By  on March 21, 2005

NEW YORK — The spotlight on the high-end market is glittering.

The segment grabbed Wall Street’s attention last week when the Neiman Marcus Group said it was putting itself up for sale. Suitors were said to be LVMH Moët Hennessy Louis Vuitton and Richemont, as well as several financial players.

Meanwhile, France’s PPR said robust luxury sales and asset disposals drove  net income up 45.9 percent in 2004. For this year, the firm was optimistic as it posted a 15.1 percent increase in sales at Gucci Group for January and February.

Driving business in the segment is the simple fact that the rich are getting richer. The macroeconomic changes include: an increase in the number of billionaires around the world; a swelling of the ranks of high-net-worth individuals; product extensions that have made luxury more accessible to all age groups, and global expansion from emerging markets in China, India and Russia.

Even though some industry observers feel that demand for luxury may cool, sales are not expected to plummet.

In the March 15 issue of “The Wealth Report,” published by The Luxury Institute, a business intelligence firm, billionaire wealth since 2003 is “up more than 50 percent from $1.4 trillion.” Citing a 2005 survey by Forbes, the report said the number of billionaires in the world grew to 691 from 45 countries this year from 587 in 2004. The combined net worth for that group rose 16 percent to $2.2 trillion. The U.S. boasts 341 billionaires, or 49 percent of the world’s total.

Demographically, it isn’t just those in the top tier that are gaining ground. Citing statistics from Datamonitor, The Wealth Report said the group of individuals considered wealthy is also expanding. This group, referred to as “high-net-worth individuals,” consists of consumers with “on-shore liquid assets in excess of $300,000,” based on the parameters used by Datamonitor. So far, there are about 8.5 million people in the high-net-worth category, and Datamonitor expects the ranks to swell to 12 million by 2008. In 2003, the latest data available, the liquid wealth in the U.S. for this group was $7.7 trillion.

The Wealth Report also indicated that individuals earning more than $100,000 a year, or 5.2 percent of American workers, don’t necessarily feel wealthy because of the impact from higher expenses for post-secondary education and housing.

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus