In 2014 the richest one percent owned 48% of the world’s wealth (US$ 127 trillion). It’s ten years later and they just keep on getting richer while the middle class is shrinking at an alarming rate.
Because affluence has been growing, you need a much higher living standard than before in order to be classified as ‘middle class’ today. Emerging economy populations, who made the middle class cut a few years ago, are falling behind again and businesses who cater for the average person on the street are suffering. The rich want – and can do – better and increasingly we see selective members of the middle class either joining the wealthy elite or slipping back to the bottom of the pyramid.
Top end restaurants in cities like New York, London and Cape Town have seen their profits soar and the changes span across sectors. Monica Minelo, Global Hospitality Head of the five star hotel chain BW, says that they have definitely been experiencing an increase in bookings for their luxury suites. “We are in the process of ‘luxurying-up’ some of our lower-end rooms in order to meet demand,” Minelo says.
Further evidence of the opposite trend is not hard to find. If you flip the coin, you’ll see that budget grocery retailer Shiwu recorded a 20% rise in sales in their annual report, released yesterday. “As a retailer or restaurant, if you’re not at the really high level or the low level, that’s a tough place to be,” says analyst Max Mitchell. “You don’t want to be stuck in the middle.”
New estimates expect global wealth to reach US$ 400 trillion by 2025. There’s more than enough money to go around, but it’s the distribution that will pose tough challenges for business and government in the future. The Marie Antoinettes of the world should take note – “Let them eat cake” is not the way to go.