The luxury brand industry is reportedly facing a recession and is looking to outlets.
As the Wall Street Journal (WSJ) reported on Monday (December 16), retailers, landlords, and real estate investors all agree that shoppers still want luxury goods as long as they can pay lower prices. I rely on it.
So while foot traffic remains at pre-COVID-19 levels, retailers have begun leasing more space in outlet shopping centers where designers can sell their surplus at deep discounts.
According to the report, there are more than 200 outlet shopping centers in the U.S., many offering brands ranging from “affordable to luxury” such as Coach and Marc Jacobs. Tangier, a landlord with 38 properties in the United States and Canada, was 97% occupied as of the third quarter, the report added.
Some smaller retailers are also offering discounts on brands like Gucci and Prada, according to WSJ. Vince Tiborn, head of U.S. retail and industry research at real estate analysis firm Greenstreet, said many luxury goods stores have fared better than other retailers in bouncing back from the pandemic because they rely on global tourism. said it was slow.
However, some luxury outlet owners are confident of long-term demand and have begun expanding or opening new stores. The report shows that luxury goods sales have fallen recently but are still above pre-COVID-19 levels, while luxury retailers are now attracting younger, more economically diverse consumers. It is said that people are gathering.
“There’s a much wider audience for buying luxury goods,” said CBRE broker Joe Hudson.
As we noted here earlier this month, consumers are spending more on more expensive goods, in part because of increased confidence and in part because of the Trump administration’s tariffs. This is due to concerns that prices will jump next year.
At the same time, recent research from PYMNTS Intelligence shows that consumers, especially those living paycheck to paycheck, are dealing with cash flow shortages.
“It’s strange that these pressures persist, given that consumers earning less than $50,000 annually spend nearly 60% of their income on food and shelter, according to PYMNTS data,” the report said. It may not be.” “Additionally, more than three-quarters of consumers in this income bracket define themselves as living paycheck to paycheck.”
To offset these pressures, credit remains a popular payment method. Payment options such as “buy now, pay later” (BNPL) are also increasingly being used to extend payments and process them over weeks or months.
