What: Discretionary spending has significantly increased above pre-pandemic levels especially in wealthy luxury shoppers thanks to increased liquidity and “revenge spending”.

Why it is important: Understanding the factors driving increased discretionary spending is crucial for economic growth and luxury brand strategies.

It is predicted that luxury spending growth will eventually moderate and return to a cyclical pattern due to consumers starting to sober up from the post-pandemic euphoria and adjust their spending habits accordingly. 
In the last ten years, the modern luxury goods business has been significantly more focused on reconnecting with consumers at the top of the food chain through a variety of limited editions, VIP facilities, and events. At most brands, the top 5% of customers account for more than 40% of sales.The rising income and wealth inequality contribute to increased spending power among those at the top of the socio-economic pyramid. It argues that the desire for luxury goods is universal and that luxury brands are expanding into lower-price product categories to attract a wider range of consumers.

Luxury shoppers are relaxing on their revenge shopping habit