Last weekend, hoi polloi rubbed shoulders with the rich and famous as they enjoyed Wimbledon’s best men’s singles final for years and witnessed Lewis Hamilton step onto the podium at the British Grand Prix. Both sports are associated with privilege and wealth, notoriously expensive to pursue and follow, yet they appeal to the masses too, attracting vast sums from sponsors and consumers alike. The popularity of Wimbledon and Grand Prix racing demonstrate how mass-market consumers often follow trends set by wealthier consumers.
The influence of the wealthy in the UK – where there are now just under 500,000 people earning more than 100,000 a year – is in part due to their swelling numbers, assets and spend.
This highest-earning segment has grown faster than those taking home salaries closer to the national average. The proportion of those earning more than 100,000 a year has grown at 10% a year for the past five years, compared with the 5% growth of those earning between 20,000 and 30,000 a year.
Not only are the numbers swelling, but so are their assets. The wealthiest 1% in the US holds 51% of the nation’s privately held equity – the top 1% holds more than the bottom 99% combined.
So, there are more wealthy consumers, whose assets are growing, meaning great news for financial services brands, but almost all other consumer brands are benefiting too. Ledbury Research, in conjunction with HM Revenue & Customs, has shown the highest earning 1% of the UK accounts for 21% of the country’s total hotel spend. This is across a range of brands; the wealthy do not exclusively buy from luxury goods brands.
The research also shows that across 12 spending categories, UK millionaires are most likely to regularly buy luxury car brands, but even then only 48% regularly buy a luxury marque. Instead, 27% sometimes buy luxury and 25% never buy a luxury car.
In other words, the wealthy are often just as likely to buy from non-luxury brands, which we can further demonstrate by examining millionaires’ favourite brands – their favourite airline may be British Airways, but easyJet ranks number five.
So, the wealthy are important to understand, given their numbers and spend across all categories. However, the research also shows that the wealthy are important when predicting future trends affecting the population as a whole.
First, the wealthy are more likely to be early adopters of larger consumer trends. Picking out earlier adopters is difficult, but they generally have a broad range of knowledge or interest in the subject area to pick up on any new developments and they need to have the financial means to try out the new product or service, which are typically expensive at the development stage.
The wealthy, by their nature, have the means but they also have the range of knowledge and interests. On the whole, they are better educated, travel more, read more and have more interests. The wealthy are more then twice as likely to be degree educated than the population as a whole.
Additionally, they are 40% more likely to take foreign holidays, 20% more likely to read a Sunday newspaper and 40% more likely to say they participate in a large number of activities and interests.
The wealthy buy from mainstream as well as luxury products, so their options arc is much larger than those of the population as a whole. As a result, once the wealthy have picked up a new product, brand or trend they are better at making refined choices as to its merits.
The wealthy have a broader influence than the general population. This can be seen by the fact that the wealthier people are, the more likely they are to say that friends often come to them for advice when buying new products. Not only are they influential among their peers, but typically their wealth and lifestyle are aspired to by the population as a whole.
In other words, the wealthy are more likely to pick up new trends, then refine their choices about them, which makes their behaviour predictive. The more recent examples range from the mobile phone, spas and health clubs to the rise of organic food – an expensive niche ten years ago, which is now a booming sector worth 1.2bn.
So, what are the key trends that are important to the wealthy now, and will influence the population as a whole over the next two to five years? Many of them will filter through each industry, but there are a number of broad themes.
Social responsibility is increasingly important to this group – this is seen from environmental friendliness to philanthropy. Another is the importance of health – expect to see the emergence of concierge-like medical services and other developments. Another is privacy and security, which can be both physical and electronic.
Brands should recognise that understanding the behaviour of the rich can predict future trends.
James Lawson, research director of Ledbury Research, contributed to this week’s Trends Insight