It appears the jig may be up for aspirational luxury shoppers.
Less-affluent consumers had previously been splurging on their favorite high-end brands with padded savings from two years of quarantine and stimulus checks. But now, with a recession threatening the economy and inflation wreaking havoc across all industries, these shoppers are cooling down on entry-level designer purchases.
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Among the “entry-level or aspirational consumer, we’re certainly starting to see what I would say is a slowdown in the growth,” Marc Metrick, chief executive officer of Saks Fifth Avenue’s online operations, told Bloomberg.
Neiman Marcus Group has also noticed a drop in the growth of new, high-end shoppers. “There is a customer who entered luxury during the pandemic or who participates in luxury from time to time,” CEO Geoffroy van Raemdonck told the publication. “We’re seeing a relative decline of the new customers.”
It could be the first real crack in the seemingly unpenetrable luxury industry, which has enjoyed an unprecedented pace of growth over the past two years thanks to steadfast wealthy shoppers. Industry heavyweights, such as LVMH and Hermès, will likely continue to report robust sales, but labels without such a loyal following of deep-pocketed collectors could be affected by a lull in aspirational consumers.
Executives at Kering, for instance, said in October they had seen some pressure on entry-price-point items in the most recent quarter. The French luxury conglomerate helms the likes of Gucci, Saint Laurent and Bottega Veneta. Companies such as Tapestry Inc. (owner of Coach and Kate Spade) and Ralph Lauren may feel the pinch ever further still. Both firms are set to report earnings on Thursday.
Rob Garf, vice president of retail at Salesforce, told Bloomberg that data is showing a splintering of demand by price point. In October, online sales of the most expensive luxury products were up 10 and the least expensive dropped by 9 percent year over year. It seems some wealthy shoppers are ramping up their spending, while aspirational folks are buying less. How about another stimulus check, Biden?