As consumers become increasingly aware of their environmental impact, data and insights company Agility, Research & Strategy has shed light on the fact that this growing consciousness towards sustainability is reflected among high net worth individuals (HNWIs).
The Global Millionaires 2023 TrendLens™report, which gathered data and insights from HNWIs across Europe, the USA, and China, reveals that the British and French HNWIs are the most environmentally conscious when it comes to making luxury purchases.
Nearly 9 out 10 (87%) of UK HNWIs state that they would pay more for a sustainable brand, slightly less than the French at 90%. In comparison, only 67% of US HNWIs would pay more for a sustainable brand.
The Global Millionaires 2023 TrendLens™report also found that almost half (42%) of UK HNWIs have made pre-owned luxury purchases in the past year, compared to 22% in the US. Thus, highlighting a shift in purchasing behaviour towards responsible and sustainable consumption practices amongst the wealthy in Europe.
The study also reveals that half (47%) of UK HNWIs plan to make pre-owned purchases in the coming year. This is compared to 27% of UK HNWIs stating the same in 2022. Among the HNWIs planning to make pre-owned purchases, over half (51%) are looking toward pre-owned watches, with clothing and footwear being much less popular purchases when buying pre-owned.
The Agility, Research & Strategy Global Millionaires 2023 TrendLens™ report has also revealed insights across various luxury industries.
Investments and Income
Despite growth for all key European economies[2] expected to slow down in 2023, HNWIs across the continent appear unaffected, with over two thirds (69%) expecting to see their disposable income increase this year - and 70% expecting to see the value of their investments increase. Those in Germany are most optimistic with 79% expecting to see an increase in their disposable income, compared to a more measured level of UK millionaires believing the same at 64%. Similar results appear across US and Chinese markets also.
Travel
When it comes to travel, UK HNWIs are mapping out more foreign adventures than other millionaires around the globe. Nine out of ten (90%) of UK HNWIs plan to travel internationally in the coming year, with 1 in 5 (19%) of those hoping to head to the States, despite the strength of the dollar against the pound. The UK is also a popular destination among European, Chinese and American HNWIs, particularly for those in the USA with 20% placing the UK as their number one destination to visit in the next 12 months, which mirrors reports of North America choosing the UK as a leading investment opportunity.
Luxury Goods
Despite the high percentage of HNWIs planning to travel in the next year, airline tickets are not the main luxury category that HNWIs are planning to increase their year on year spend on. Interestingly, make-up has come out as the number one category that UK HNWIs intend to increase their spend on with over a third (34%) stating this, suggesting a re-emergence of the ‘lipstick effect’ phenomenon that has appeared during past economic recessions. We can see this shift through the comparative 2022 data which showed that 27% of British HNWIs planned to increase their year on year spend most on leather handbags, typically a more expensive good than cosmetics.
Comparatively, HNWIs in the USA and China predict themselves to increase their year on year spend most on luxury watches and fashion accessories respectively.
Retail
With TikTok booming among Gen Z and Millennials and reaching nearly 50 million active users daily, the Global Millionaires 2023 TrendLens™ report also shows that HNWIs in Europe, China and the US, across all age groups using it as a method of research and inspiration when it comes to luxury shopping. Over 1 in 5 (21%) UK millionaires used TikTok to gain inspiration for their luxury purchases. This number was even greater across Europe, with German HNWIs leading the charge with close to 4 in 10 (39%) using TikTok to get ideas about buying luxury items.
While this is the case, in the UK, in store browsing remains a popular method of gaining insights for luxury shopping despite the digital revolution, with 34% of HNWIs still choosing this as a method of inspiration. This number is higher than European counterparts such as German and Spanish HNWIs, however the USA HNWIs were most favourable of in store browsing with 53% doing so to plant the seed about purchasing a luxury item.
The report also investigated whether HWNIs across the Europe, China and the US valued co-branding from luxury brands such as the recent Balenciaga x Gucci collaboration that took place last year. It was found that nearly four in five (73%) UK millionaires chose to purchase co-branded luxury items in the past year, and the main driving force for this was the opportunity to experience the best of both brands. On average across Europe, two thirds (68%) of HNWIs showed a preference for co-branding, putting the UK just above the rest while China and the USA fell behind at 63% and 58% respectively.
Amrita Banta, MD of Agility, Research & Strategy comments, “At Agility Research & Strategy, we have been closely monitoring HNWIs across the globe for a decade and use our findings to help luxury brands understand the mindset of affluent consumers.
“Our Global Millionaires 2023 TrendLens™ report clearly shows that HNWIs factor in sustainability when considering luxury purchases and therefore brands lacking ESG credentials could see a downturn in sales.
“The report also affirms the power of the digital realm when it comes to driving purchases. And despite its correlation with the Gen Z demographic, luxury brands must not underestimate the rise of TikTok as we have found that the platform is a key source of purchase inspiration for HWNIs across several markets.”
Amrita Banta is available for interviews and commentary to talk to the recent findings from Global Millionaires 2023 TrendLens™ report as well as further insight on the mindset of millionaires and global luxury markets.
