Luxury Uprising: Why Global Retail and Travel Brands are Targeting America’s Wealthy
When the recession hit a few years ago, people and businesses cut extravagant expenses from their budgets completely, a natural reaction when cash flow is tight. But now that the economy is recovering, it looks like the popularity of lavish goods and services is increasing right along with it.
The Resurgence of Luxury
The luxury sector in the U.S. is rebounding in a big way, thanks to fast-growing industries like technology and energy. According to a recent article in the New York Times, these verticals are transforming cities like Houston, Dallas and San Jose, Calif., into hotspots for the wealthy; in Dallas alone, the number of high net-worth individuals has increased as much as 20 percent since 2012.
In fact, experts estimate that the U.S. in total is set to remain the wealthiest country in the world reaching more than $114 trillion in aggregate wealth by 2019.
Two industries in particular are benefiting from the resurgence of this wealth: retail and travel.
Luxury Goods and Travel are on the Rise
Retailers like Chanel and Salvatore Ferragamo are targeting America’s super rich due in part to their willingness to spend on designer clothes, shoes and jewelry. Plus, counterparts in markets like China and Russia, previous hotbeds for designer and high-end good sales, are cutting back for a variety of reasons including political and economic challenges.
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The travel industry is also benefiting from shifts in spending. International travel, often considered an extravagant expense, is cheaper than ever because of the shift in exchange rates. The euro in particular is down to about $1.15 – good for those of us looking to book a European vacation, but potentially not so good for international tourists wanting to head to the U.S.
Not only are we now more apt to spend on vacations, but also on business travel. The Global Business Travel Association estimates that business travel spending will reach $310.2 billion this year, up 6.2 percent from last year. Airlines in particular are taking advantage of this projected increase, offering personal services and even more benefits aimed squarely at attracting corporate travelers. Want your own sleep unit? Done. Need a Porsche Cayenne to transport you to your next flight? You got it.
But, like most trends, not everyone is sold on whether or not increased spending is here to stay. In fact, economists at Morgan Stanley say it’s simply unsustainable, citing the ultra-rich can only purchase so many personal aircrafts. In the meantime, it seems only fitting that luxury brands and luxury travel follow the money and the money appears to be focused back on United States once again.