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No recession fears for the super-rich

by Maria Onyango August 08, 2012

Analysts are woefully predicting that the effects of the recession could be felt on the high street until 2020 as consumers - lacking confidence due to the double dip and Eurocrisis - hoard their cash under their proverbial mattresses.

Andrew Goodwin, senior economic advisor to the Ernst & Young ITEM Club has said, ominously, "we still need to keep our fingers tightly crossed". If that's the strategy from the top, then retail really is in trouble.

Or is it?

In the same week, the new owner of Harrods has given itself a luxurious £100.5 million dividend. That's a lot of Christmas hampers flogged. Pre-tax profits have also leapt to 15% according to the latest accounts filed at Companies House

Harrods is not the only luxury retailer that has been bucking the downward trend. Indeed, the entirety of the luxury sector seems to be enjoying an ostentatious little boost. The Observer even reports that interest in private islands is on the rise, according to a specialist estate agent, and notes that consumers looking to spend in the luxury space are looking for more than just “handbags”, they are looking for experiences – safaris in particular are coming out on top.

It seems that parts of the world - and in particular parts of cosmopolitan cities like London (Knightsbridge, for example, in which Harrods is conveniently situated) are effectively immune to recession. And with the assets of the super-rich declining by less than 2% to $42 trillion worldwide, there is no reason why the spending won't continue well into the future.

Not much good for the twenty-plus empty shops on Wirral high street - it's doubtful they will be able to take advantage of the sheikhs and oligarchs enjoying Knightsbridge - but an interesting proposition for new and existing businesses who have the potential to access this niche corner of the consumer market. It will be interesting to see if, over the next five years, there is a rise in start-ups aimed at the luxury market, and whether the existing consumer base will accept these young new upstarts.

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