Luxury goods boom in Britain as super-rich youngsters weather recession

They are young, wealthy and mortgage-free, and the descendants of the 1% are in their twenties.

Despite the economic gloom currently surrounding the UK and many other Western countries, sales of luxury brands have exploded and a growing number of shoppers are young adults.

Swiss watches, Louis Vuitton sneakers, rare Birkin bags and 81-year-old whiskeys are among the products fueling the impressive earnings growth of luxury brands such as LVMH, Burberry and Kering.

Imports of Swiss watches to the UK increased by 31% in the first half of 2022, according to the Federation of the Swiss Watch Industry – with the Watches of Switzerland group’s average spend being around £6,000. Meanwhile, sales of sub-£2,500 watches, sometimes referred to as ‘mid-range’, are plummeting.

A Rolex watch
Watches occupy a prominent place in the luxury resale market. Photography: /Alamy

Burberry’s sales have increased by 11% over the past six months, we learned last week. LVMH, which owns brands such as Dior, Tiffany, Moët Hennessy and Louis Vuitton, rose 28%, while Kering, the company behind Gucci and Balenciaga and others, saw a 14% rise.

“I don’t want to describe luxury as recession proof – it sounds like a tempting fate – but it is an extremely resilient sector, both at the high end of the market and in the luxury segment. affordable,” said Helen Brocklebank, chief executive of Walpole, which represents the UK luxury market.

Tourists from the United States and the Middle East are taking advantage of the strong dollar to come to the United Kingdom and European countries, according to James Ison, the so-called Deal Maker For The 0.1%, who founded his business as a wrangler for the rich after his Rich Kids of Instagram account became popular.

Louis Vuitton
Louis Vuitton is a popular brand for designer bags. Photograph: Christophe Petit-Tesson/EPA

“People have a Yolo [you only live once] moment,” Ison said. “They go to Bicester Village and spend five figures in an afternoon. They include a lot of people who have done well during the pandemic, online entrepreneurs.

“These are people who aren’t necessarily paying mortgages or high fuel costs,” Ison said. “Children of very successful business people or international students. It’s the younger generation who are more likely to bid on Louis Vuitton and Nike Air Force 1 trainers at £7,000 a pair.

This is the other side of the boom – the rise of the luxury retailer. The purchase of a watch, a handbag or a pair of sneakers has become a new type of investment, even if no one calls these resold investments “second hand”.

“During the pandemic, people were selling their Rolexes for 150%, 180% more than the retail price,” Ison said. “They just don’t have the supply – big luxury brands face the same kind of problems as any other company with supply chains, so you get people who are able to source something at retail , then sell it online 24 hours later for double that.

Sotheby’s and other traditional auction houses set the tone with sales of items such as a Hermès Himalaya Birkin 30 handbag for $226,180 (£190,250) in 2021.

More modest deals are available online at sites such as Vestiaire Collective, Trendy Tickers and RealReal, which said Millennials and Gen Z shoppers make up 41% of their customers.

“People have more of an incentive to buy a watch than to save up and buy a house,” Ison said. “It gives them opportunities – they buy status, that way to level up in the mob they’re chasing. And a watch is easier to sell than a house.

Whiskeys are the British equivalent of Swiss watches, according to Brocklebank. Last month, an anonymous collector at Sotheby’s in London paid £300,000 for a bottle of Macallan’s The Reach, an 81-year-old single malt, the oldest whiskey to be sold at auction.

However, British luxury goods makers fear that dollar-rich tourists will return to London, but prefer European destinations such as Paris and Milan, as the UK has stopped allowing tourists to reclaim VAT when they leave the country.

“I go to boutiques and department stores every day, and it’s quiet,” said Melody Mashilompane, founder of Style Concierge by Melody, who is a personal shopper for many wealthy people.

“People are definitely not spending as much as they did six months ago,” she said.

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