The realm of Luxury retail is experiencing fast metamorphoses according to a change of consumer demands and income patterns. Some years ago, luxury brands used to be able to segment customers as High-net-worth individual (HNWI). Typically, these individuals are defined as holding financial assets (excluding their primary residence) with a value greater than US$1 million.
However, Wikipedia says that there are distinct classifications of HNWI and the exact dividing lines depend on how a bank wishes to segment its market. For example, an investor with less than US$1 million but more than US$100,000 is considered to be “affluent”, or perhaps even “Sub-HNWI”. “Very-HNWI” (VHNWI) can refer to someone with a net worth of at least US$5 million.
By 2007, the expansion of HNWI assets led to the creation of a super class of HNWIs, known as ultra-high-net-worth individuals (UHNWIs), i.e. those with US$30 million in liquid financial assets according to the Capgemini and Merrill Lynch World Wealth Report 2006 or with a disposable income of more than US$20 million.
At the end of 2015, there were just over 13 million HNWIs in the world. The United States of America had the highest number of HNWIs (4,180,000) of any country, whilst London had the most HNWIs (370,000) among cities as based on data from the Knight Frank Wealth Report.
But Now a singular definition of a luxury customer is being changed. The new luxury consumers are younger, better-informed, ethnically diverse, tech organized, more educated, have household incomes more than the national average and complex multi-tasking lives.
A new cohort called HENRY‘s (High Earners Not Rich Yet) should be nowadays on the constant vigil of luxury brands.
They have the ability to cut through the marketing clutter and find true collectors. Building brand credibility is crucial to influence this category. They don’t tend to have an ownership, they like to rent apartments, exclusive things and perfect dresses or advices. Millennials are 82% more likely to use their phones than speak to a sales associate, which means that brands must change their inspiration, story and discovery process before they enter the store. Brands need to understand how to catch their attention.
Millennials are often looking for more than just something thats shiny and beautiful, so Luxury brands need to adjust accordingly. Luxury gets more functional, more adventure-oriented with individual shopping experience, more customized and digital. So, Unique experience = New Luxury
No brand in any industry can afford to ignore the new realities of digitalized world, especially luxury retailers. Technology is both providing unique experience and finding new touch-points with a new customers. Success will be dependent on developing strategies that address the new behaviours of the modern consumer NENRY, while, of course, appreciating that luxury brands in social media still remain Luxurious.