Global businesses are operating in a world of economic uncertainty and rising inequality, impeding the expansion of the middle class. These issues enhance the importance of high net-worth and affluent consumer segments to providers of luxury goods and services, as well as to businesses that normally target the middle classes. In this context, Euromonitor International has developed the Wealth Index to measure the potential of high-value consumption in 84 key countries to help businesses pinpoint opportunities.
The growing importance of wealthy consumers
In an era of global economic uncertainty, weak income growth and rising inequalities impede the expansion of the middle class and undermine its role as the driver of consumer markets (in a megatrend Euromonitor International identified as the Middle-Class Retreat). It is more important than ever before for global businesses to assess, identify and capture high net-worth opportunities.
Whilst ultra-High Net Worth Individuals (HNWIs), HNWIs and affluent consumers are already important target groups for providers of luxury goods and services, businesses that traditionally target the middle class will increasingly need to strategise to also attract wealthier consumers in order to succeed and grow in the face of the Middle-Class Retreat.
Despite their relatively small sizes, the ultra-high net-worth, high net-worth and affluent consumer segments are lucrative and growing. In 2018, these top three wealth segments accounted for 0.9% of the global adult population, but commanded a massive 46.5% of the global wealth. By 2030, they will expand to 1.3% of the global adult population and will command 53.5% of the world’s total wealth.
Why an index?
The potential for high-value consumption is dependent on many factors. For example, a country with a high number of HNWIs who only travel abroad for luxury spending is not really a country with market potential. The Wealth Index takes into account 21 indicators covering a wide range of factors, including:
• The three wealthiest consumer segments – their sizes in absolute and proportional terms, average wealth and share in the country’s aggregate wealth. The size and wealth of the wealthy and affluent population are indicative of a country’s high-value market potential
• “Inconspicuous consumption” by the richest 10% of households – “inconspicuous consumption” refers to spending categories that are more discretionary and less ostensibly material, such as health goods and medical services, education, leisure and recreation, or miscellaneous goods and services
• Other asset-related indicators, such as the proportion of homeowners without a mortgage, savings per adult, insurance and pension funding, are further included in the index, as these are also important measures of wealth.
Euromonitor International’s Wealth Index is designed to help businesses in a wide range of sectors, from luxury goods, premium FMCG and financial services, through to health and wellness, education and travel.
Top 5 performers: US in the lead
• Through to 2030, the US is set to remain in its position as the most important market for businesses seeking high-value opportunities. The country has the world’s largest wealthy and affluent population, and its richest households account for large shares of spending on categories that matter to businesses seeking high-value opportunities.
• Home to only 0.1% of the world’s population, Switzerland accounts for 1.8% of the global high net-worth population.
• The proportion of HNW and affluent population in total adult population in Hong Kong is the third highest in the world, in both 2018 and 2030.
• Singapore ranked fourth overall on the Wealth Index. However, it is a lucrative market for businesses seeking high-value opportunities as the city state ranked second in 2018 for “inconspicuous consumption” by wealthiest households. It also boasted the world’s highest savings per adult.
• Australia’s wealthiest households are among the world’s biggest spenders, even though its wealthy population had relatively low average wealth.
To learn more about our Wealth Index, key findings, detailed country rankings and recommendations for businesses, listen to the webinar The Global Wealth Index: How to Capitalise on High-Value Consumers or request a demonstration.