30-day Challenge – Day 26
There are a lot of words and phrases to describe the typical luxury consumer. You could use: wealthy, affluent, moneyed, well off, well-to-do, prosperous, opulent, well-heeled, and a bunch of other colorful words. Though today’s luxe buyers can be segmented into different income and wealth categories, we have usually characterized luxury with the most affluent segments of society.
In my post entitled, The Pulse of Luxury, I discussed the definition of “affluent”: those earning incomes of $100,000 or more. For the longest time (or as long as I’ve been around – not too long), much of the literature has considered $100,000 as the “rich” threshold. Well, if you read that post, you will remember that I raised a question as to whether we need to keep using that description because it does not seem to take inflation into consideration or consumer sentiment.
Well, it seems appears that my concern has been somewhat adressed. The Wall Street Journal recently reported on Gallup’s recent poll, which shows that a $150,000 annual income or $1 million net worth serves as the new definition of rich.
There was some disparity in the definition depending on what sex you are or where you live.
Those who lived in cities said they would need twice as much ($200,000) than what those who live in towns or rural areas said they needed ($100,000). Men also say they need more than women: $150,000 compared with $100,000.
I think income and wealth are very obvious barometers for luxury consumption. However, I am ready to make a bet the stronger association with luxury in my generation will be with bespoke products and services. I stand by this prediction because of the great transparency and access that social media and e-commerce have enabled. The new tools that appeal to a more mobile consumer have made traditional luxury items somewhat of a commodity. In the future, I predict that having a pair of expensive red-bottom heels may be just as luxe as commissioning an affordable, but custom bracelet.
That’s it from me for today. I’d love to hear from you.
2 thoughts on “Please Define “Rich””
I had a discussion with Lincoln’s Group Marketing manager over this (he’s a family friend) and how Lincoln is repositioning itself to truly be identified as luxury good. Looking at the break-down of household incomes(http://en.wikipedia.org/wiki/Household_income_in_the_United_States) you find that 10% of the population resides in the $100,000-$150,000 bracket. Making in excess of $150,000 puts you in the top 5% of earners. Given the rising cost of education and I think people’s overall excessive spending habits on their children and themselves, incomes up to $150,000 may no longer be a segment which defines themselves as rich. It all depends on saving and spending habits. People in those brackets should be able to afford SOME luxuries, not ALL the luxuruies they want. When you get above $250,000, the top 1.5% of earners, then I think you get into a class of people that can pretty much attain any of the luxuries they want. I’d peg today’s rich figure at $150,000 and up.
Now, “wealth” is at another stratosphere in my opinion.
Awesome insight, Chris. Per the cost-of-living factor, you may want to read this article from Forbes. It talks about Forbes’ Cost of Living Extremely Well Index (CLEWI).