World’s Ultrawealthy Grew 1.7% In 2020
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World’s Ultrawealthy Grew 1.7% In 2020

However regions away from North America and Asia saw a decline ultra-wealthy populations.

By Fang Block
Thu, Jul 1, 2021 2:56pmGrey Clock 2 min

The global ultra-high-net-worth (UHNW) population showed resilient growth in 2020 despite the huge disruption from Covid-19 pandemic, a new report finds.

In 2020, the world’s wealthiest population—those with a net worth of more than US$30 million—grew 1.7% year over year, adding 4,730 individuals to bring the total to 295,450 in 2020. Their combined fortune rose 2% to US$35.5 trillion, according to Wealth-X’s ninth annual World Ultra Wealth Report released Wednesday.

Last year’s ultrawealth expansion was much slower than the nearly double-digit pace in 2019, but represented a sharp increase from 2018’s flat growth rate of 0.8%, according to Wealth-X, a global provider of information and insights on the wealthy.

The expansion was largely driven by monetary stimulus from global central banks and a strong rally in financial markets, with almost all major stock market indices posting healthy annual returns by year’s end, the report said.

The report is in sync with others by wealth-tracking firms that show the rich weathered the pandemic with the help of the rising equity markets.

Across the regions, North America and Asia continued to lead in ultrawealth creation. In North America, the UHNW population grew 6.9% year over year in 2020 to 112,250 individuals. Their combined wealth increased 7.1% to US$13.4 trillion. Asia’s UHNW population and their joint wealth both increased 5.2% with 87,460 individuals possessing US$10.2 trillion.

All the other regions, including Europe, Middle East, Africa, Latin America, and the Pacific posted a decline in their ultra-wealthy populations, according to the report.

Other key findings in the report include:

  • The U.S., with 101,240, had the largest UHNW population, which was followed by China with 29,815, and Japan with 21,300;
  • France saw the largest decline in its ultrawealthy population, down 10.8% year over year to 9,810;
  • San Jose, Calif., had the highest density of UHNW individuals, with one for every 727 city residents. This concentration is two-and-a-half times greater than New York, the world’s largest UHNW city with 11,475 individuals;
  • Paris’s ranking fell two places to seventh as its UHNW population declined 13.7%r to 3,765; London, which suffered a 17% decline in the size of its ultrawealthy class, dropping from seventh to 12th position and out of the top-tier rankings for the first time since 2004;
  • The share of self-made ultrawealthy increased to 72.5%, compared to 66.5% in 2016;
  • Sports and philanthropy were the top hobbies and interests for the UHNW.


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Why Prices of the World’s Most Expensive Handbags Keep Rising

Designers are charging more for their most recognisable bags to maintain the appearance of exclusivity as the industry balloons

By CAROL RYAN
Tue, Mar 5, 2024 3 min

The price of a basic Hermès Birkin handbag has jumped $1,000. This first-world problem for fashionistas is a sign that luxury brands are playing harder to get with their most sought-after products.

Hermès recently raised the cost of a basic Birkin 25-centimeter handbag in its U.S. stores by 10% to $11,400 before sales tax, according to data from luxury handbag forum PurseBop. Rarer Birkins made with exotic skins such as crocodile have jumped more than 20%. The Paris brand says it only increases prices to offset higher manufacturing costs, but this year’s increase is its largest in at least a decade.

The brand may feel under pressure to defend its reputation as the maker of the world’s most expensive handbags. The “Birkin premium”—the price difference between the Hermès bag and its closest competitor , the Chanel Classic Flap in medium—shrank from 70% in 2019 to 2% last year, according to PurseBop founder Monika Arora. Privately owned Chanel has jacked up the price of its most popular handbag by 75% since before the pandemic.

Eye-watering price increases on luxury brands’ benchmark products are a wider trend. Prada ’s Galleria bag will set shoppers back a cool $4,600—85% more than in 2019, according to the Wayback Machine internet archive. Christian Dior ’s Lady Dior bag and the Louis Vuitton Neverfull are both 45% more expensive, PurseBop data show.

With the U.S. consumer-price index up a fifth since 2019, luxury brands do need to offset higher wage and materials costs. But the inflation-beating increases are also a way to manage the challenge presented by their own success: how to maintain an aura of exclusivity at the same time as strong sales.

Luxury brands have grown enormously in recent years, helped by the Covid-19 lockdowns, when consumers had fewer outlets for spending. LVMH ’s fashion and leather goods division alone has almost doubled in size since 2019, with €42.2 billion in sales last year, equivalent to $45.8 billion at current exchange rates. Gucci, Chanel and Hermès all make more than $10 billion in sales a year. One way to avoid overexposure is to sell fewer items at much higher prices.

Many aspirational shoppers can no longer afford the handbags, but luxury brands can’t risk alienating them altogether. This may explain why labels such as Hermès and Prada have launched makeup lines and Gucci’s owner Kering is pushing deeper into eyewear. These cheaper categories can be a kind of consolation prize. They can also be sold in the tens of millions without saturating the market.

“Cosmetics are invisible—unless you catch someone applying lipstick and see the logo, you can’t tell the brand,” says Luca Solca, luxury analyst at Bernstein.

Most of the luxury industry’s growth in 2024 will come from price increases. Sales are expected to rise by 7% this year, according to Bernstein estimates, even as brands only sell 1% to 2% more stuff.

Limiting volume growth this way only works if a brand is so popular that shoppers won’t balk at climbing prices and defect to another label. Some companies may have pushed prices beyond what consumers think they are worth. Sales of Prada’s handbags rose a meagre 1% in its last quarter and the group’s cheaper sister label Miu Miu is growing faster.

Ramping up prices can invite unflattering comparisons. At more than $2,000, Burberry ’s small Lola bag is around 40% more expensive today than it was a few years ago. Luxury shoppers may decide that tried and tested styles such as Louis Vuitton’s Neverfull bag, which is now a little cheaper than the Burberry bag, are a better buy—especially as Louis Vuitton bags hold their value better in the resale market.

Aggressive price increases can also drive shoppers to secondhand websites. If a barely used Prada Galleria bag in excellent condition can be picked up for $1,500 on luxury resale website The Real Real, it is less appealing to pay three times that amount for the bag brand new.

The strategy won’t help everyone, but for the best luxury brands, stretching the price spectrum can keep the risks of growth in check.

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