Online Shopping attracting the big spenders, high-end stores adapting to market changes

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When buying luxury items, consumers have more choices
Anne D’Innocenzio- Dec. 25, 2019

New York

To get that monogram tote bag by Louis Vuitton or leather Flashtrek sneakers by Gucci, the go-to place had been luxury department stores.

Not anymore.

Now, there are far more ways to access exclusive labels. You can buy them at online sites like Netaporter. Or get them barely used through sites like Fashionphile and The RealReal. You can even rent an entire rotating wardrobe through companies like Rent the Runway.

“The consumer is king. And they can buy luxury brands in different places,” says Steve Sadove, former CEO and chairman of Saks Fifth Avenue and now a senior adviser at MasterCard.

The new entrants have disrupted the luxury sector by creating different channels for attaining the previously unattainable.

That has forced luxury department stores that once had a lock on where the well-heeled could shop to reimagine their approach. They now offer new services as well as food and alcohol to lure back customers who were once exclusively theirs.

At Nordstrom’s women’s flagship in Manhattan, for instance, customers sip champagne and nibble on small bites while trying on shoes. Recognizing the growing popularity of second-hand sites, Neiman Marcus is rolling out shops where customers can sell their designer belongings as part of a partnership with Fashionphile, an online resale accessories company. And as part of a $250 million renovation of its flagship store in Manhattan, Saks Fifth Avenue has dedicated its main floor to luxury handbags and staffed it with 50 handbag style advisers in addition to sales associates.

Meanwhile, brands like Gucci and Louis Vuitton are opening more of their own stores and expanding online. Robert Burke, a luxury consultant, says they are trying to control their future as they watch their products get discounted on resale sites.

Joseph Aquino, president of real estate services firm JAACRES, sees luxury’s future in fewer stores that focus on “less product” and “higher prices.”

In one sense, traditional luxury stores are no different than other brick-and-mortar retailers that must now fiercely compete with online rivals. But the exclusivity they used to command by catering to a niche market of wealthy spenders is beginning to erode, especially among the new-moneyed set of shoppers in their 20s through their 40s who can afford high-end merchandise but may still be looking for a deal.

Millennials and Generation Z accounted for 47 percent of luxury consumers in 2018 and for 33 percent of all luxury sales worldwide in 2018, according to a study by consulting firm Bain & Co.

Overall, the global market for personal luxury goods is healthy, buoyed by a strong economy and the spending power of China. The sector reached a record high of $286.53 billion in 2018 — a 6 percent increase from the year before, according to Bain. Jewelry has been one of the top luxury growth categories.

In the U.S., luxury sales excluding jewelry have fallen 1.9 percent through November compared to a 3.4 percent increase in overall retail sales excluding autos and gas, says MasterCard SpendingPulse, which tracks sales across all types of payments. That’s in part because of store closures and a drop in international tourists.

Source: https://www.timesunion.com/business/article/High-end-stores-adapting-as-big-spenders-shop-14931577.php

Disclaimer: This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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