ed pressure to capture the hearts – and wallets – of the ultra-wealthy for sales growth. In July, luxury retail giant LVMH reported a 1 per cent increase in its second-quarter sales, to $22.7 billion,missing analysts’ expectations of $23 billion. In July, the S&P 500 Textiles Apparel & Luxury Goods Industry Index, which tracks the performance of companies in the textiles, apparel, and luxury goods industries, experienced a 30 per cent decline compared with the year prior. The US luxury retail market was worth $134.6 billion last year, retail analyst and GlobalData managing director Neil Saunders told Inside Retail. “While this is made up of spending from a whole range of income groups, the top 1 per cent play an outsized role in the success of the segment. As such, the spending of the affluent is actively courted by luxury brands and businesses, and a lot of effort is expended to keep hold of these shoppers,” he said. What is the 1-per-cent customer looking for? The term 1-per-center refers to the wealthiest 1 per cent of Americans, who control about one-third of the nation’s wealth. With the median income in the US hovering around $75,000, and half of Americans earning less than that, the 1-per-center’s annual salary, depending on the state they live in, can range from $368,000 to nearly $1 million or higher. Unlike the middle-income shopper, the cost of goods, in itself, is not the concern of the 1-per-cent shopper, but more so the experience of acquiring them. Coresight Research analyst Sunny Zheng said there are five main strategies luxury retailers employ to attract ultra-rich shoppers: exclusive products and limited editions; personal shoppers, stylists, and VIP events; high-end services, such as luxury concierge services and private shopping appointments; digital innovations, such as virtual showrooms and personalized online experiences using AI; and membership programs and invitation-only access. One retailer excelling in several of these areas is the German luxury e-commerce platform Mytheresa. Founded as a boutique in 1987, and launched online in 2006, Mytheresa reported €233 million ($253 million) in net sales in the quarter ending March 31, an impressive 17.6 per cent gain from the €198.9 million ($216 million) the year before. From exclusive capsule collections with designer brands like Gucci, Bottega Veneta, Loewe, and Brunello Cucinelli, to one-of-a-kind premium experiences, such as a 24-hour event in Shanghai produced alongside the Paris-based label Courrèges, Mytheresa offers a shopping experience that only a select few can indulge in, let alone afford. Which is why Mytheresa North American president Heather Kaminetsky said the ultimate secret to catering to the 1 per cent consumer is offering them the one thing money can’t buy: time. “I think the most important thing about our clientele is that the biggest luxury they crave is time. A lot of our consumers are extraordinarily busy, whether it’s with their family, business or traveling, time is never on their side,” Kaminetsky said. “That’s where we make shopping easy for them.” The brand does this in two ways: its selective curation of products and personal shopping services. Rather than stocking 100 different white button-down shirts from luxury apparel brands, Mytheresa strictly limits the number of brands on its website to 250 in order to offer the best of the best. If a brand is not performing, then it is replaced by a brand with which consumers are more likely to engage. By offering consumers a limited array of enticing products and an engaging experience with a personal shopper, Mytheresa is ticking an item off the time-strapped high-income earner’s to-do list. Several luxury retailers, such as the legacy player Saks Fifth Avenue and digital newcomer In-Seam, both based in New York, have been doubling-down on personal shopping offerings to engage with the 1-per-cent shopper. Saks is expanding its Fifth Avenue Club, a suite within high-end hotels and resorts where it provides consumers with a highly personalized styling and shopping experience. The brand plans to increase the number of locations from four to 24 by the end of next year. Meanwhile, In-Seam is an online community of more than 200 personal shoppers who provide their customers with immediate access to the full product assortments of over 100 popular luxury brands. It is on track to drive $300 million in annual gross merchandise value by 2027. It’s all about experience Selvane Mohandas du Ménil, the managing director of the International Association of Department Stores, said there are three main types of retailers that cater to the 1 per cent. First, those that focus exclusively on high-income earners – like the German department store Breuninger,which made the decision years ago to say, “We’re not going to try to cater to luxury customers as a whole,” Ménil said. Instead, the company strives to provide unique perks to the 1 per cent of shoppers who visit its stores. Second, those that create separate VIP spaces and offerings within the broader business, like SKP in Chinaand Harrods in the UK, which offer restricted club memberships accessible only by way of personal invitation from enrolled members. And finally, those retailers that leverage their heritage and experience to provide the level of excellence that customers are expecting. This group includes legacy players like Selfridges. Marie Driscoll, a financial analyst and a professor at Parsons, The New School and the Fashion Institute of Technology, said the trick to selling to the 1 per cent is making them “feel pampered” and anticipating “their desires on a personal individual basis while surprising and delighting them with covetable (and often exclusive) product”. This can be done through “destination fests that are a combination of culture, sport, fashion and food,” Driscoll explained. Examples include international shopping excursions where retailers and brands provide high-income earners with the best seats to must-see events, from private performances hosted by the New York City Ballet to coveted tickets to events like a Taylor Swift concert or the Olympics. “Experiential retail at its highest,” Driscoll noted, “is a strategy employed by many purveyors of luxury products.” Ultimately, the goal is to leave the shopper with a “souvenir” experience that, in turn, will create positive memories and a desire to return. Similarly, Saunders believes that creating a sense of intimacy with the customer is key to a successful high-end retail experience. “Some brands, like Brunello Cucinelli, have created separate physical experiences that are invite-only,” he said. “These allow high-net-worth individuals to shop in private in an extremely relaxed environment where they are pampered and cosseted.” While it’s an expensive venture, Saunders acknowledged, “It ultimately pays dividends and allows the brand to get to know customers more intimately.” At the end of the day, the 1-per-cent shopper wants to feel special and have a shopping experience that is carefully curated for them; be it through personal shopping services, exclusive products, or one-of-a-kind retail moments. This story first appeared in the September 2024 issue of Inside Retail US magazine.