One of the challenges in researching the Super Rich is that they are hard to research. In fact, there is very little research out there that has a significant sample size of households with $1 million + HHI.
At the same time, price of luxury goods continues to increase ($800 shoes, $1,500 handbags, $500 per night for a regular room at a five-star hotel, and $15,000 watches are the norm), and more wealth is accumulated in the upper echelons of the 1 percent, while everyone else treads water. With that in mind, luxury marketers would be well served to throw away perceptions of what the Ultra High Net Worth (UHNW) segment looks like and where they live.
Last August, we conducted an e-mail survey to a third-party database of private jet owners and received 215 responses. The responses provided some real insight into who these very rich families are and how they made their money. Most research shows 90% of today’s UHNW ($30 million +) households are self-made, many coming from middle- to lower-class upbringings. In other words, they didn’t grow up shopping for saddles with dad before going to the club or having afternoon tea with the designer who was going to do the home in the Hamptons. As an example, Starbucks’ Howard Schultz’s father was a truck driver.
While celebrity CEOs are known entities, most of the UHNW are not. Russ Prince, who has authored more than 40 books on the Super Rich, calls them “Driveway Celebrities” because the only place they are well known is with friends and family. Our research backed this up. While responses came back from Fortune 500 CEOs and a former Formula One racing champion, the typical sources of wealth were much more mundane.
One respondent, age 45, who keeps a base in Iowa but has several other homes, made his fortune starting a garbage collection business when he couldn’t get a job after graduating college. At the time, the city where he was living had cut back on collections outside its boundaries, so this unemployed entrepreneur got a truck and started picking up refuse in the unincorporated suburbs. He sold the business in 2008 to a conglomerate for nearly $300 million.
A recent New York Times profile of luxury skyscraper One57, where apartments run from $10 million and up, noted buyers included a vitamin business magnate from North Dakota, a farmer from Iowa, and the owner of car dealerships in Minnesota.
There were responses from CEOs of regional banks in Colorado and Alabama. We also had a supermarket magnate from Argentina, the CEO of an aerospace company from Taiwan, a division president of an energy company based in Indonesia, bankers from Zurich, Geneva, and Greenwich, Conn., plus a Beverly Hills surgeon. Closer to MediaPost’s audience was a former Proctor & Gamble brand manager who launched a digital marketing company in 1998 and sold it to Publicis in 2011 for $575 million.
The interesting thing about the Super Rich audience is they are virtually always on the move, taking more than 100 flights per year, including 11 international trips, and have on average three principal residences.
Researcher Wealth-X shows there are more UHNW families in Minnesota than Russia and more Super Rich in Wisconsin than Saudi Arabia.
Clearly the folks who have the financial wherewithal to buy luxury goods and services regularly today are more diverse than ever and come and go to more places than ever. Traditional single country and big market local media strategies that in the past may have been effective in reaching High Value Customers probably no longer fit.