Engaging the Re-emerging Luxury Consumer · Wealthy Millennials and Real Estate • Millennials...

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Engaging the Re-emerging Luxury ConsumerMAY 21, 2015

Strictly Confidential: If you are interested in learning more, please contact: [email protected] www.ipsos.com/mediact

RE-EMERGENCE OF WEALTH

AFFLUENT MINDSET & BEHAVIOR

PERSPECTIVES FROM A LUXURY MARKETER

ROLE OF DATA DRIVEN MARKETING

Q&A

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Speakers

Stephen Kraus, Ph.DSVP, Chief Insights Officer

Ipsos

Ginette WrightVice President

Luxury Marketing

NRT

Jackie GrazianoDirector of Marketing

WealthEngine


38 Years of Tracking Affluent Lives & Luxury Interests

N=12,747 Affluents (adults 18+ with $100K+ HHI)Population: 67.5 million adults

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800.933.4446

The Re-emergence of Wealth


Affluents Lead Income Growth in Bifurcating Economy

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Top 5%

Top fifth

Bottom fifth

Second fifth

Third fifth

Fourth fifth

Source: U.S. Census, Current Population Survey https://www.census.gov/hhes/www/income/data/historical/household/

Average household income (2013 dollars)

Average $322K+88% from 1967


Wealth Concentration Continues to Grow

18%21%

69%74%

2010 2013

% of HH

% of NetWorth

Affluents ($100K+ HHI)

4% 4%

43%48%

2010 2013

Ultra Affluents ($250K+ HHI)

Source: Ipsos analysis of Survey of Consumer Finances

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The Affluent Mindset: The “Perfect Storm” of Optimism


Context: Luxury Growth Fueled by Rising Optimism

20%

40%

60%

Jul2009

Jan2010

Jul2010

Nov2010

Feb2011

Jun2011

Oct2011

Feb2012

Jun2012

Dec2012

Aug2013

Apr2014

Apr-15

51%Optimistic

26%Pessimistic(trend line not shown)

Recession “officially”

ends

Bi-partisan budget

agreement

DOW <11,000

Debt ceiling crisis

DOW breaks 13,000

Pre- Presidential election uncertainty

Source: Ipsos Affluent Barometer; among $100K+ HHI

Three segments consistently lead: • Millennials• Men• Ultra Affluents

% very/somewhat optimistic about the U.S. economy


2005-2007 2008-2009 2010-2012

A Decade of Luxury Evolution

ASPIRATIONALLUXURY SHOPPERS

STEALTH WEALTH & LOGO SHAME

ULTRA AFFLUENTSFUEL LUXURY MINI-

BOOM


Perfect Storm of Optimism: Expecting a Better Micro & Macro Year

2013 2014 2015

AFFLUENT POPULATION GROWTH

+6% +8%

Affluentsexpecting a better year

personally, and economically.

They want “more”

AFFLUENT MINDSET Restarting the engineExpansion without

dilution

COMPARED TO LAST YEAR…

“This year was an improvement for me

personally”

“This year was an improvement for the

economy and country”

KEY INDICATORS

Increase in income, leisure spending, travel, charitable contributions, experiences, influence

Population grew while maintaining individual-

level growth seen in 2013


Easing Pressure Continues Reshaping Mindsets, Consumption

Personal growth

Self-worth, accomplishment

Belonging, love, family

Safety, steady job, insurance

Food, water, shelter, air, warmth

SELF-ACTUALIZING

ESTEEM

SOCIAL

SECURITY

PHYSIOLOGICAL

MASLOW’S HIERARCHY OF NEEDS (1943)

Meaning

Bucket lists Hobbies & interests

Leisure/spare time

Entertainment

Experiences

Luxury

Food & beverages

Future-focus

Self-discovery


“More Aggressive” Investors Outnumber “More Conservative”

17%

23%

8% 7%

Affluent Ultra Affluent

More aggressive

Less aggressive

ENTERING 2014

21%24%

10%

4%

Affluent Ultra Affluent

ENTERING 2015

Investment mindset relative to previous year

Source: Ipsos Affluent Barometer; among $100K+ HHI


Travel Interests Grow with the Rising Tide of Economic Growth

23%

29%31%

16%

10%

14%

Affluent Ultra Affluent Affluent Millennials

More Less

PLANNED VACATION/PERSONAL TRAVEL VS. LAST 12 MONTHS

70%These days, I am making a greater effort to enjoy my spare time (60% in our 2014 POV on The Growing Leisure Economy)

Source: Ipsos Affluent Barometer. Among $100K+ HHI


Which would you rather have?

