[Weekend Money] Buying Luxury Bags Is Outdated? U.S. High-Income Earners Spend on Experiences

Top 10% of U.S. Consumers Drive Half of Total Spending
Preference for 'Experience Spending' Like Michelin Dining and Luxury Cruises
"Purchasing Power Highlights Membership-Based Revenue Models"

As polarization intensifies in the U.S. consumer market, with the top 10% of households by income accounting for half of total consumption, analysts note that spending among the wealthy is shifting from goods to experience-based consumption.

Michelin Over Handbags... Luxury Consumption Shifts from Goods to Experiences

According to NH Investment & Securities on May 17, consumption in the United States structurally trends toward the top 10% of high-income households accounting for 50% of total consumer spending. Researcher Jo Yeonju at NH Investment & Securities pointed out, "The oil price shock triggered by the Iran war has not dampened overall U.S. consumption but rather made the K-shaped divergence even more pronounced."

The change in spending patterns is particularly noteworthy. Benefiting from rising asset prices, the wealthy are now booking luxury cruises and purchasing VIP concert box seats instead of high-end designer handbags. In fact, markets focused on experiences—such as cruises, private jets, fine dining, and hotels—have grown for two consecutive years, while ownership-focused markets like luxury automobiles declined over the same period.

Corporations are also expanding related services. Researcher Jo explained, "The three major U.S. airlines are restructuring seat configurations by reducing economy class and increasing premium seating," and added, "Luxury brands are expanding experience-based businesses through hotel acquisitions and collaborations with Michelin-starred chefs."

Membership Experience Outpaces One-Time Supercar Purchases as a Money Maker

This business model also significantly increases customer lifetime value (LTV). LTV refers to the total revenue generated during the period a consumer remains a customer of a company. While goods are typically purchased by individuals, experience-based consumption often involves groups, resulting in potentially larger spending amounts.

Researcher Jo noted, "A supercar is typically purchased only once or twice in a lifetime, and even luxury handbags are generally limited to one or two purchases per year. In contrast, a Michelin three-star dinner can be enjoyed several times a month, VIP concert packages can be booked each season, and luxury cruises can be reserved on new itineraries every year," she said.

She further analyzed, "Experience-based consumption can ultimately serve as infrastructure for goods consumption. The recent expansion of luxury brands into the hotel and food & beverage industries is a move to maximize the time customers spend within the brand ecosystem. Rather than simple business diversification, it is more about building marketing infrastructure to strengthen revenue."

Focus on Companies Positioned at the Top of the K-Shaped Curve

From an investor's perspective, it is now crucial to select stocks directly exposed to the upper end of K-shaped consumption rather than relying on average consumption indicators. NH Investment & Securities cited Vikings (VIK), Delta Air Lines (DAL), Marriott (MAR), Sphere Entertainment (SPHR), American Express (AXP), and OneSpaWorld (OSW) as potential beneficiaries.

NH Investment & Securities researcher Go Minseong commented, "Vikings is a luxury cruise operator that has succeeded in differentiation with its adults-only themes and exhibits a strong lock-in effect, with over 90% of customers expressing intent to rebook. Delta Air Lines is emerging as a premium airline by introducing new aircraft models that double the proportion of business class seats."

He continued, "Sphere Entertainment, which operates Sphere—the giant dome performance venue in Las Vegas—is seeing a sharp increase in its performance thanks to the success of its original show 'The Wizard of Oz.'" "OneSpaWorld is securing stable, high margins by monopolizing the cruise spa business, and American Express is the only platform company where the expansion of luxury experience spending by affluent customers, such as with Marriott and Delta, directly translates to card fee revenue," he added.

This content was produced with the assistance of AI translation services.