The High-end Consumer Shift
Bain & Company, a leading consultancy firm, reveals that luxury brands attracting affluent buyers in the United States are significantly outperforming those targeting aspirational shoppers with lower income brackets. The economic uncertainty is a major deterrent for the latter.
Boost in Luxury Sales Forecast
In its bi-annual report, Bain upgraded its yearly sales predictions for the worldwide personal luxury goods sector - comprising apparel, accessories, and beauty items. The new forecast suggests a growth range of 5% to 12% this year, up from the previously expected 3% to 8%.
China Fuels Global Luxury Market
China's recovery from COVID-19 lockdowns has positioned it as a vital growth engine. However, in line with recent results from various retailers, Bain underscores that the robust post-lockdown spending wave in the United States appears to be receding.
Streetwear Loses Ground; Premium Brands Soar
"There is a broad slowdown, primarily driven by aspirational consumers and lower-cost items. Thus, sectors like streetwear and sneakers are currently underperforming," Federica Levato, a partner at Bain, informed Reuters. She pointed out a clear split between better-performing brands and those lagging, mainly those catering to premium customers.
The Rise of Upscale Strategies
Many premium brands are revising their merchandising tactics or going more upscale to meet the needs of their wealthiest patrons. These high-end customers, compared to younger shoppers, seem more resistant to economic setbacks, given that rising costs affect the younger, less affluent demographic more.
Hugo Boss Targets High-End Market
For instance, last week, luxury retailer Hugo Boss increased its sales and profit forecasts for 2025, crediting strong growth in the U.S. and anticipating revenue increases in the Asia-Pacific region.
China's Middle-Class Appetite
Despite some concerns about China's middle-class market and a possible deceleration in sales growth, Levato noted there's still considerable demand in that sector.