You may assume that helicopter rides in the Alps or staying in private island getaways are the preserve of a few billionaires, but a new report from the Boston Consulting Group (BCG) has found that even more modest multi-millionaires are now indulging in expensive experiences. The report found that 55% of spending on luxury goods and services is now splashed out on ‘experiential luxury’, rather than the usual cars and handbags. Furthermore, the proportion of spending on these experiences has risen 50% faster than spending on luxury goods. Why settle for using ski lifts in Val d'Isère when we can just take the chopper to Alaska, darling?
The report, which surveyed 1,000 wealthy people in eight developed countries, found that out of a total of $1.4tn annual spend on luxuries, $770bn was on luxury experiences, $350bn on luxury cars, and the rest on expensive goods such as wristwatches, shoes and handbags.
Reasons for the shift to experiences vary but one explanation reckons that the consumers who drove the luxury boom in the 1990’s are now retiring, and don’t really want any more ‘stuff’. They’ll take the odd Aston Martin or a case of 1926 vintage Dom Perignon (don’t get them wrong), but now they’re more interested in ticking things off their bucket list…
BCG’s report also argues the shift is partly to do with changing social attitudes in developed markets. Whilst emergent middle classes tend to value ‘things’, more developed economies are full of people who place more emphasis on memorable experiences and fulfilling lifestyles than consumables.
Many major luxury brand owners already operate experiences for customers. Luxury brand giant LVMH (which owns Louis Vuitton, and the Moët champagne brand) already runs several private hotels in places such as the Maldives and is expanding the offering to include Oman and Egypt. But BCG, offering some earnest advice to the luxury brand powerhouses, says more needs to be done by other brands to cash in on the market shift.
One thing’s for certain: we MT staff will be miffed if we can’t have virtual golf in our hotel rooms next time we go to Hôtel de Paris for the Monaco Grand Prix weekend…
Click here to read Emma De Vita's 'What It Means To Be Wealthy' feature from the June issue of Management Today.