Less than a week ago, the American Express Publishing Luxury Summit concluded its 2013 program, this year at the St. Regis Monarch Bay in Southern California. This year, its theme was Luxury: The Remix 2013, and examined the evolving needs of the affluent consumer on all tiers, from the midlevel millionaire, to the core affluent to the Ultra High Net Worth population.
Here are seven takeaways that might well be remembered throughout this year, and until the next AMEX Publishing Luxury Summit begins at the Ritz Carlton, Naples Florida in 2014.
1. The Affluent population is happier, and will spend more this year than in previous years:
“2013 will be a big spend year. This is forecasted in part, by looking at the totals in peoples’ checking accounts. In 2007, the totals in checking accounts equaled about $160B. In 2013, it is $814B, and it is forecasted by midyear it will pass a trillion. This means there is a lot more discretionary spending, many more possibilities for buying in all areas. Indeed, the projection is for $247B in discretionary spending in core luxury categories, up 3.4% from 2012. And, for the first time since Q1 2011, there are more consumers who plan to increase (14%) vs. decrease (10%) their spending in the coming year.”
2. Though people are happy with their personal economy, they are not happy with the national one.
In The Survey Of Affluence And Wealth In America, 2013, his data show that 75% of those he surveyed continue to feel successful in their personal lives and 69% feel happy about their careers. 72% say they are very happy, up from 66% last year and 58% in Q1 2008. However, 63% say the performance of the national government has worsened, and 34% feel the economy has worsened. The major issues of concern are the national debt (75%), the quality of public schools (71%), taxes (66%) gun control (62%)
3. Passion Investing and purchasing will continue to increase, especially as regards real estate, art and automobiles. The symbolic safety deposit box – a place to put their money so it will be safe — is a high-end home, a piece of great art, or a classic car.
The growth in China and other countries with great emerging wealth is where to put their money safely, without the government interference. Homes and apartments in New York have become major assets, and if you would want a Lamborghini, there is usually an 18-month wait list. From last year to this year, there has been a 400% rise in sales volume for classic cars, and high-end art sales are up 17% in the first quarter.
4. Those who buy high end cars – Lamborghinis, Maseratis, etc. usually don’t speak English as their first language
Robert Frank, author, Wall Street Journal writer of The Wealth Report and now CNBC Commentator, said he spent a lot of time recently in the Lamborghini showroom in Miami. He believes new wealth is global, and young. In the showroom, he asked the sales manager how many of these cars had been sold to English speaking people recently. He said he hasn’t sold any to a native English speaker in two years. Sales went to those from Brazil and the Middle East, generally.
5. There are sunrise and sunset wealthy.
Robert Frank also discussed the sunset wealthy are the old guard, there are challenges in understanding them, especially with so many of the sunrise wealthy – younger people with great wealth and mobility, vs. the sunset wealthy who believe in history and heritage of the brand. There are 1 million millionaires in China alone, and more that ¼ of luxury sales are made by Chinese, but not in the US. The challenge for sales people is to learn multiple languages and to make both sunrise and sunset wealthy feel comfortable.
6. There are Worth Dominant and Deal Dominant buyers within the affluence bandwidth.
Dr. Taylor further discussed the emerging ideas discovered in his Survey’s market research: that worth consumers focuses on quality, craftsmanship and service, and assumes that price reflects significant details of each attribute. The brands bought by the worth consumer reflect how the consumer feels about him or herself, and are integral parts of their identities and the lives they lead, Deal consumers focus on price and moderate their expectations for quality, craftsmanship and service so that the fit within the price they have decided to pay. Pride of ownership involves making the deal, not particularly in the brands they own.
7. Yesterday’s luxury is tomorrow’s necessity. Comfort trumps exclusivity.
Frits Van Paasschen, President and CEO of Starwood Hotels And Resorts, said that the movement from poverty to wealth for many has been exceptionally fast, and connectivity
The new generation luxury wants comfort, great service, not pomp and circumstance.
Read more from the American Express Publishing Luxury Summit, 2013:
• Sir Richard Branson: Lessons From A Master Entrepreneur
• Robert Chavez, Hermès of Paris US CEO: Searching For The Perfect Skin
• Robert Frank: The Wealth Index – Forecasting the Future of Affluent Spending