falcon 2000 would be about $320,000. A Learjet 60 would only be about $160,000. However, when you have children, nannies, friends and baggage eight seats may not be enough. It also doesn’t have trans-Oceanic range, which if you read on is a potential issue. In addition…
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Even for “C” grade students like myself, it is easy to extrapolate that the hyper growth of the Super Rich naturally leads to an increase in the population Super Rich spouses and kids who are growing up in Ultra High Net Worth (UHNW) households.
Tanya Gold, a U.K.-based writer doesn’t like what she sees. “I am surrounded by affluent rage,” she writes for one of her media outlets, continuing, “Although I have moved from the kitchen with the fourposter bed in Hampstead, because I could no longer live in a part of London full of bankers pretending they live in a rural village, I have failed to escape it.”
She continues, “I moved away from the farm re-enactment people, the cold-eyed workaholics and the actresses with small dogs. But I made a terrible error, because I am now living opposite a private school and, twice a day, I have to listen to affluent screaming and the affluent squeaking of stiletto boots. The posh mums are advancing.”
Speaking about the type of cars UHNW moms drive, Gold opines, “My theory is they need the cars, because they do not work. This makes them feel powerless and the fact that their superhero investment banker husbands may not be faithful only adds to the groaning sense of terror.”
So here is Gold’s take: “My theory is this. Humans are just beasts – not in the Enid Blyton sense, but in the Charles Darwin sense. Survival of the fittest means the acquisition mania never stops – therefore, wealth does not make you happy. Actually, it makes you more unhappy than ever, because you have achieved wealth and it’s not as good as you’d hoped. You are still you, he is still him and you can’t find your car keys, because your car is bigger than Finsbury Park.”
Not to stop, in a separate column in The Sunday Times, Gold took issue with the “Rich Kids of Instagram.”
She wrote about the UHNW scions (according to Money Week; as a non-subscriber I didn’t have access to the entire Times’ piece), “I do not think a person who preens on a private aeroplane, or wears multiple Rolexes on one arm… can be happy. Rather it is the desperation of the unhappy to appear happy by shouting at the world – look at my stuff! Don’t you wish you had my stuff?”
According to Money Week, Gold suggests that “rampant materialism” only makes people more unhappy, “because it is so isolating, and, in the end, never enough, which is why there is such a glut of expensive junk on sale. All you need is love and there isn’t much of that on Instagram, which is more about boasting.”
I guess my question is, what point is Gold actually trying to make?
There are more bratty rich kids than middle class kids. The percentage of UHNWs who are unhappy is higher than those who are scraping to get by. Materialism is only represented at the Super Rich level. Being rich should buy you happiness, but it doesn’t. Materialism and ‘look at me’ selfies are more prevalent with the very rich than other income groups.
Being controversial is a good media strategy to standout and drive page views, and I suppose Gold qualifies, although she is in good company taking potshots at the Super Rich.
Over the years I have come in contact with the kids of some very, very rich people. My experience in terms of their behavior is it run the gamut just like my non-rich friends. Like all children, some will grow up to do great things, others will live their lives under the radar and some will make the headlines for unsavory endeavors.
However, where Gold misses the mark, is the behavior she detests has been around forever and exists at all economic demographics. My guess is columns on “the driving habits of middle class parents” and “the bad manners of poor kids” wouldn’t attract the readership she is looking for.