48%52%

TWO EXTRA WEEKS OF

VACATION TIME?

TWO EXTRA WEEKS OF

SALARY

Was 60/40 salary in 2014



“LUXURY IS IN THE EYE OF THE BEHOLDER”

15

“THE DEFINITION OF LUXURY TODAY IS NOT THE SAME AS

IT WAS 5 YEARS AGO”


Luxury Is Idiosyncratic & Evolving

86% 63%


Highest quality

Excellent designExcellent reputation

Unique

Indulgence

Long-lasting

Splurge

Designer branded

ExclusiveExpensive

Sophisticated

Rare

RefinedPrivileged

One-of-a-kind

Status

Pretentious

Heritage

TREND

RISING

FALLING

60%40%20%

% ASSOCIATING EACH TERM WITH ‘LUXURY’Source: Ipsos Affluent Barometer. Among Ultra Affluents

Leveraging the New Language of Luxury


Affluents Shop Widely Across the Retail Spectrum

eBay, Etsy, Ulta

JCPenney, Barnes & Noble, Sears


The Home Central to Affluent Financial & Emotional Lives

Affluent($100K+ HH)

Ultra Affluent

($250K+ HHI)

Wealthy ($500K+ HHI)

% owning home 93% 94% 93%

Average value of principle residence $405K $667K $970K

Home as % of net worth 41% 31% 25%

Average past year home/garden spend $7,782 $15,092 $21,385

Entertain at home in a typical month 73% 78% 75%

“I enjoy presenting my home to others” 50% 56% 60%

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Perspectives from a Luxury MarketerGinette Wright, NRTLuxury Real Estate


NRT

• Nation’s largest residential real estate brokerage company

• 700 offices

• 5 brands

• $157B in sales volume


NRT: Luxury Real Estate Trends (transactions $1,000,0000 and higher)

2014:• Biggest YOY Gains in the top 1% of the market• U.S. prices still below international real estate capitals like London and Hong Kong • 3 newcomers to the $100M club* - ultra-wealthy consumers continue to push the

envelope• “Luxury” is responsiveness, discretion and access to listings that are not publicized• Millennial buyers playing a bigger role

2015:• 4 sales over $40M• Greater strength of U.S buyers in the top 1% of the market • Lack of inventory continues to affect sales growth and frustrate buyers in lower

price points

*industry wide


Wealthy Millennials and Real Estate

• Millennials have stronger interest in buying and on average spend more ($7.8M vs $1M)

• Rise of live anywhere trend has contributed to growth in markets like Vail, Park City and Aspen

• Differences in behavior (compared to boomers) forces sales professionals to evolve


Challenges: Reaching Ultra-Wealthy Consumers

• Consumer research is limited

• Traditional media presents challenges

• No universal metric for segmenting UHNW consumer

• Prospecting


Data-Driven Marketing Plays a Role

• Personalization: Profile (wealth, demographics, lifestyle, business, charitable), segment, and customize the experience

• Prospecting: Profile target clients & find look-alikes

• Circle of Influence: Using connections to find other HNW/UHNW target clients


Quote of the Day

Getting an advantage from data in marketing is art and science.“ ”


CO

NSU

LTIN

G &

PR

OFE

SSIO

NA

L SE

RV

ICES

ANALYTICS & MODELING

How WE Does It

ONLINE ACCESS INTEGRATION API

SCREENSEARCH CIRCLE OF FRIENDS WE PROSPECT

DATA


USE THE WEALTH DATA TO PERSONALIZE

SALES, MARKETING AND ENGAGEMENT

STRATEGIES IN REAL-TIME

WealthEngine API


Wealth Insight Improves…


REAL ESTATE / BUYER VERIFICATION

NAME

SHOWING LIST

⟩ Improve sales efficiency

⟩ Enhance marketing efforts

⟩ Improve buyer satisfaction

EMAIL ADDRESS

PHONE

ADDRESS

RESERVATION

GUEST WEALTH PROFILE

Prioritize response based on wealth: Segment future

mailings

P2G

1|0

Effectively manage real estate appointments with Guest Wealth Profiles

from WE

HOME VALUE

WE API NET WORTH > $5M

INCOME > $500K

REAL ESTATE > $2M


Key Takeaways

• Post recession affluence has rebounded

• High luxury consumer confidence but changedexpectations

• Authentic experiences are mandated

• Growing responsibility for luxury marketers to leverage data driven marketing

• Marketing is what you say. Value is what you do.


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Engaging the Re-emerging Luxury Consumer · Wealthy Millennials and Real Estate • Millennials...

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