Luxury Retail Market Rushes to Cater to America’s Rich
In the United States, the new market trend is to cater for the rich and luxury shopper. Upper-income shoppers elsewhere in the world have started to slow down, with spending reducing in some of the world’s emergent markets. Yet in America customers continue to look for the luxury brands. Industries such as technology or energy have seen rapid growth, turning cities, including Dallas and Houston, into new modern city centres with a high wealth density. According to research by Capgemini and the RBC Wealth Management Tally, the number of individuals classed as having a ‘high net worth’ has increased by around 20% within Dallas and by 18% in the Houston area, turning previously unremarkable urban environments into hotspots for luxury shoppers.
Within these new urban landscapes, luxury brands are capitalising on the opportunities to boost sales and attract new customers. In Houston, high-end label Chanel is opening a new galleria with over 5000 square feet, styled to resemble the Baroque-inspired apartment design of Coco Chanel herself. Elsewhere, in Beverly Hills, California, Yves Saint Laurent opened a flagship store of twice this size, covering 10000 square feet and including a discreet rear entrance for celebrity customers. Whilst in Manhattan a $300 million revitalisation at the site of the World Financial Center will see the arrival of Hermes, Paul Smith and Salvatore Ferragamo.
In the last 18 months, there have been around 1.6 million new millionaires within the United States. Compared to China, which reported 90,000 new millionaires, this shows clear signs of American financial strength. It’s no surprise, then, that luxury brands seek to attract American customers. Where previously brands might have marketed themselves to appeal to the Russian or Asian elites, attention is turning to the USA and its proportionately wealthier population. In addition, tourism opportunities mean that the wealthiest inhabitants of other countries are likely to be willing to come to America to purchase their luxury items whilst on holiday, meaning there is a twofold benefit. The American West Coast remains a popular destination for travellers from Asia, bringing the richest members of society into contact with these US flagship branches.
Other research shows that there was an increase of around 5% in luxury spending on personal goods within the USA in 2014. Compared to the negative growth seen in Russia and China over the same period, it is clear to see why American investment offers such strong potential. Chinese sales are affected by a new crackdown on institutionalised bribery, whilst in Russia spending is down because of the weakness of the rouble. The largest luxury-goods company, Moet Hennessy Louis Vuitton, reported that whilst their annual Asian sales fell by 6%, US revenues increased by 8%.