r, the company noted. This jives with other reports of a luxury spending boom. In December 2022, a note by Morgan Stanley stating that young adults living at home with their parents were driving purchases of pricey products, was widely covered by the media.  The fact that some people are splashing out on $3000 handbags in the face of a recession doesn’t surprise Philip Corne, a board member for Camilla and Solbari, who was CEO of Louis Vuitton Australia from 2003-2016.  “I saw this developing in a really strong way during the period of the GFC,” he told Inside Retail.  “The customer would shop economically for the basics, and then go straight to the top for the things that were important to them. Having fewer things, having better things that last longer – that trend has continued in each difficult economic cycle.”  The lingering effect of the pandemic is also fuelling the luxury spending boom, according to Boston Consulting Group’s fashion and luxury expert Judith Vitrani. She cited four main drivers: back to normal shopping stimulated by the return to socialising and travelling; increased savings during Covid; increased desire to reward or indulge oneself; and the shift to viewing luxury products as investment assets.  “What we’ve seen on the market is that consumers had to delay experiential [spending] during Covid restrictions, which means that during this period, personal luxury grew more than experiential, with the exception of personal luxury goods intended for social occasions,” Vitrani told Inside Retail. “With the reopening after Covid, experiential is catching up and poised to outgrow personal in the future – e.g., consumers are planning to travel more and for more extended periods of time.”  “Swapping out caviar for schnitzel” But while the idea that luxury spending is immune to economic crises is widely accepted, consumer psychologist Jana Bowden believes the narrative is not as straightforward as it appears.  “The story around ongoing consumer spend in the face of an ongoing cost-of-living crisis isn’t cut and dry. The data is murky, multifaceted and it’s a moving feast. It’s necessary to dig a little deeper to get a granular view of it,” Bowden, a professor at the Macquarie University Business School, told Inside Retail.  On the one hand, cafes, restaurants and takeaway food services saw a 1 per cent increase in sales in March, according to the latest data from the Australian Bureau of Statistics – notably slower than the growth that Colliers has reported.  On the other hand, more than half of Australians, 51 per cent, say they have cut back on dining out because of the increasing pinch on their shrinking wallets, according to Finder. In fact, four in five Australians now indicate they feel financially stressed.  Bowden believes consumers are actually curtailing their spending at the top of the dining scale, with fine-dining restaurants seeing a 28 per cent decline in bookings this year, while mid-tier restaurants now comprise 48 per cent of all reservations, up from 37 per cent a year ago, according to data from ResDiary.  “Diners are swapping out the caviar for a schnitzel. The cost-of-living crisis is biting,” she said.  The story is similar when it comes to luxury goods.  “Many brands saw their sales slow last year, signalling the potential for what has been dubbed a ‘richcession’,” she said, noting that LVMH Group’s organic revenue growth was just 9 per cent in the fourth quarter of 2022, off the back of double-digit growth throughout the year.  “Kering also saw a 19 per cent loss of sales in the Asia-Pacific region when compared to 2022,” she said. “Yet if we look at Q1 2023 for LVMH, its sales were up 17 per cent in Q1 2023.” “Just look at the results” Whether or not we’re in the midst of a spending boom, or a ‘richcession’, one thing is certain: the trend towards experiential retail isn’t going anywhere, and the luxury sector is primed to benefit.  As Corne noted, the over-the-top customer service experience offered by luxury brands is what keeps many consumers coming back. And even if they’re splurging more on fine dining, they’re not necessarily reducing their spending on luxury goods. “Just look at the results,” he said. LVMH chairman and CEO “Bernard Arnault is the wealthiest individual in the world. LVMH is one of the most valuable companies in the world, so that customer is doing both.” In some ways, the distinction between luxury retail and fine dining is becoming irrelevant, as a growing number of brands, including Louis Vuitton and Dior, open their own restaurants and cafes. “If you look at the new Dior store on Avenue Montaigne, it has an amazing cafe and ambience,” Corne said. “Of course, the hero product is the accessories and ready-to-wear, but this is adding to the experience for the customer.”  While it may not be a money-maker, Vitrani believes the trend of luxury brands venturing into hospitality will continue, as they seek to create 360-degree luxury lifestyle offerings for their customers.   “They will continue investing in other occasions where they can meet consumers, whether it is through new products, or pop-up stores in holiday destinations, or collaborations with hotels and restaurants,” she said.