Experiential luxury now makes up almost 55 per cent of total luxury spending worldwide, according to a survey of approximately 1,000 wealthy people across eight developed and four emerging countries.
The research was conducted by the Boston Consulting Group (BCG), in collaboration with the International Luxury Business Association and the research firm Ipsos. Respondents were from France, Germany, Italy, Japan, South Korea, Spain, the UK, the US and the "Bric" countries – Brazil, Russia, India and China.
The report, Luxe Redux: Raising the Bar for Selling of Luxuries, found that aggregate annual spending on luxuries now tops $1.4trn. This includes more than $770bn on luxury experiences, close to $350bn on cars and the rest on personal goods such as watches, handbags and shoes. The shift from owning a luxury item to paying for a luxury experience is accelerating and many providers of high-end goods such as watches and handbags may soon miss out.
The survey also found that even in China, where personal luxury goods serve as a badge of status and success, experiential luxury dominates: the sector is growing at 28 per cent each year.
Jean-Marc Bellaiche, a BCG senior partner, said:
More and more luxury shoppers tell us they love experiences that make them feel pampered. But if luxury-goods players are to capitalise on the "experience" trend, they have to move quickly and forcefully. To date, very few have been successful in adding experiential elements to their offerings, websites, or in-store execution. While the lack of such elements may not yet be hurting the providers’ financials, it is a missed opportunity to boost performance.
Michelle Eirinberg Kluz, a BCG principal and co-author of the report, said:
All over the world, luxury shoppers tell us they’d rather spend more on experiences than on clothes and jewelry. They’ve gone from "all my friends and I wear Cartier" to "I cherish spa days with my friends". Although experiences are more intangible than an item, consumers consider them more memorable.