According to the Wealth Report 2019, the global Ultra-High-Net-Worth (UHNWIs) population is set to grow by 22% over the next five years. If you are not sitting up already, this means that an extra 43,000 people will be worth more than US$30 million by 2023, with existing UHNWIs all expecting their wealth to increase in the next 12 months.
Much of this growth is being driven by a new generation of UHNWIs, most notably Generation Z (born mid- to late-1990s) and millenials (born in the 1980s and 1990s), digital natives who are dramatically changing the luxury market and the way in which they search and purchase luxury goods. A recent report by Bain & Company noted that Generation Z and millennials will represent around 55% of the 2025 luxury market, contributing 130% of market growth.
Owing to this imminent transformation of the buying habits of the ultra wealthy (defined as those people with wealth in excess of €30 million) marketing departments at luxury brands are scrambling to remain relevant, in a market they may no longer understand. Those companies relying on traditional boutique experiences and exclusive store locations have to get online fast, and start pleasing digitally savvy customers, before it is too late.
So how are the online habits of the ultra wealthy changing? How can luxury brands capture the attention of UHNWIs online? I reached out to this elite audience, to find out what makes them tick, and which brands have managed to capture their imagination in this ever-changing market... and how they've done it.
Sophisticated omnichannel marketing
Omnichannel marketing, a digital marketing strategy that offers customers a completely seamless online shopping experience from the first touchpoint to the last subtly building your relationship with a brand, is now being cleverly used by the world’s leading luxury brands.
Four Seasons is a luxury brand that expertly leverages technology to engage with customers. According to Adrian Messerli, regional vice president and general manager of Four Seasons Hotel Shanghai, more than 60% of consumer touchpoints during the research and discovery phase are digital, making it paramount that luxury brands find a way to connect with these affluent individuals and offer a personalised online experience.
At Relevance, a Monaco-based digital marketing agency that is focused on helping business from across the world target UHNWIs, we have identified 26 touchpoints that UHNWIs go through when purchasing a yacht, from starting with a simple Google search through to the final purchase. Just four of these touchpoints were offline, demonstrating the power of digital in the world of luxury marketing.
Responsive digital platforms
Sophisticated digital platforms, from websites to social media channels, can now allow UHWNIs to manage the whole process of purchasing luxury goods online.
St Tropez House is a forward-thinking luxury brand that embraces the latest digital marketing strategies to allow UHNWIs a seamless digital experience from beginning to end.
A luxury villa rental company based in St Tropez, France, CEO Emilia Jedamska says she has seen a spike in the number of transactions that are done entirely online, by North American property tycoons, Middle Eastern royalty, and British financiers, for example, highlighting the shared behaviours of UHNWIs from across the globe.
“In the last five years we have rented villas to clients who never met us or even called us prior to closing transactions,” Jedamska explains.
“We have closed deals, worth more than a quarter of a million, over Instagram messages and emails. These new, ultra-wealthy clients usually define a particular search in Google, land on our website, check our Instagram profile, and then send an enquiry form. Our sophisticated digital content, including details of our villas, ultra-luxurious photos and slick drone videos, enables potential customers to view our offerings all digitally. Our team then takes over by email, securing an agreement and payment details.”
Hanushka Toni is a Monaco-based millennial who follows the world’s most covetable luxury brands across various digital platforms and social media channels, often making high-end purchases without setting foot in a physical retail store.
“All my shopping is online,” she explains. “From the food in my fridge to the clothes I wear, I do not visit physical stores unless I have a specific purpose. With two children and two businesses I just don't have the time. I think for people of my generation there is a real sense of trust when it comes to online retail - even for big ticket items. I have friends who buy all their luxury items like Hermes handbags and Rolex watches online. Our generation has complete confidence in the process and this is what’s driving growth for online luxury platforms.”
She adds: “Online is the gateway to any luxury purchase. For example, in Monaco’s crowded real estate market, where there are so many brokers, the user experience online is really important. The estate agencies that haven't invested in this area of their business are losing out. As a client I like to see all the available properties online first before speaking to my broker. It gives you a sense of control and confidence at the outset of the process.”
