With the Chinese market at a standstill due to multiple lockdowns and restrictions related to Covid-19, all the spotlights are on the United States. As the leading market in the luxury segment, it seems very promising for the players in this sector.
Some describe it as both mature and high potential, and luxury houses from all over the world have understood this. Between fashion shows on the West Coast and store openings on the East Coast, the United States is attracting luxury brands.
As the Cruise show season kicked off in mid-May, many luxury brands flew to America to show their models. World-renowned French fashion house Louis Vuitton set up shop in San Diego on May 12 at the Salk Institute in California, while the New York Stock Exchange attracted Balenciaga on May 22. Dior followed its competitor Vuitton in presenting its “spring” Dior Homme collection on May 19, and also chose California, taking over Windward Avenue, an iconic and prestigious street in the City of Angels, more precisely located in Venice Beach.
If in previous years, luxury houses had begun to observe the importance of the United States as a flamboyant market for luxury, this year it seems to have increased tenfold.
What role does the US play in the financial results of luxury groups?
The luxury houses, which are beginning to publish their economic results for the first quarter of 2022, are jointly noting the significant importance of the United States in their figures. The LVMH group in particular underlined that the sale of perfumes and cosmetics are experiencing “excellent dynamics thanks to sustained growth in perfume and make-up in the United States” and reached a turnover of 1.9 billion euros (+23%) in the first quarter of 2022; the United States which also represents the first world market of the French group.
The Swiss group Richemont, which has published exceptional results in 2021/2022, have indicated that it is mostly the United States that has registered the results of Richemont at this economic level.
Finally, the French leather goods house Hermès noted that America is accelerating strongly in the first quarter of 2022 (+44%), thanks to the very good dynamics observed in the United States.
However, luxury sector executives seem to be concerned about the partial shutdown of activity in China due to strict lockdowns in several major cities such as Beijing, Shanghai and Shenzhen, where the population is seeing its economic situation decline. These concerns seem to be prolonged and are disrupting the outlook for the second quarter of 2022. China’s situation has therefore reshuffled the cards for luxury brands’ strategies.
“Will the US save luxury in 2022? We hope so. Few markets are as promising. Even if I observe that Dubai is on the rise, it’s not in the same league,” says an executive of a major watchmaker. “We are not worried at all. Our performance there is very good and the market is dynamic for the sector,” says Anish Melwani, CEO of LVMH USA.
Which regions of the United States are the most attractive?
According to the consulting firm Bain, America today weighs 78 billion euros in the global luxury market, where the United States seems to dominate the figures. New York City in particular stands out.
New York alone is worth 23 billion euros and represents a larger market than the whole of Japan: “New York is a market in itself. The city is still bigger than the third largest market in the world, Japan,” says Joëlle de Montgolfier, vice-president of research for luxury goods at Bain. In addition, the city represents 20% of the entire American market. Louis Vuitton has four stores in this city, but has a U.S. network of over 100 stores, as do Chanel and Gucci.
The California region represents 25 to 30% of the American market, and one of its leading cities for luxury, Los Angeles, continues to attract brands, both for fashion shows and to set up new boutiques. This is particularly true of Jaeger-Lecoultre, which has just opened an innovative immersive concept store on Rodeo Drive, in the heart of the Beverly Hills district. Louis Vuitton has eleven boutiques in California. The attractiveness of this city (and the entire California region) continues to interest major brands, who see it as a haven of economic prosperity.
The latest region to attract the big names in luxury: Florida. With a strong foothold in the Design District, Miami is full of luxury boutiques. Several large shopping malls such as Bal Harbour or the Aventura Mall are must-see addresses for luxury shoppers. Louis Vuitton has the same number of stores in Florida as in California, i.e., eleven.
Beyond the rebound in retail sales, however, luxury houses should not lose sight of American consumers who have moved to the sea, the mountains or the countryside, meeting their service needs via pop-ups and clientelling. Indeed, with the habits acquired during the confinement, the United States is moving towards a ruralization of wealth. Developments that largely explain the rebound in online sales observed last year, which grew by 19.9% compared to April 2020 and 95.6% compared to April 2019, according to the Mastercard Observatory.
Featured Photo : © Holiday Inn
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