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04 November 2022
Luxury brands look to smaller US cities
Luxury brandsUnited States
In recent years, luxury brands have looked for growth in markets like China, but with the current global political and economic upheavals, they are focusing once again on the US – and expanding their existing footprint there.
Why it matters
Pre–pandemic around half of US luxury sales came from New York and California, but an increase in remote working has seen wealthy consumers relocating around the country. Consequently, luxury brands are expanding geographically and tailoring their marketing accordingly.
By the numbers
The US luxury market remains the biggest in the world: Bain Capital put US sales at €78bn last year, compared to China’s €60bn.
And luxury sales in the US are growing faster than the global average: twice as fast in 2021, according to Citi Research, and 1.5 times in H1 2022.
In its recent Q3 results, LVMH reported 19% year-on-year revenue growth in the US; at Hermès the equivalent figure was 24%.
Who’s doing what
Cartier is planning to expand store numbers from 30 to 40. “The short-term economic outlook is hard to predict but we know we need more exposure in the US,” Cartier chief executive Cyrille Vigneron told the Financial Times.
Hermès recently opened a flagship store on New York’s Madison Avenue, but it is also opening stores in Austin, Texas – which has seen an influx of wealthy tech workers from Silicon Valley – and in Naples, Florida, where there are many second-home owners.
Kering, owner of Gucci and Saint Laurent, recently opened stores in Columbus, Ohio, and Austin, Texas, and plans 30 more US stores in the coming years.
“The US is a priority market for investment for all of our brands, and that wasn’t the case a few years ago. Five years from now we’ll have hundreds more stores than today” – Anish Melwani, CEO of LVMH North America.