Experiential luxury sales outperform goods sales

Dubai: Experiential luxury now makes up almost 55 per cent of total luxury spending worldwide, with year on year sales of experiential luxury having grown 50 per cent faster than the sales of luxury goods, according to a recent study.

The numbers are a clear indicator that there is an increasing shift in consumers wanting to experience a luxury rather than owning it, which is reflective of the recent growth rates for experiential-luxury spending worldwide, Boston Consulting Group (BCG) stated in its report titled ‘Luxe Redux: Raising the Bar for Selling of Luxuries’.

The global consulting firm, along with market research specialist, Ipsos, and International Luxury Business Association, surveyed approximately 1,000 affluent people in eight developed markets (France, Germany, Italy, Japan, South Korea, Spain, the UK, and the US) and the four emerging Bric countries (Brazil, Russia, India, and China).

Results showed that aggregate annual spending on what those consumers described as luxuries now tops $1.4 trillion (Dh5.14 trillion). This includes more than $770 billion on luxury experiences, close to $350 billion on luxury cars, and the rest on personal luxury goods such as watches, handbags and shoes.

“All over the world, luxury shoppers tell us they’d rather spend more on experiences than on clothes and jewellery. They’ve gone from ‘all my friends and I wear Cartier’ to ‘I cherish spa days with my friends’,” explains Aldous Mitchell, Principal at BCG Middle East. “And although experiences are more intangible than an item, consumers consider them to be more memorable.”

The GCC, however, is yet to realise its full potential as a luxury tourist hub, points out Klaus Kessler, senior partner and managing director at BCG’s offices in the Middle East. “The ever increasing importance of experiential luxury puts the GCC countries in a very good position, especially in terms of their actively developing tourism offerings,” he said.

Echoing his thoughts is Mitchell who said that the GCC is poised for substantial growth in the experiential luxury sector, “not necessarily in lieu of luxury goods, but as a natural progression from ownership”.

“For instance, local luxury sports car buyers want more than a showroom sale and ownership of the vehicle; they want to test the car on an F1 race track, guided by celebrity drivers and use the opportunity to network with their peers. Then, when they travel abroad, these consumers want access to a luxury car fleet of the same quality as their own vehicles, including airport greetings, concierge services and VIP tickets to motorsport events,” he explained.

According to Kessler, leveraging the uniqueness of recent five-star-plus hotel developments, luxury spas, luxury malls and upcoming cultural heritage assets will allow the GCC countries to compete successfully in these market segments.

“Therefore, the global trend towards experiential luxury is of significant relevance to GCC service providers,” he said, adding that in addition, local units of international luxury brands can expect continuing growth in sales of physical luxury goods to inbound luxury travellers. “Dubai’s luxury tourist flow from Russia, China and Western Europe during the winter months is a strong example of this influx,” he points out.

[Rohma Sadaqat is an intern at Gulf News]