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Luxury brands are prospering and expanding stores despite high inflation

The US consumer is somewhat bifurcated, and we are seeing different behaviors:

  • Those on the lower income scale are starting to struggle with high, inflationary prices and pulling back or trading down what they buy. (e.g., Retailer store brands share is growing).

  • The affluent, however, are more insulated (although some concern with erratic stock market). They are less likely to change their spending habits and are continuing to spend to fulfil their “pent up demand” from pandemic lockdowns.


As a result, there are shifts in what products and services are growing.


Luxury brands are selling well.

WSJ (Aug 5, 22) reported double digit sales growth in the USA for first half of 2022 vs prior year for luxury brands:

  • Vuitton +28%

  • Gucci +23%

  • Hermès +29%

  • Prada 22%

WSJ notes:

“The experience of the pandemic unshackled affluent American consumers who might previously have felt guilty about splurging on luxury products, fueling the continuing U.S. boom

… Luxury brands have also been effective in tapping into a new cohort of young U.S. consumers with marketing drives such as LVMH’s recent Tiffany campaign starring Beyoncé and Jay-Z”

Many Luxury brand manufacturers are investing in building out more stores across the US, including in growing mid-American cities. While China had remained a primary focus in the past, they are recognizing US opportunities to balance out where they play and tapping into the US potential.

As inflation forces brands to rethink how they play their portfolio – they need to have deep understanding of their consumers and shoppers. Strong brands have opportunities to trade people up, while managing what they have people trade down to.


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