Feedback from UHNWIs suggests luxury industries will need to adapt how they cater to high-yield customers in these challenging times.
Businesses in the luxury products and experiences market will need to adjust how they operate and market to ultra-high-net-worth customers if they hope to maintain their patronage in a world with COVID-19. This is a key takeaway from recent surveys of customers and brokers conducted by Northrop & Johnson, the leader in luxury yachting and lifestyle.
“We asked our very busy and affluent customers to share their feedback on a broad range of topics, including how COVID-19 is impacting their lifestyle and what they forecast for the foreseeable future, says Daniel Ziriakus, President and COO of Northrop & Johnson. “The message is loud and clear, UHNWIs either plan to decrease or avoid activities that would increase the risk of exposure, at least until COVID-19 has been mitigated.”
In every category except online shopping, home entertaining, private aviation, and yachting, over 50% of Northrop & Johnson customers said they plan to decrease or completely stop their usual activities until COVID-19 is mitigated. Those categories include flying on commercial airlines, dining out at restaurants, shopping at malls, department stores and small boutiques, attending live events, attending conferences and conventions, and staying at hotels/resorts.
“While UHNWIs represent a small segment of the market in terms of population, the purchasing power of these individuals and the businesses they control can have a significant impact on the industries where they typically spend hundreds of billions of dollars annually,” adds Ziriakus.
Key findings from the survey include:
- 68% will decrease or stop entirely attending sporting and live entertainment events, a blow to professional sports where up to 50% of stadium revenues come from luxury boxes and premium seating
- 65% will reduce travel via airlines, eliminating a key source of first and business class passengers, perhaps massively changing airline economics
- 56% expect to decrease or stop entirely dining out at restaurants, one of the hardest-hit segments economically
- 57% will cut visits to shopping malls and 52% will stay away from small boutiques
- 57% will cut back attendance at trade shows and conferences, a $1.03 trillion industry
- 57% will entertain less or stop entertaining in-home, a potential blow for charities who often use UHNW residences for fundraisers
- 53% will decrease stays at luxury hotels and resorts
Winners include providers who sell online and travel options that are perceived to be safe, such as private jets and yachts.
- 55% will increase online shopping, pushing retail operators to rethink how they do business with their highest spending clients
- 39% of UHNWIs expect to increase use of private jets
- 77% of customers who had yacht charters booked for 2020 said they will move forward or are taking a wait-and-see approach
In addition to insights on spending by this UHNW audience, the new report also contains in-depth information on preferences and trends in yacht charters and ownership, as well as countless insights that will be of broad interest to those who track affluent behavior.