An article by The Moscow Times Friday reported “spending by Russian tourists abroad has plunged, diving 51 percent in January after falling 44 percent in December because of the ruble’s freefall.” The report cited figures released by tax-refund company Global Blue.
On its website, the news outlet noted luxury marketers are battling “crippled demand from Russians for luxury goods, and many labels are growing concerned the trend could last, with no end in sight for the conflict in Ukraine.”
Among those brands reportedly impacted “Salvatore Ferragamo, have been severely hit by the Russian economic crisis…Last week, Jean-Francois Palus, No.2 at Gucci owner Kering, said the group’s Italian tailor Brioni had witnessed a significant drop in sales to Russian tourists.”
The Russian traveler is an important marketing, particularly for shopping while traveling. “The Russian luxury market is made by relatively few consumers with very high discretionary spending power, as epitomized by the ‘Russian oligarch’,” said Luca Solca, a luxury goods analyst at Exane BNP Paribas. “These consumers have higher exposure to high-end versus accessible luxury brands and categories … such as Brioni and Cartier.”
So where can luxury marketers find well-to-do Ultra High Net Worth customers?
Slicing apart data from the 2014 World Ultra Wealth Report reveals if American states were viewed as countries, 23 of the top 50 Super Rich populations would be states. The report defines Super Rich/UHNW as $30 million + in assets.
Ranked alongside countries, California would be third in the world, New York sixth, Texas ninth and Florida 12th. Illinois (17th), Michigan (19th), Pennsylvania (21st), Ohio (23rd), Massachusetts (27th), Wisconsin (28th), Connecticut (31st), Maryland (32nd), Virginia (34th), Minnesota (35th), New Jersey (36th), Washington (39th), North Carolina (41st), Georgia (43rd), Tennessee (44th), Colorado (45th), Indiana (47th), Arizona (48th) and Oklahoma (49th) show that for marketers there are significant pockets of the Super Rich in the so-called “fly over” states.
In terms of UHNW consumers, Russia would have ranked only 40th fit snuggly between the state of Washington and North Carolina and well behind the likes of Wisconsin, Maryland and Minnesota.
Wealth-X defines Super Rich as households with a net worth of at least $30 million and says combined this group spends $234 billion on luxury lifestyle products and services.