The financial crisis has impacted the luxury industry the most. But there is a distinct rebound visible in the luxury market. The world economy has grown bigger in absolute terms than it was prior to the crisis. The luxury brands and companies are once again chasing the so called luxury consumer who can buy a $4,500 bicycle for his dog. BCG Research has done a study and prepared a report that might help us better understand the luxury consumer.
The report concludes that ‘Luxury Consumer’ is not a homogenous group. They have divided the group into five categories depending on their income levels, behavior patterns and characteristics. The study was done in the markets of U.S., Brazil, China, Japan and Russia, and Europe. The report calls the first category as the Aspirationals. Typically they have an annual income of $85,000 in developed countries or $29,000 in emerging markets. They don’t spend big amounts individually but their numbers are large and together they account for a third of all luxury spending.
Rising Middle Class is the next category that has an income in the range of $170,000 or more in the U.S. and $55,000 in emerging markets. They contribute 25% of the total sales of luxury market. New Money Household is the third category with investible incomes of $1 million or more. They spend about $90 billion a year on traditional luxury. Old Money Households comprise of inheritors and far more frugal with a share of 7% of the luxury market. Beyond Money Household forms the last category. They are self made people who don’t believe in status spending.