From VIPs to ‘beyond money’: Luxury’s shift to ultra-high spenders

In the face of global economic uncertainty, luxury brands are increasingly turning their attention to a small but mighty consumer segment: The “beyond money” spenders. This insight comes from the 10th edition of the Altagamma Consumer and Retail Insight report, released on Tuesday and based on surveys and one-on-one interviews. It highlights the growing importance of these ultra-high-net-worth individuals (UHNWIs) in driving luxury market growth. The report defines “beyond money” consumers as those spending over 50,000 euros ($54,008) annually on luxury goods and experiences. Despite representing less than 1% of luxury consumers, this segment accounts for 21% of total luxury spending – a figure that has doubled over the past decade. With an average annual spend of 350,000 euros ($378,115), each “beyond money” consumer is worth about 230 times an aspirational buyer. Market nuances China plays a crucial role in this trend, with the country’s population of ultra-wealthy set to expand from 98,551 UHNWIs in 2023 to 144,897 by 2028, according to Knight Frank’s latest Wealth Report. Chinese “beyond money” consumers, like their global counterparts, are showing remarkable resilience to economic fluctuations. However, they present unique challenges and opportunities for luxury brands. The report highlights that Chinese VICs have unique expectations compared to their Western counterparts. They seek hyper-local personalization, but also demand global recognition. Additionally, Chinese VICs place a higher emphasis on accessing exclusive products and events. Altagamma’s paper identifies several key challenges for luxury brands in catering to this elite segment. Many brands struggle to accurately identify and segment their VICs, potentially missing out on 70% of potential high-value customers. Moreover, VICs’ expectations are evolving faster than brands can adapt, particularly in areas of personalization, product exclusivity, and community experiences. The way forward To win the hearts of “beyond money” consumers, luxury brands must master several differentiators: Enhancing personalization through advanced CRM and AI technologies; offering truly bespoke products while making wait times engaging; investing in top-tier client advisors; and creating a sense of community, especially for next generation VICs in soft luxury categories Another report highlight is the increasing importance of client advisors in the luxury ecosystem. With 70% of VICs stating they would follow their trusted advisor to a new brand, luxury houses are facing a war for talent to attract and retain the best advisors. This trend is particularly pronounced in China, where personal relationships and trust play a significant role in luxury purchases. As luxury brands refine their strategies to capture this valuable segment, the industry’s focus on personalization, exclusivity, and community-building is likely to intensify, reshaping the luxury landscape in China and beyond.

From VIPs to ‘beyond money’: Luxury’s shift to ultra-high spenders

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Published July 04, 2024

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From VIPs to ‘beyond money’: Luxury’s shift to ultra-high spenders