As a digital native, Toni also utilises a wide array of online tools across her businesses, including for her London luxury consignment store, Sellier Knightsbridge.
“Instagram has transformed the way we do business,” Toni comments. “All the items we sell are unique and our stock constantly changes so we love to share items with our customers as soon as they come in. It's really exhilarating to see the immediate response from clients all around the world. We have so many repeat customers who now feel like close friends - they live in areas where they don't have access to boutiques or designer shops, so our Instagram gives them access to items which they wouldn't otherwise have.”
Stepping out of our own reality
Peter Diamandis, Silicon Valley icon and founder of X Prize Foundation, and New York Times best-selling author Steven Kotler penned a book about technological innovations which will change industries like retail. In 'Abundance: The Future Is Better Than You Think' the authors discuss “shopping mode”, the concept of a client going shopping in person at physical boutique locations.
In shopping mode the client will wear AR glasses so as when they look into the shop’s display window they’ll see a digital and personalised selection on the mannequins based on their previous purchases or recent browsing history. The clothes could even be in the client’s sizes and new releases shown in the client’s favourite colour. The display windows of luxury boutiques have always been beautifully assembled, but now they could be even more enticing by being personalised to each client’s preferences.
Go In Store is an immersive live video commerce which connects in store staff to website visitors. For example, when working with Porsche they created a system where the concierge desk accepts the client’s live video call, finds out what they are interested in and connects them to a sales associate who could further assist by providing a live video tour of a specific model or simply answering questions. Having a more personal connection with live video calls between the brand and the client will strengthen the relationship and remove pain points for clients in their client journey. All that is needed is a high-quality phone and hand-held stabilizer for a more pleasant video experience.
Augmented reality and virtual reality are now key players helping luxury brands make conversions even for the highest ticket items. Emilia from St Tropez House says: "Last year we were contacted by Azerbaijani client who had very particular requirements for the villa (rental) however could not come over for a viewing. We did a 360VR presentation where you can “walk" around the house and the garden. Within a day the deal was finalised. 360VR answered all the questions of the clients."
Other novel digital tools luxury brands are utilising is the ability for clients to try on goods digitally. For example, Pinterest has recently released an AR tool for users in the US called Try On. This innovative tool is powered by the platform’s Lens visual search tool. Utilising the front-facing camera purchasers can, for example, try on different shades of lipstick from beauty retailers such as Sephora, while a swipe up feature takes them straight to the brand’s website should they wish to purchase. Gucci is another luxury brand embracing this type of technology, giving clients the option of trying on apparel such as hats and shoes on digitally. This combination of AR and ecommerce is set to revolutionise luxury purchases, making luxury transactions easier and more seamless than ever before.
Not many brands have AR filters with their products on Instagram, not even Gucci does, but Balmain has a filter on Instagram showcasing their B-Buzz bag. Users can choose between three different filters with each dedicated to one colour-way of the bag. Having the opportunity to play, explore and see the product digitally is one of the key touchpoints brands should incorporate for the modern wealthy client.
Experiential and emotional
According to a recent report by Hootsuite, more than one billion people use Instagram every month, highlighting its significant reach, with some 500 million using Instagram Stories every day. Of particular note is that 200 million users will visit at least one business profile daily.
Legacy luxury fashion brand Hermes offers playful content that entices users to engage with the brand on its Instagram feed. This artistic and abstract approach to content takes users on a journey of discovery, evoking a connection between the user and the brand. Hermes' Instagram posts make clever use of sound, enlightening the senses of users and forming a sense of nostalgia and familiarity.
Belmond, part of the LVMH group is a luxury hospitality and leisure company that owns a collection of luxury hotels, resorts, and timeless train and river cruise journeys. Across Instagram, this luxury travel brand posts high-quality stunning images and dynamic videos that capture the spirit of their bespoke travel experiences and the lifestyle that they encapsulate.
This user-generated approach encourages customers to share their journey, inviting users into the brand’s elite community, creating a sense of belonging and further boosting brand awareness. These aspirational images are accompanied with carefully crafted captions which truly bring the images to life. Further, Belmond shows their followers destinations and places they may not have been to, giving people a reason to follow their page. Belmond’s clever use of Instagram Stories take users behind the scenes at events, inviting followers into the brand’s exclusive world.
