ET Insider – January 22, 2013
More than ever private jet travelers, or elite travelers as we like to call them, are the most lucrative market for luxury brands and service providers.
With readers spending $10,000 per hour to fly privately, the over 600,000 readers Elite Traveler reaches each issue provide you a great way to make sure your message is in front of consumers who have the money to be good customers. With our Asia Edition, Elite Traveler Superyachts, our over 60 Elite Traveler Destination Guides at Elitetraveler.com, our global database of private jet owners and our award-winning custom marketing team, we would welcome the opportunity to be of help to you in making sure you get a bigger share of our reader spending. With a Net Worth of more than $25 trillion, I hope you will agree elite travelers should be a key target for your marketing!
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“Recently we had an American customer who walked in with a copy of Elite Traveler and booked two suites that been directly featured in the magazine. The value of the booking was in the region of $200,000.” – Tony Potter, Corinthia Hotels
In this edition:
1. A Lesson for Luxury Marketers from the King of Diamonds: It Only Takes a Few of the Right Customers 2. Luxury Society: The Rich Keep Getting Richer 3. The Rise of the £6,000 GBP Dress
1. A Lesson for Luxury Marketers from the King of Diamonds: It Only Takes a Few of the Right Customers
Recently I was chatting with a few people about how much money there is to be had with the 1 percent – or even more to the point, the upper half of the one percent. Various research by the likes of Citi Private Bank value the total net worth of the world’s Ultra High Net Worth (UHNW) consumers at over $40 trillion. As a comparison, the much talked about U.S. debt is $16 trillion.
Now marketers may ask, are there enough of these UHNW consumers to impact my business? According to Singapore and New York-based researcher Wealth-X, there are over 185,000 UHNW families worldwide based on a threshold of at least at $30 million net worth, excluding primary residence. At Elite Traveler we call them our readers, as the numbers closely dovetail with the core users of private jets.
So. back to the King of Diamonds, Laurence Graff. Last year his eponymous company started to prepare for an IPO, providing a first-time look behind one of the luxury industry’s most amazing rags to riches stories.
In 2011, Graff generated total sales of $756 million, with one single customer contributing $100 million – yes $100 million from one customer.
More interesting, Graff’s top 20 customers contributed about 50 percent of sales.
Take away Customer Number One and the Next 19 customers bought about $275 million in jewelry and watches from Graff in a single year. That works out to about $14 million per customer for Number 2 to 20. To put this in perspective, a Prince & Associates research study of Elite Traveler readers shows a spend per household of nearly $250,000 per year on jewelry and $150,000 on timepieces – which, when compared to the Graff data, underscores how UHNW consumers can really move the needle for a luxury company.
How would you like 20 more customers like your 20 top customers? We know where to find them! They read Elite Traveler on their private jets! Keep in mind Elite Traveler has 411,000 readers each issue who make over $1 million Household Income per year, including many who make much more. It’s the highest number of UHNW readers of any magazine in the world!
“Elite Traveler is a key media source for us with well over $200,000 in sales we can track directly back to our ads in your magazine over the past year.” – Charles Krypell, Owner, Charles Krypell
2. Luxury Society: The Rich Keep Getting Richer – Here are some sound bites.
The descriptor of former Reuters reporter Chrystia Freeland’s book Plutocrats tells it all when it comes to figuring out who the heavy users of luxury goods and services are: The Rise of the Super Rich and the Fall of Everyone Else.
Paris based B2B website Luxurysociety.com recently published a review of Freeland’s book and here are some highlights:
They’re their own global community: Glenn Hutchins, founder of private equity firm Silver Lake, tells Freeland: “A person from Africa who runs a big African bank and went to Harvard has more in common with me than he does with his neighbors, and I have more in common with him than I do with my neighbors.”
The Rich are Getting Richer Everywhere: In the early 1970s, the top 1% captured 10% of U.S. income. Today the very same group captures about 33%. And the trend is not limited to the US. A 2011 OECD report showed similar changes worldwide including countries such as Sweden, Finland, Germany, Israel & New Zealand, all generally not considered hotbeds of cutthroat capitalism.
