According to the Global Wealth Report 2021, the number of high net worth individuals (HNWIs) in the UK has grown steadily since the last recession in 2008.
In 2008, the report estimated there were around 413,000 HNWIs in the UK, with a net worth of over $1 million (USD), including their primary residence.
By 2020, that number had increased to 2.4 million HNWIs, representing a growth of over 480%.
While there might be some debate whether this benchmark aligns to HNW or not, it looks like a fairly low barrier to entry, and does show the rise in personal wealth, particularly among the very wealthy in this country.
Understanding the impact of recession on the luxury goods market
Last week, I shared an article: Why luxury brands will prevail during hard economic times.
In it, we looked at the growth in the luxury goods market following the 2008 recession, and the reasons why.
We also analysed the demographics driving this upturn and the typical buying behaviours of these HNW consumers.
The art of attracting HNW audiences
First: CRM and first party data. In luxury, this is typically a small data set; overall, luxury brands have been behind the curve to collect – and capitalise on – this type of data.
However, we know that both large retail and FMCG can drive upwards of 50% of their online revenue using well-informed digital performance programmes.
Not only this, but the barrier to entry is low; this is a far cheaper method to market than purchasing expensive media.
The value exchange
Is your data structure set to collect the right interactions and do you have enough value exchange in your marketing activities to support this objective?
A key element to help drive this should be built around the CRM programme, spending time and effort considering how to get audiences to participate.
The user experience
Then there’s the CRM programme itself.
Consider the UX to see how you can drive stronger conversions from your emails; are you getting feedback through your A/B testing?
Have you segmented your content and targeted at different archetypes with a structured programme of work and incentive (not discounts) to keep them engaged?
Second: broaden your horizons. While your traditional audience might be your staple of today, that isn’t your market for tomorrow.
As the research has shown, two key audiences need to be considered for longer-term growth:
- Aspirational wealth – people who are upwardly mobile – the captains of industry of tomorrow.
While they might not be a wealth audience today, they are the people who buy ‘one-off’ luxury as a sign of status. So what campaigns can be used to harness their potential today with an eye to longer-term growth tomorrow?
At Giant Leap, we spend significant time considering this audience, looking to understand their habits, creative needs, trends, music tastes and platform consumption. This is key to getting campaigns right to draw their attention and gain long-term value.
- International audiences – this sounds daunting to most luxury brands. However, to start, we don’t have to look at localising content into multiple languages, or learning how to operate in China to grow.
In the 2021 World Wealth Report by Capgemini, the population of HNWIs in the US increased by 12.7% in 2020, reaching a total of 3.8 million individuals with a combined wealth of $14.6 trillion.
With a well-structured programme, this is an obvious market for luxury UK brands to tap into. While the US is a large audience in its own right, we can cut out a lot of the noise through clever targeting and using high-profile events to help ‘news jack’ and create buzz.
Third: change the narrative. Consumers today are demanding brands to be more sustainable; they want high-quality products that offer them status.
This already leans into a lot of brands’ values and qualities, but luxury tends to make less noise around this.
The polar opposite of greenwashing, Positive Luxury independently certifies, based on scientific evidence, that your luxury brand operates in line with the highest standards of sustainability.
Certification that demonstrates both your brand’s understanding of your HNW consumers and its alignment with the values of tomorrow’s audience.
Consider how your brand can leverage your accreditations through organisations such as Positive Luxury. Utilising third party support can help elevate areas of your brand to drive resonance and value.
Driving this digital and cultural change will enable your luxury brand to target relevance to key audiences for long-term growth, securing revenue with data-led digital performance programmes.
Giant Leap Digital
We bring together industry leaders to help understand your brand, commercial and transformational challenges, to provide clear impartial advice and skills for your digital business.
Our strategic experts will not only help you to access your wealth audiences today, but we’ll challenge the status quo to ensure your brand is dynamic and well-poised to make a Giant Leap into the future of digital.