By Amish Dargan
Canada is becoming the hub for settlement to a rapidly increasing population of affluent residents with growth surpassing that of the United States. More than 335,800 people fell under the category of ‘High Net-Worth Individuals’ (HNWI) in 2016, with net assets valued at more than $1 million, and is expected to grow by 50% to 503,800 by the year 2026. ‘Ultra-High Net-Worth Individuals’ (UHNWI) with those whose assets are valued at more than $30 million, and those above the category of UHNWI, are also expected to grow by 50% by 2026. UHNWI are expected to grow from 4,110 to 6,170, those with the net worth of more than 100 million from 483 to 725 individuals and billionaires are expected to grow from 40 to 60 by 2026. From the year 2015 to 2016 alone, there has been a rise of more than 15% in the UHNWI.
All this while, while the rich see a steep growth in their population, things do not seem so well for average Canadians. Even though there was a rise in HNWI and UHNWI populations in Canada, there was only a 0.1% increase in the average income. This income divide is restructuring the economy of Canada. Even reputed names such as the Citigroup has asked investors to focus on businesses catering to the the affluent, especially, luxury goods. Luxury goods luring the citizens of Canada can be understood by the fact that according to a Canadian study, more than 30% of the revenue from a shopping mall with over 240 stores comes from only the top 24 stores.
A few avenues which have witnessed considerable growth, and would continue to do so in the coming years are:
Canada has seen a steep rise in the high-end Jewellery stores catering to the HNWI and UHNWIs. According to Euromonitor International’s report, Canadians spent more than $2.1 billion on luxury jewellery in 2016, from $1.3 billion in 2011. This steep increase of almost 60% is an indicator of the rising spending of Canadian citizens on jewellery. Things sure look good for luxury jewellery in Canada, and are set to remain so in the coming times.
Canada has witnessed a new found love for watches among its citizens. While the sales are much lower as compared to luxury jewellery, things still look good for luxury watch brands in the coming times. The sales for luxury watches have risen from $166.3 million in 2011, to $214.1 million in 2016. This may not be as high as 60% rise in jewellery, but is still 28.7% increase, which is considered more than decent. In 2017, Toronto saw more luxury watch brands open stores in the city than anywhere in the world.
3. Luxury Cars
This is another luxury Canadians enjoy spending their money on. Luxury Vehicles (Including large luxury utility trucks, luxury high passenger cars, compact luxury passenger cars and luxury sports cars) have seen a rise of about 8% from 4500 in August, 2016, to 4900 in August, 2017. While this number is not very high, there still exists high scope in the market for the same due to the introduction of concepts such as ultra-long auto loans in Canada, that stretch to up to 144 months, with lower interest rates.
4. Fashion and Boutiques
Luxury fashion boutiques are expanding rapidly in Canada. High-end boutiques and brands such as Tiffany & Co., Chanel, Gucci, and Hermes have located in areas in Toronto such as Bloor Street, which is often known as the “Mink Mile” due to its concentration of high-end brands. The same goes for Vancouver's 'Luxury Zone', centred in the area around and including the 1000 block of Alberni Street. Other areas offering high-end boutique collection include Toronto's Yorkdale Shopping Centre and Yorkville Avenue/Yorkville Village, with up-and-coming clusterings in downtown Toronto, Montreal and Calgary.
Another new found love in Canada’s luxury sphere is pricey weddings. Bridal salons such as Kleinfeld at Hudson’s Bay, Becker's Bridal, White Toronto, Jealous Bridesmaids Bridal Studio and others are examples, with dresses that can be priced into the thousands. And that's just the beginning of what can be an extravagant wedding that includes rings, food, entertainment and whatever else the happy couple may desire.
It yet remains to be witnessed if Canada will continue to see the rapid growth in luxury products into the coming years as is expected out of it. It will be dependent on a number of factors, including the Canadian economy, travel patterns of different countries, and even its immigration policies. Looking at the current trends of the same, things look very well for the country’s luxury sector. Although growth may be slower for some mediocre retailers doing business in Canada, 2018 will surely prove to be an exciting year for luxury retail in Canada.