The luxury goods market is back on track. According to research recently compiled by Bain & Co, the consultancy firm, worldwide sales of luxury goods look set to increase, driven by demand from Chinese customers as well as millennial and “Generation Z” shoppers.
Worldwide revenues from personal luxury goods sales are expected to rise 6 percent in 2017, beating forecast projections which indicated a 2-4% increase.
Security problems at European luxury goods retailers and a slowdown in the Chinese market had threatened to curb sales across Europe, but now many major luxury goods companies, including LVMH in France, and Louis Vuitton, are reporting positive earnings, indicating that the problems are easing.
And nowhere more so than in the UK. The pound’s post-Brexit plunge has made the UK the place to shop for luxury brands. London has been labelled a “bargain basement for luxury” by the Wall Street Journal, as high end brands have kept their prices at pre-Brexit levels despite the suffering pound, and luxury label hunters from all over the world have reaped the benefits.
Airlines have even been using the appeal of cheaper luxury goods as a means to promote trips to the UK; the money that can be saved – even taking into account the price of a plane ticket – is well worth the trip, they argue.
Last year, during “golden week”, the first week of October when many wealthy Chinese take trips abroad, the overall cost of a holiday in the UK fell by as much as 20%, giving visitors plenty of ammunition for a high-end shopping splurge.
Spending in London’s West End topped £1,256 per tourist, according to research from the New West End company, with many shoppers tempted to “bulk buy” in case prices return to pre-Brexit levels.
But luxury goods operators say that it is not just the favourable exchange rate that is pulling the posh punters in, but the quality of the goods. The theory is unlikely to be tested just yet, as the fashion houses have indicated that they are happy to continue at current pricing levels until the pound recovers – which does not look like happening any time soon – Britain just raised its interest rate – by a quarter of a percentage point – for the first time in more than a decade.
Tourists are snapping up bargains including wedding dresses and accessories, jewellery, and niche fashion, and making impulse buys more regularly, buoyed by the exceptional, personalised service and extended shopping hours that London offers.
Now, more luxury brands are looking at moving in on the action; Mulberry announced this month that it would be opening a new store in the Burlington Arcade, with an authentic gin bar on the second floor, whilst jeweller Patrick Mavros will also move in to the Arcade this week.
Peter Mace, who leases commercial property at the Arcade for Cushman & Wakefield, said that: “the luxury retail market in Central London continues to forge ahead as witnessed by these recent lettings in the Arcade and a flurry of activity on nearby Bond Street.”
Sadly, there is no data available on the number of Brexit “Remainers” who have rushed to New Bond Street to check out the latest bargains. This kind of retail therapy is unlikely to be to everybody’s taste.