According to the Luxury Marketing Council, the regular retail mass market experiences a 4% to 6% growth annually. Contrast those numbers to the annual growth of the luxury retail market, which has averaged growth of 20% to 32% each year for the years from 1998 to 2008. Forecasters predicted the luxury market would be more than $1 trillion per year in 2010. Of course, that didn’t happen because the economy did a belly-flop. However, according to the experts, the luxury market is catching its breath. Luxury is making a comeback.
Who is purchasing all these luxury products? There are 2.7 million customers in the United States with liquid portfolios of $1 million or more. Of those 2.7 million affluent customers, 1.2 million have a net worth of over $5 million. And their numbers are increasing at the rate of 100,000 per year. Add to that the fact that there are 215 million people in the United States over the age of 50 in 2010. Which means over the next 20 years $12 trillion in inheritance will change hands.
The rich are definitely getting richer.
However, even among the rich there is no equality. Marketing luxury products to Paris Hilton requires a different approach than marketing luxury to John Wayne. Paris was born with a gold spoon in her mouth, and John Wayne pulled himself up by his bootstraps. Both are rich. Yet they require different marketing tactics.
Of those getting richer, 10 million of them are self-employed women, entrepreneurs who are running and growing their own businesses. In fact, at least 20% of the people in the workforce are self-employed, and they control a whopping 70% of the wealth. Of those classified as ultra-rich, 50% are self-employed.
The U.S. Census reports provide much interesting information about the affluent self-employed. Seventy-five percent of self-employed individuals have no employees. Many of these one-person businesses are home-based, including professional, scientific, and technical services, construction, retail trade, personal services, repair, and maintenance.
Most self-employed businesses are “self-made.” Of those who run self-employed businesses with paid employees, 77% used their own money to start the business. This is compared to the 59% of the self-employed business owners with no employees. Of these “self-made” businesses, 79% are in the areas of accommodation and food service; 78% are in manufacturing, 74% in wholesale trade, and 72% in retail trade.
An astonishing 28% of all self-made businesses were started with no money. And 10% of all self-employed business owners used credit cards to start their company. Most of these affluent self-made people are highly educated, 23% having earned a college diploma, 17% had a graduate degree, and a whopping 64% had some college credit.