TRADITIONAL SPHERE:Traditional consumption is about buying more and/or better stuff than fellow consumers. Which is by no means dead. In fact, expect the consumer arena in 2008 to still be about hundreds of millions of consumers who do want to consume more, who do covet all things bling and who do crave in-your-face brands.
If conspicuous consumption were ever to subside in mature consumer societies, then count on the emerging middle classes in China, India, Russia, South Africa, Turkey, Nigeria, Vietnam and Brazil to proudly take over the torch. In other words, count on multiple consumption and status arenas to develop simultaneously for years to come.
While the rise of the global middle class is as big a story as they come, the rise of high networth individuals (HNIs) has an equally significant impact on consumerism. Consider the following numbers, from the 2007 World Wealth Report by Merrill Lynch and Co. Inc. and Capgemini. The number of HNIs—individuals with net assets of at least $1 million (Rs3.94 crore), excluding their primary residence and consumables, in the world increased 8.3% to 9.5 million.
The number of ultra-HNIs—individuals with net assets of at least $30 million, excluding their primary residence and consumables, grew by 11.3% to 94,970. China’s HNI population grew by 7.8% to 345,000 people and Russia’s has increased by 15.5% to 119,000. Brazil (120,000 HNIs) and India (100,000 HNIs) also showed continued strength.
With so much (new) wealth and disposable income around the world, not only is there money to be made from selling premium goods, there’s also a constant need for redefining what constitutes luxury, for what constitutes status in bling-driven consumer societies. If millions have access to the same premium goods, to the same premium brands, these premium offerings lose some of their value, as their entire raison d’être was to offer something that others could not get access to. Scarcity is becoming less scarce and wealth is always relative, leading to actual ‘status despair’ among those who are by all means, financially well off.
So, in an arena that has become crowded with middle class and high net worth consumers, expect luxury goods to take on more outlandish forms and shapes, at ever-higher costs.
London’s St Pancras International railway station is now home to Europe’s longest champagne bar (96m).
Our most recent favourite example of status despair was Prince Alwaleed bin Talal bin Abdulaziz Al-Saud of Saudi Arabia buying himself a $320 million Airbus 380, which for another $100-plus million will be turned into a ‘flying palace’ with three bedrooms, private lounges, bathrooms, offices, a steam bath and exercise machines. But even here, commoditization is threatening the Prince’s purchase: Airbus actually expects to sell about 20 VIP versions of the A380.
TRANSIENT SPHERE: Attractive to consumers who are driven by experiences instead of the fixed—those who are driven by entertainment, by discovery, by fighting boredom, who increasingly live a transient lifestyle, freeing themselves from the hassles of permanent ownership and possessions.
We dubbed these consumers Transumers about a year ago, and the trend is still building.