In 2022, the French luxury retail sector experienced a significant surge in store openings and property investments, solidifying France, particularly Paris, as a highly sought-after destination for luxury commerce. According to a study conducted by Cushman & Wakefield, there were 36 luxury store openings in France last year, representing a notable 57% increase from the previous year, with the majority concentrated in the capital city. Moreover, luxury retailers made a record-breaking 53 commitments in total, showcasing an impressive increase of 152%.
Despite the slowdown in the Chinese market, luxury brands managed to achieve remarkable results by diversifying their customer base and targeting younger generations and the middle class, particularly in Asia. Furthermore, the resurgence of global tourism, particularly in France and Paris, played a significant role in the success of the industry. Although tourist numbers did not fully recover to pre-Covid levels, over 44 million travelers visited France in 2022. Additionally, the strength of the US dollar encouraged American consumers to engage in luxury shopping experiences across Europe. The removal of tax-free shopping for foreign visitors in the UK due to Brexit also incentivized high-end customers to spend lavishly in Europe, especially in Paris.
These factors prompted major luxury conglomerates to invest in the real estate market through large-scale operations in central Paris. Luxury brands have dedicated several billion euros to acquiring retail premises, demonstrating their desire to have control over their entire production chain and maintain a high-quality distribution network in the long term. This strategy, already implemented in Anglo-Saxon markets, is now expanding in the French market as more mature luxury groups seek to secure their long-term physical presence by acquiring boutique properties and head offices.
Luxury giants have been able to capitalize on strong financial results and the strong reputation of their brands. One notable transaction in Paris in 2022 was the acquisition of the property at 22 Avenue Montaigne, where Louis Vuitton’s flagship boutique is located. The Bernard Arnault Group took full ownership of the 18,000 square meter building, of which it already owned 40%. Gucci, a brand under the Kering group, also acquired over 2,000 square meters at the corner of Rue de Castiglione and Rue Saint-Honoré.
In terms of luxury commerce, the geography in Paris has remained consistent, with historic streets and Boulevard Saint-Germain claiming the top five spots in terms of transactions. Avenue Montaigne, which had been experiencing a decline even before the Covid pandemic, made an impressive comeback in 2022, surpassing Rue Saint-Honoré in terms of activity for the first time in five years. Both avenues remain the most coveted addresses for luxury brands in the French capital. Notable brands such as Gucci Valigeria, Celine, Jimmy Choo, and Jacquemus have opened on these streets, while others like Bottega Veneta, Dior, Saint Laurent, and Alexander McQueen have expanded or renovated their stores. The Champs-Élysées has also witnessed a transformation with the arrival of high-end watch brands, reshaping the avenue’s landscape.
Moreover, the Left Bank is regaining its place in the rankings with commitments on Boulevard Saint-Germain, facilitated by the openings of Saint Laurent and Gucci, as well as the arrival of Rolex on Rue de Sèvres. Place Vendôme and Rue de la Paix dropped out of the top 5, although their prestigious boutiques are still undergoing several restructuring projects.
The rebound of the French luxury retail market is expected to persist in 2023, fueled by the upcoming Olympic Games in 2024. Cushman & Wakefield predicts the opening of approximately 40 new luxury boutiques, with Avenue Montaigne and Rue Saint-Honoré remaining at the core of the activity. Luxury brands are not only expanding in Paris but also in provincial resort markets such as Cannes, Nice, Saint-Tropez, and mountain destinations in the French Alps like Megève and Courchevel.
Overall, the luxury retail market in France is on a positive trajectory, and although there are some signs of a slowdown, this trend is expected to continue in the months ahead. The investments in store openings and property acquisitions underscore the confidence and long-term vision of luxury brands in the French market. With its rich history, cultural allure, and appeal to tourists, France continues to be a premier destination for luxury fashion and retail.
Useful links:
1. Cushman & Wakefield: France’s luxury market rises again despite crisis
2. Luxury Daily: French luxury retail to benefit from return of international travel
