London’s Luxury Sector Thrives Off Art Audiences, But Both Are at Risk: Report

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London’s luxury sector depends on local museums, galleries, and other cultural spaces bringing in affluent consumers, while cultural institutions rely on luxury brands to attract new audiences, according to a report published earlier this month by Walpole, a UK trade association that oversees high-end British brands.

While that connection has been mutually beneficial, the report warned that the luxury market, which contributes $106 billion to the UK economy, could face risks if arts funding continues to dwindle. (Government spending on culture in the UK has fallen by £2.3 billion since 2011.)

The findings come as luxury sales reach a global standstill, with analysts at Bain Consultancy predicting in June between 0 and 4 percent growth for 2024. 

It’s not entirely doom and gloom for the UK luxury market. The Walpole report argues that London’s luxury businesses should be on track to grow as the city’s private wealth increases. Around 80 percent of London’s 227,000 high-net-worth individuals told Walpole that they expect their disposable income to stay the same or grow in 2024. And real estate consultancy CBRE Group recently reported that retail investments have seen a 71 percent increase in the second quarter of 2024, as well as a 25 percent surge in sales of properties worth £15 million or more since last year. Both of those figures suggest that the wealthiest Londoners continue to remain economically stable.

“The factors that have shaped London’s luxury market are closely tied to its role as a ‘cultural generator,’” Helen Brocklebank, CEO of Walpole, wrote in a memo from the report. She added that businesses moving toward experiential luxury—away from the accumulation of luxury goods—could be crucial for preserving that status. “Much of London’s global soft power comes from its creative industries,” Brocklebank added.

The report argues that London’s museums and galleries drive significant traffic to luxury brands there, with the Victoria & Albert Museum’s 2023 Coco Chanel exhibition alone attracting over 400,000 visitors and contributing to museum attendance rising. Meanwhile, in September, the V&A announced that Manolo Blahnik was the sponsor of its forthcoming exhibition on the 18th century French queen Marie Antoinette.  The announcement, which came one month after Manolo Blahnik suffered a 10 percent decline in sales, wasn’t the first time the shoe designer leveraged European high culture for its benefit. In 2019, the designer partnered with London’s Wallace Collection on an exhibition pairing the brand’s shoes with the institution’s paintings. Attendance reportedly surged by 30 percent that year. 

The report cites over a dozen similar cases of successful art and luxury collaborations. Such high-end cultural events and art sales, Walpole argues, open financial opportunities for luxury brands by attracting wealthy international tourists. According to Bain’s figures, the spend of UK’s high-end international visitors—with the most coming from the US—is 14 times that of the average non-UK tourist. But with visitor numbers expected to plateau at around 38.7 million this year (and spending declining), Walpole warns the UK risks “failing to compete effectively” for “high value” attendance from other countries.

The Walpole report warns of the risks in neglecting living artists too. Cultural experts and financial consultants surveyed say that cuts to public funding and a decline in formal arts training undermine the city’s ability to maintain a creative work force.

After a report last year revealed the dire financial situation faced by artists in London, Justine Simons, the city’s deputy mayor for culture and the creative industries, told the Guardian that the loss of studio space for artists was due to gentrification. “A lot of the things we all care about in London, and in other cities with a strong cultural life, don’t have the protection they need,” Simons said.

And, on the occasion of last year’s edition of Frieze London, CEO Simon Fox told WWD that the fair was working withthe London Mayor’s Office to address challenges in the city’s art ecosystem and help it retain its “preeminence as the cultural capital of Europe.” (Frieze’s Los Angeles–based parent company Endeavor has for the last decade funded a Tate acquisition during the opening days of the fair.)

The question of London’s continued viability as an art capital has been at the center of art world conversations recently, with Frieze London and the newly rebranded Art Basel Paris having faced off in back-to-back fair weeks earlier this month. The sentiment among many artists, dealers, and market analysts is that London’s importance is waning. In a preview for Frieze, Nigerian-British artist Yinka Shonibare told the New York Times that the energy that built London’s contemporary art scene in the 1990s and early 2000s is waning. When artists are priced out of spaces and gradually pushed out of the city, he said, the effects are stifling.

“The sector becomes static,” he noted, adding, “Things are shifting away from London.”

Matthew Slotover, Frieze’s cofounder, who was interviewed by Walpole for the report, disagreed, arguing that London’s art audience is wider than the other locations it competes with for sales and attendance.

“Someone put it to me recently that in London you have 500 serious players in art, but 500,000 engaged in it,” he said. “In New York, you have 5,000 serious players in art and that’s it.”