Market shifts: what’s new
Extreme engagement
Where inflationary price increases of goods and services are hitting people in lower socio-economic brackets hardest in the US, people with household incomes of £83,685 ($100,000, €98,165) or more are also feeling the impact, with two fifths reporting they now think about rising prices ‘all the time’ (source: CNBC/Momentive). In response, luxury brands are shifting their focus to court the top 1% of earners – and spenders – who hold more wealth than all of the middle classes.
Focusing on its very important clients (VICs) in the US, Givenchy took a select few to the Save Venice benefit gala in New York in early 2022, while Brunello Cucinelli welcomes its VICs to Casa Cucinelli, an exclusive, invitation-only apartment in the city where they can get a taste of Italian living, eating and drinking – alongside luxury goods. Other brands are focusing on adjacent, feel-good activities. Gucci is reported to have taken VICs to the Coachella festival, while Alexander McQueen recently hosted an immersive New York experience for clients over several days.
Secondary cities rising
Millions of Americans fled the claustrophobia of cities during the pandemic, bolstered by a desire for more space and better climes. At the same time, tourists – who typically congregate in major cities like New York, Los Angeles and Miami – have been hampered in returning to the US, making them less profitable for luxury brands. With wealth and tourism hotspots in flux, America’s secondary and tertiary cities are coming to the fore.
To test these new markets, brands are renting smaller boutiques on shorter-term leases. Luxury resale platform The RealReal is shifting its pre-Covid strategy of large flagship stores in city centres in favour of smaller-footprint neighbourhood stores. Others, such as Bonpoint and Proenza Schouler, have also been exploring smaller permanent stores with retail analytics company Flagship measuring just 1,500 square feet.