Don’t Bet on Aspirational Consumers Coming Back: Recovery numbers in the US are distorted according to Alan Greenspan by “a significant recovery among high-income individuals, large banks and corporations…the rest of the economy, including small businesses and a very significant amount of the labor force is still stuck and struggling.”
Think of the Super Rich consumer on a Global Basis: A 2005 Citibank memo to top clients explained “In a plutonomy there is no such animal as ‘the US consumer’ or ‘the UK consumer’ or ‘the Russian consumer.’ There are rich consumers disproportionate in the gigantic slice of income and consumption they take. There are the rest, the non-rich, the multitudinous many, but only account for a surprisingly small bit of the national pie.”
As illustrated in the Item One about Graff, they have big spending power: David Rubenstein, not a household name, but estimated to be worth nearly $3 billion, is an example. He tells the author how one afternoon he noticed the last privately held copy of the Magna Carta was being auctioned by Sotheby’s.
Struck by the idea the document wasn’t just the founding document of Britain’s constitutional monarchy, but the US democracy too, he decided there should be a U.S. owned version. He bought it for $21.3 million. When he got home, his wife asked him, “What did you do today darling?” His answer: “I bought the Magna Carta.”
What is your company’s UHNW marketing strategy? Let me know and let us know if we can help you achieve your goals by targeting our readers as they relax aboard their private jets and yachts.
“From the Summer Edition of Elite Traveler Superyachts, as well as the Asia Edition including the May/June issue we are happy to report sales ($437,000) of the timekeepers we advertised” – Patrik Hoffmann, CEO Ulysse Nardin
3. The Rise of the £6,000 GBP Dress
From The Independent, the price of ready-to-wear dresses is reaching new heights; add the handbags for $2,000 and heels for $1,000, and it is an Elite Traveler world when it comes to shopping.
“For spring 2013, the luxury-fashion site Net-a-Porter predicts “the rise of the £6k dress”. That’s a dress that costs £6,000. They are not wedding dresses, or even red-carpet gowns: some are for cocktail parties; others might even qualify as daywear (depending on how razzy one’s social diary is before sundown). And they sell – if not in industrial quantities, then at least enough to warrant buyers placing larger orders than they used to.
“There has always been a market for intricately made [and appropriately priced] dresses,” explains Judd Crane, womenswear buyer at Selfridges, which has increased the number of £4k-plus pieces that it buys as its average prices have crept up overall. “The aim is to elevate the shopping experience. There is an appetite for those products within an influential market.”
Of course, designer clothing has always been expensive. But the profusion of newly made (multi) millionaires in developing economies has meant that, despite what Western markets see as strained times, luxury labels still have a customer base for even the most exclusive of garments and, for that matter, price tags.
“It’s a dream that clients are responding to these pieces because it means we can work with designers on incredible pieces that really push the boundaries,” Natalie Kingham says.
This audience accounts perhaps for some of the more high-octane numbers, such as Matthew Williamson’s beaded Aztec minidress (£5,695, Matches) or the Alexander McQueen lattice corset dress (£7,990, Selfridges), but there are more and more customers spending these sorts of figures on restrained and minimal pieces, too. All you need to do is look at the speed with which understated Céline collections fly out of the shops.
The upper end of the dress market in Harvey Nichols is very much inspired by the idea that these pieces are classics rather than fripperies. The tried-and-tested Stella McCartney illusion dress, as worn on the red carpet by Kate Winslet and Heidi Klum, comes in at £2,810; Riccardo Tisci at Givenchy’s long monochrome, one-sleeved dress is £3,200; and a snakeskin-print georgette shirt-dress by Valentino tips the scales at £7,705.
“It isn’t necessarily about being ‘showy’,” Avril Mair adds, “though that’s inevitably what some customers want. If you remember that a Chanel suit can cost £5k, it’s a similar investment. You’re going to have it for ever.”
Well, somebody will. But it isn’t likely to be one of us.”
Likely readers of Elite Traveler 🙂
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