The luxury industry in the United States is experiencing a remarkable resurgence, positioning itself as a potential rival to China as the next hot hub for luxury brands. Notably, major luxury brands like Kering, LVMH, and Hermès have seen a significant rebound in sales, indicating a newfound interest and enthusiasm for luxury goods among American consumers.
For instance, Kering reported a remarkable 46% increase in comparable sales in the first quarter of 2021 in the US market, while online sales witnessed an astounding surge of 134% during the same period. Similarly, LVMH and Hermès also recorded positive sales growth despite the ongoing impact of the Covid-19 pandemic.
This resurgence is particularly evident in North America, with luxury brand Salvatore Ferragamo experiencing an 18.2% increase in sales. Popular tourist destinations like Miami, Las Vegas, and Los Angeles have witnessed a surge in luxury purchases, which has been attributed to the phenomenon of “revenge shopping.” After months of deprivation, consumers are indulging in luxury purchases, driving the sales growth in these regions.
Luxury brands are taking note of this renewed interest in the US market. Gucci, for example, chose Los Angeles as the venue for its centennial celebrations, while brands like Moschino and Montblanc have opened stores in New York. These moves indicate the optimism and confidence luxury brands have in the potential of the US market.
Claudia D’Arpizio, a partner at Bain & Company, emphasizes the significance of the US market for the luxury industry. According to her, the US is regaining its prominence in the luxury industry, particularly as younger consumers are emerging as a driving force. D’Arpizio believes that the US can be considered the new El Dorado after China, especially with the younger generation’s growing appetite for luxury goods. Additionally, the US economy is expected to fully recover to pre-pandemic levels in 2021, further fueling the demand for luxury products.
The Biden administration’s substantial investment plan, including a $1.8 trillion spending package and a $2.0 trillion infrastructure stimulus, has also played a role in boosting the US economy. In fact, the first quarter of 2021 witnessed a 6.4% rise in GDP as a result of these measures. D’Arpizio draws parallels between the current rise in confidence in the US market and the extravagant years of the 1920s. With limited travel options and in-person experiences, consumers have redirected their expenditures towards luxury products, contributing to the increased sales.
Since the beginning of the year, luxury brands have experienced soaring sales in the US. Retail sales in April 2021 alone increased by 23% compared to the same period last year, with online sales rising by 19.9% and 95.6% respectively. D’Arpizio highlights a shift in retail distribution, with department stores struggling to attract younger consumers while specialized e-tailers and new online players catering specifically to this demographic flourish.
To effectively tap into the US market, D’Arpizio advises luxury brands to invest more and consider the social and cultural dynamics of various communities, particularly the African-American and Latin American communities. Localization efforts and targeted marketing strategies are crucial in engaging with these demographics. Additionally, luxury brands should take into account the evolving needs of American consumers as they embrace rural lifestyles, such as offering pop-up stores and personalized services.
In conclusion, the United States is swiftly emerging as a coveted destination for luxury brands due to its robust sales growth and favorable market dynamics. While Asia and China have historically dominated the luxury industry, the US is staging a remarkable comeback, alluring a new generation of luxury consumers. With the country’s economic recovery and heightened consumer confidence, luxury brands should seize this opportunity to invest in the US market and cultivate relationships with diverse communities.
Useful Links:
1. Business of Fashion: The US Is Poised to Overtake China as the Top Luxury Market
2. Vogue Business: Luxury Is Ready to Leave Asia’s Travel Dependency Behind
