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From Gucci’s 10,000-square-foot store on the site of a former pencil factory in SoHo to Hermes’ two-story flagship in a New Jersey mega-mall, America hearts luxury.
And that’s a good thing for the industry, because with Shanghai in lockdown and European demand potentially hurt by the war in Ukraine, the US once again is picking up the bling baton.
In 2021, luxury growth was led by the US, not China. Soaring stock markets and cryptocurrencies boosted wealth, while stimulus checks encouraged many more shoppers to dip their toes into top end waters. And the wealthy didn’t just splurge on Dior bags and Cartier jewellery. They also led art buying, according to the Art Basel and UBS Global Art Market Report. That helped the overall market exceed its pre-pandemic levels.
Structural factors, too, are helping the proliferation in sales of upmarket goods. While the high end has long been concentrated in the retail bastions of New York, Los Angeles, San Francisco and Chicago, this is now changing. Many Americans moved during the pandemic: New Yorkers relocated to Florida and Californians to Arizona and Texas. They didn’t leave behind their appetite to consume, but rather fueled demand for luxury goods from Scottsdale to Charlotte, Cincinnati and Nashville.
This has started a race to acquire prime retail space, driving up rents in the most favourable locations.
In the past, brands confined their openings to giant flagship stores on Fifth Avenue or Rodeo Drive. Now they are taking sizeable sites in suburban malls and exploring satellite shops in local neighbourhoods and wealthy resort towns. Another incentive to move to the ’burbs has been the spate of shoplifting in some city centers, including Los Angeles and Chicago.
Consequently, French luxury group Kering SA is reassessing where it puts its stores. It has been opening and revamping Gucci outlets across the US, debuting most recently in Austin. Gucci generates about 27% of its revenue from North America. More new stores will follow, including in Atlanta and Sacramento.
New Jersey’s American Dream mall recently announced that Kering will lease a 10,000-square-foot site for Gucci. Kering’s activity has not been confined to its biggest brand, but encompasses other houses — including Saint Laurent, which is also expanding its presence at American Dream.
—Bloomberg