MILAN — Luxury’s skyrocketing prices may have left aspirational consumers with window shopping as their sole comfort, but high- and ultra-high-net-worth individuals don’t seem to be skimping on their shopping sprees, undaunted by the dampened macroeconomic landscape.
Over the past 12 months, Europe, as well as Japan, has been swarming with UHNWIs eager to splurge on luxury products and, most importantly, experiences.
The latest “Luxury Insights” monitor compiled by tax-free shopping solutions provider Global Blue and luxury consultancy Agility Research, unveiled Tuesday here and called “The Era of Ultra Luxe Shoppers,” provides an identikit of this sought-after consumer cluster.
This includes individuals who spent 137,000 euros per capita in the September 2023 to August 2024 period, according to the report, based on the two companies’ combined data.
Spend on luxury goods and experiences, as well as premium and lifestyle brands’ products, has grown 26 percent for this demographic compared to 2019, the year picked for comparison to offset regional fluctuations in the aftermath of the COVID-19 pandemic and geopolitical instability.
Often secretive and hard to reach, the wealthiest — who represent 0.1 percent of tax-free shoppers, but account for 13 percent of tax-free shopping spend — are the holy grail for luxury companies aiming to secure loyal customers with deep pockets.
The Louis Vuitton flagship on Place Vendôme in Paris.
Dominique Maitre for WWD
What’s more, the global population of millionaires is expected to grow by 38 percent by 2027, Agility Research estimated, with UHNWIs in key markets — including the U.S., India and the U.K. — forecast to see a significant jump in their net worth this year, according to the same analysis.
China remains the only country with a less rosy forecast, but nonetheless is the biggest contributor to the UHNWIs’ cluster, making up 25 percent of total tax-free spend in the period, back at 2019 levels.
The American and Gulf Cooperation Council’s wealthiest have increased their spends significantly in the period, jumping 3.7 times and 2.8 times, respectively, compared to 2019.
The fifth-largest economy, India’s fast-paced growth is shaping a new generation of wealthy individuals with strong spending power, as the study highlights. In the September 2023 to August 2024 period their tax-free spend hit 140,000 euros, a six-fold jump compared to 2019.
This was driven by their likening of luxury purchases to means of quality-of-life enhancement, self-expression and confidence boosters.
“India is possibly what China was 20 years ago,” said Mathieu Grac, Global Blue’s vice president of intelligence strategy. “In 10 years India will lead on spending for luxury products.”
The five top destinations for UHNWIs to spend their money include three Asian spots — Singapore, Osaka and Tokyo — the latter two showing how Japan is reclaiming its position as a top shopping hub due to the weak yen.
“The proximity of Japan to their own market is a reason for resorting to the country,” Grac said with regards to Chinese wealthy consumers spending more locally.
Not only that: Luxury-shaming in China, a phenomenon whereby the wealthiest choose not to flex their spending power for fear of being demonized, is pushing them to spend abroad, explained Amrita Banta, managing partner at Agility Research.
“You don’t want to be seen at these shops, that’s why a lot of money is being spent outside of the country. In fact, China is the single consolidated luxury market where the share of overseas purchases is bigger [than the domestic one],” and represents 56 percent of total spend, she said.
By country, France and Italy continue to lead the list of top destinations, followed by Japan.
“At the current pace of growth, soon Japan will be bigger than Italy for luxury shopping, ditto for France,” Grac said.
However, in the current global scenario marked by travel where leisure and business purposes are increasingly blurrier, smaller resort destinations are on the rise. Hot spots such as Mykonos, Greece; Courchevel, France; Saint Moritz; and Ibiza, Spain are the fastest growing locations by luxury spend shares.
“This is a population you get to look at globally,” Banta said.
The Hermès store on Faubourg Saint Honoré in Paris.
Dominique Maitre for WWD
The study estimates that each UHNWI generally taps into nine brands, splurging the most money — about 91,000 euros — on watches and jewelry typically from a single, favorite label, followed by leather goods from two brands and ready-to-wear from as many as five brands, with a per capita spend of 39,000 euros.
According to the research, however, only two out of the nine brands have identified their UHNWI customers and added them to their VIC, or very important clients, lists of the top 1 percent of their clientele.
There’s a lot of untapped potential, especially as UHNWIs are eager to be part of that roster — and for more than one reason.
“All of these people are luxury VICs but they are also being pampered by the private banks, top tier travel and top tier credit card [operators]. You’re talking about people who are very well pampered and exposed, but within that demography they also enjoy their VIC status, especially as it ensures priority access to events. They love experiences that money can’t buy,” Bants explained.
These may be customers that one doesn’t necessarily need to lure in-store, but certainly has to treat with best-in-class retail experiences to cement a relationship and fall within that cluster of nine go-to brands each UHNWI is reportedly loyal to.
