A Tale of Two Millionaires: - Managers of Wealth

A Tale of Two Millionaires: The Best of Times for Private Banks to Look Beyond the Ultra-High-Net-Worth Market
15
Crafting a Core
Millionaire Offering
Private banks should take a page from the luxury retail
playbook and begin to think about their traditional
offering for the UHNW market as a high-end brand –
necessary, but not sufficient, for success. Private banks
could introduce the equivalent of complementary
brands to profitably serve Core Millionaires.
Tiffany & Co. serves as an instructive example. At the time of its 1987 IPO,
the jewelry chain had eight stores and was almost exclusively focused on
selling high-end jewelry. Starting in the mid-1990s, Tiffany began to develop
sterling silver and gold items priced below $1,000. Today, these
products drive nearly $1 billion in annual sales and represent almost onethird
of the company’s overall revenue. Tiffany has bifurcated its sales
model to generate profits in lower-priced merchandise, while maintaining
an exclusive buying experience for its wealthier clients. Today, a typical
Tiffany store has a dedicated area for high-end jewelry sales that is spacious
and located near the front of the store, with numerous salespeople.
Sterling silver products are located in a separate, smaller area with fewer
salespeople and are also increasingly sold online. Tiffany & Co. is not alone
in developing different business models to serve various client segments –
similar examples can be found in apparel (Ralph Lauren), automobiles
(Ferrari) and hospitality (Starwood).
What these consumer brands have in common is that they have expanded
beyond their core operating models in order to profitably meet the needs of
new customers. In contrast, private banks often attempt to serve Core Millionaires
with the same value proposition and service model designed for
UHNW clients.