THE REWIRING OF THE AFFLUENT CONSUMER

affluent transactions in a post-recession world

FUNDAMENTAL SHIFTS IN AFFLUENCE
HIGH-NET - 14.9% - 19.5%
WORTH Population Value

ULTRA- - 24.6% - 23.9%

HIGH NET Population Value
WORTH

A SWEEPING CATASTROPHE FOR AFFLUENCE

CAP GEMINI/MERRILL LYNCH WORLD WEALTH REPORT 2009

ASIA-PAC DISTRIBUTION OF AFFLUENT CONSUMERS
SHIFTING

2007 FIGURES
14.2% DROP IN 2008.
H-K HARDEST HIT – HNWI
POPULATION DOWN 61.3%

CAP GEMINI/MERRILL LYNCH ASIA-PACIFIC WEALTH REPORT 2008

AFFLUENT ASIA-PAC NOT RECESSION-PROOF

ACTUAL DROP IN
WEALTH AND
CUSTOMER VALUE

CAP GEMINI/MERRILL LYNCH WORLD WEALTH REPORT 2009

2013 ASIA-PAC PROJECTED TO BE LARGEST AFFLUENT
REGION

CAP GEMINI/MERRILL LYNCH WORLD WEALTH REPORT 2009

 GLOBALLY, AFFLUENT TRANSACTION PATTERNS
SHIFTING
LUXURY SECTOR

GLOBAL
MINUS 10%
Luxury Goods Sales
Bain & Co: 2009 Projection

US EUROPE JAPAN
MINUS 15% MINUS 10% MINUS 10%
Luxury Goods Sales Luxury Goods Sales Luxury Goods Sales
Bain & Co: 2009 Projection Bain & Co: 2009 Projection Bain & Co: 2009 Projection

LUXURY CATEGORIES

APPAREL JEWELLERY & SHOES &

WATCHES LEATHER GOODS
MINUS 15% MINUS 12% MINUS 10%
Luxury Goods Sales Luxury Goods Sales Luxury Goods Sales
Bain & Co: 2009 Projection Bain & Co: 2009 Projection Bain & Co: 2009 Projection
 SOME PREDICTIONS EVEN MORE PESSIMISTIC

LUXURY SECTOR

AMERICAS GLOBAL EUROPE

MINUS 14.8% MINUS 21% MINUS 8.8%
Luxury Goods Sales Luxury Goods Sales Luxury Goods Sales
Altagamma: 2009 Projection Altagamma: 2009 Projection Altagamma: 2009 Projection

ASIA JAPAN REST OF WORLD

MINUS 2.3% MINUS 11.7% MINUS 2.1%
Luxury Goods Sales Luxury Goods Sales Luxury Goods Sales
Altagamma: 2009 Projection Altagamma: 2009 Projection Altagamma: 2009 Projection

LUXURY CATEGORIES
APPAREL JEWELLERY & WATCHES
MINUS 8.7% MINUS 12.3%
Luxury Goods Sales Luxury Goods Sales
Altagamma: 2009 Projection Altagamma: 2009 Projection
SHOES & LEATHER GOODS
MINUS 6.2%
Luxury Goods Sales
Altagamma: 2009 Projection

TABLEWARE PERFUME & COSMETICS

MINUS 15.4% MINUS 4.8%
Luxury Goods Sales Luxury Goods Sales
Altagamma: 2009 Projection Altagamma: 2009 Projection
BUT IT’S A WORLD PLAYING TO DIFFERENT SCRIPTS
“No longer are middle-class
consumers funding their
caviar dreams with a Visa
and a prayer…anecdotally
at least, there has been a
return to ‘common sense’, a
coldly comforting pride in
living more simply”
“THE RECESSION AND ITS IMPACT ON LUXURY” – ANN M. MACK
“The appetite for luxury
goods has been sated by
decades of excess in the
developed world, but in
emerging markets they’re
just getting started”
WHAT’S HAPPENING IN THE WEST WITH AFFLUENT
TRANSACTIONS…

“The downturn simply

accelerated a trend that was
already in place.”
CLAUDIA D’ARPIZIO – BAIN &
CO

“…the luxury market has been hit by a renewed

sense of consumer ethics, which has seen some
consumers turn away from the pamper and
luxuriate outlook to take on a less is more
approach.”
LUXURY MARKET LOSES THE BLING – SIMON
PITMAN
 ..IS JUST A DIFFERENT STAGE OF AFFLUENT
DEVELOPED
CONSUMPTION

ACTUALISATION
D
LUXE
TE HIGHER ORDER
IR EC
E R-D CONSUMPTION
Y INN CONSPICUOUS
NGL
R EA
S I ABSTENTION
INC MASS LUXURY REJECTION

SELECTIVE
EXTRAVAGANCE
EMERGING REFINEMENT

CONSPICUOUS
EMERGING

CONSUMPTION
RAMPANT
MATERIALISM
SHORT-TERM LONG-TERM ORIENTATION
ORIENTATION

ADAPTED BY “THE FUTURE OF LUXURY – VOLUME ONE” – ANTERIOR INSIGHT

STRONG SIMILARITIES WITH MILLWARD BROWN MODEL

A COGNITIVE ADVERTISING/COMMUNICATIONS CLUSTERING MODEL

 HYPOTHESIS - POSSIBLE TO OVERLAY OUR MARKETS
DEVELOPED

ACTUALISATION
LUXE
HIGHER ORDER
CONSUMPTION
CONSPICUOUS
ABSTENTION
MASS LUXURY REJECTION

SELECTIVE
EXTRAVAGANCE
EMERGING REFINEMENT

CONSPICUOUS
CONSUMPTION
EMERGING

RAMPANT MATERIALISM

SHORT-TERM LONG-TERM ORIENTATION

ORIENTATION

“ADVERTISING IN ASIA” – MILLWARD BROWN

 AT BEST SHOWS RELATIVE TENDENCIES – POSSIBLE
DEVELOPED
CLUSTERS

ACTUALISATION
LUXE
HIGHER ORDER
CONSUMPTION
CONSPICUOUS
ABSTENTION
MASS LUXURY REJECTION

SELECTIVE
EXTRAVAGANCE
EMERGING REFINEMENT

CONSPICUOUS
CONSUMPTION
EMERGING

RAMPANT MATERIALISM

SHORT-TERM LONG-TERM ORIENTATION

ORIENTATION

“ADVERTISING IN ASIA” – MILLWARD BROWN

DRIVING AFFLUENT TRANSACTIONS
what issues affect action in a post recession world
 COMMODITIZATION
MASS PRESTIGE DEBASING OF THE LANGUAGE OF AFFLUENT
TRANSACTION

NEED TO PROVE OR OWN DEEP, AUTHENTIC CREDENTIALS TO JUSTIFY MARGIN

 BLING OR STEALTH WEALTH
DETERMINED BY OUTER OR INNER DIRECTED MARKETS AND
CONSUMERS

THIS DISTINCTION BECOMING MORE APPARENT POST RECESSION

 AUTHENTIC LUXURY
SUBSTANCE WINS - HERITAGE, CRAFTMANSHIP, MATERIALS,
CREDENTIALS

LUXURY ONCE AGAIN FOR THE CONNOISSEUR

“THE BEST THAT THE MIND OF MAN CAN IMAGINE AND THE MOST SOPHISTICATED THE HAND
OF THE VIRTUOSO CRAFTSMAN CAN ACHIEVE.”
IN CLOSING, SOME THOUGHTS ON AFFLUENT TRANSACTIONS IN EMERGING MARKETS