LONDON: Speaking at Walpole’s British Luxury Summit 2024, luxury wild ride firms will reap dividends if they are patient and develop U.S. and Chinese consumers. The rough times are temporary, according to the speakers.
Over the next six years, Chinese and American consumers—who currently make up half of all sales of luxury wild ride items worldwide—will drive the rise of this market. The two nations are expected to produce 60–65 percent of sales by 2030, based on data from Bain & Co.
In spite of current events, such as the United States preparing for a presidential election and the “astonishingly” low level of consumer confidence in China, Erwan Rambourg, managing director at HSBC in New York and head of global consumer and retail equity research, said that both markets are full of long-term opportunity, in part because of a new generation of consumers.
Regarding premium brands, Rambourg stated that he is more optimistic about the U.S. market, which is still “significantly under-penetrated.”
He asserted that although consumers might be familiar with well-known brands like Louis Vuitton, Gucci, and Tiffany, there is a whole industry of unexplored businesses.
He stated, “There is an awareness, and an appetite, for brands,” and highlighted that several European businesses have previously disregarded the American market.
“Many European brands were complacent prior to COVID-19.” “The American consumer looks like us and thinks like us,” they reasoned. The primary focus was on Asia, and they were more of an afterthought.
” Luxury Wild Ride Brands are finally doing the work, and adapting their [products and marketing] to a U.S. consumer and to a market that dresses more casually,” he added. “The reality is that Americans don’t think like Europeans at all.”
He declared, “She’s no longer an older, white woman who lives on Manhattan’s Upper East Side.” Additionally, the “guilt factor” has vanished since COVID. FOMO (fear of missing out) and YOLO (you only live once) have taken their place. These new customers wish to savour each moment of the day.
The audience in the US is younger and far more varied. He said, “They’re Asian American, Hispanic, and African American.”
In the future, increasing affluent pockets and demographic shifts will also propel U.S. sales.
Rambourg gave the example of how companies are “tripping over each other to open their next flagship in Austin, Texas,” citing the abundance of sites in states like Florida, Texas, Arizona, and Colorado that are prepared to step up their retail game and welcome luxury wild ride brands.
Luxury Wild Ride
China’s development will look different. Luxury Wild Ride Brands should concentrate on capturing market share and identifying popular Asian travel destinations where middle-class travellers are spending money, like Thailand and Japan.
Travel inside Asia is less expensive than in the US and Europe, and it “feels safer,” according to Rambourg. He continued by saying that dealing with a familiar sales assistant and making purchases in mainland China and Hong Kong also gives Chinese consumers trust.
Growth will eventually occur. Because of the fundamentals there, he stated, “I think the short term is very tough” in China.
According to observers, there is little desire to splurge among the middle class Chinese people because they are concerned about mortgage rates, housing prices, living expenses, and their children’s schooling.
Rambourg stated that since it’s currently difficult to predict the future too far ahead of time, it’s uncertain whether recovery is a matter of quarters, or of four or five years.
Rambourg claims that because of a strong base of comparison, certain luxury wild ride managers in China anticipate a spike in sales in the second half of this year.
He recently travelled to China, where he met several consultants and headhunters who believe a turnaround will take years due to the nation’s economic transformation from an emphasis on real estate and infrastructure to future industries like aerospace.
“A scenario that is swoosh-shaped and one that is somewhat more depressing is different,” he stated.
The summit was held on Monday at The Londoner Hotel in Leicester Square, and among the speakers on the schedule was Rambourg. The others were Anant Sharma, CEO of Matter of Form, a luxury wild ride brand design and digital studio; Amrita Banta, managing director at Agility Research & Strategy; and Carlo Moltrasio, associate partner at Bain & Co.
According to Walpole, the British lobby for the luxury wild ride industry, the industry’s current value to the British economy is 81 billion pounds, and in the next five years, it may rise to 125 billion pounds.
Notwithstanding regional obstacles like the current Conservative government’s removal of tax-free shopping, trade tensions resulting from Brexit, and an ongoing cost-of-living issue, that growth is expected to occur.
According to reports, Walpole has been advocating for the establishment of “a modern, digital, VAT-free shopping scheme” as well as the reinstatement of tax-free shopping.
The restoration of the policy is predicted to be extremely beneficial for London and the entire United Kingdom. The analysis projects that the change will boost the British economy by 4.1 billion pounds and add 78,000 new jobs.