Another brand that expertly utilises Instagram is the luxury Parisian jeweller Chaumet. Their Instagram Highlights showcases people wearing the brand and includes a ‘swipe up’ feature so people can view the collection or individual items that these elite people are wearing. Additionally, there are beautifully illustrated Highlights accompanied by feed posts introducing a new item of jewellery to help people further discover the story of this luxurious brand.
TV moves online
One of the best ways to attract the attention of UHNWIs is through video, which sells a brand’s lifestyle and heritage. Video is portable, immersive, and measurable. YouTube has been the reigning platform for video since its inception, but IGTV is growing in popularity and usurping their lead. IGTV is an integrated platform within the Instagram app, where videos can be up to an hour long. These long-form videos are intermixed with regular image posts and short-form videos on the Explore page and appear on users’ feeds with short clips.
Google has now integrated YouTube results on their main search page. Video is highly interactive, encouraging users to go on a journey, through links to purchasing pages and websites. A well-executed video can offer an incredible return on investment, especially if a video goes viral. According to the online learning platform SmartInsights, video offers the highest return on investment, followed by photos, blog posts, texts and quotes, and infographics.
Superyachts are the reserve of the world’s wealthiest with yachts selling for up to €500 million and brokers are using ever increasingly sophisticated digital marketing strategies to attract this highly elite audience, including video. Fraser is a superyacht broker that embraces digital marketing strategies and utilises them to their fullest, showing their willingness to stay on-trend and give users what they want. Rather than being scripted and overly produced, Fraser’s video is often authentic, captured in the moment offering a true-to-life insight as to the luxury lifestyle the world’s most extravagant superyachts can offer.
Dior's YouTube channel is filled with exquisite behind-the-scenes views of their atelier and the magic their artisans and seamstresses create. You’ll discover videos such as Precious couture tailoring takes shape, Embroidering fields of gold and The meticulous art of lace appliqué. They also have dynamic interviews with Maria Grazia Chiuri, the creative director at Dior, where she speaks about her inspiration for collections and her personal values. There are videos of fashion shows, special releases of items and collaborations with artists.
The emerging power of podcasts
Podcasts are another marketing tool that luxury brands are utilising to reach UHNWIs. Indeed, podcasts are becoming a popular communications tool for high-end fashion companies, for example the high-end department store Saks in the U.S.
According to Saks’ senior vice president and general manager of beauty, jewellery and home, podcasts enable Saks to “tell a longer and more intimate story” offering the department store the “ability to connect with guests on a very personal level.”
Luxury brands keen to target UHNWIs are now experimenting with the medium too, including Chanel, which debuted a 3.55 podcast in-store in 2017, and Gucci, which in 2018 launched The Gucci Podcast.
Indeed, savvy marketers would be wise to explore this growing medium, especially considering that podcast listeners grew by some 14% in 2018.
The benefits of podcasts are numerous. The fact that all people need to do is “listen” makes Podcasts highly portable, with people being able to access them while on the move, from exercising to travelling, or even while at work. The fact that potential consumers can engage with your brand wherever and whenever, no matter what they might be doing, makes podcasts highly accessible and a unique, flexible tool for digital marketers.
Not only do podcasts give marketers another avenue in which to tap into a targeted audience, but brands which start their own podcasts can further build brand credibility, authority, and awareness, all of which can help a brand grow.
Traditional offline marketing techniques are no longer sufficient to guarantee success in the highly competitive luxury industry. In order to stay in the hearts, and wallets, of UHNWIs, exclusive brands need to follow the lead of these digital natives, utilising everything from IGTV to podcasts to make themselves heard, and seen.
Not even the most valued and successful businesses can afford to ignore this shift in culture, and need to embrace new digital strategies in these changing times, where the world’s wealthiest prefer to buy over VR rather than visit a physical shop.
The winners in the next decade will be luxury brands who are sufficiently nimble enough to adapt in order to keep up with the latest digital trends and the changing ways in which UHNWIs purchase luxury goods and experiences. The question remains though, which luxury brands will rise to the challenge? Time will tell.