The luxury market in a post-recession United States thrived for several years, reporting steady gains annually. That all came to a screeching halt last fall and has continued to tumble ever since. The sinking numbers, which last reported a measly 3.2% growth in the second quarter of this year, come as LVMH reported double-digit gains and consumers in China keep lopping up designer items. So what gives?
Some luxury brands, like Cartier, are chalking up the slowdown to political uncertainty, which The Wall Street Journal was quick to point as an easy out by implying that sales will rebound in post-election 2017. Another macroeconomic explanation offered is the strong dollar, which encourages luxury consumers to shop while they travel instead of spending dollars domestically.
Luxury is also facing some industry-wide challenges. Knock-offs remain a real problem for designer brands, along with the disruptive “see now, buy now” fashion calendar that played out during fashion month.
Perhaps the most intriguing, however, is the charge that the dismal state of department stores is contributing to luxury’s decline in the U.S. With stores closing what seems like weekly and shopping malls being abandoned in droves, there are less brick-and-mortar outlets to sell designer wares. Add to that some luxury brands’ refusal to venture into e-commerce and luxury goods have a serious dilemma.
— Christine Galasso