Lux­ury stores adapt to chang­ing shop­pers

Antelope Valley Press - - Business - By ANNE D’IN­NO­CEN­ZIO As­so­ci­ated Press

NEW YORK — To get that mono­gram tote bag by Louis Vuit­ton or leather Flashtrek sneak­ers by Gucci, the go-to place had been lux­ury depart­ment stores.

Not any­more.

Now, there are far more op­tions to ac­cess ex­clu­sive la­bels. You can buy them at on­line sites like Ne­ta­porter. Or get them barely used through sites like Fash­ion­phile and The RealReal. You can even rent an en­tire ro­tat­ing wardrobe through com­pa­nies like Rent the Run­way.

“The con­sumer is king. And they can buy lux­ury brands in dif­fer­ent places,” says Steve Sadove, former CEO and chair­man of Saks Fifth Av­enue and now se­nior ad­viser at Master­Card.

The new en­trants have dis­rupted the lux­ury sec­tor by cre­at­ing dif­fer­ent chan­nels to at­tain the seem­ingly unattain­able. For lux­ury depart­ment stores that once had a lock on where the well­heeled could shop, that has forced them to reimag­ine their ap­proach. They now of­fer new ser­vices as well as food and al­co­hol to lure back cus­tomers who were once ex­clu­sively theirs.

At Nord­strom’s women’s flag­ship in Man­hat­tan, for in­stance, cus­tomers sip cham­pagne and nib­ble on small bites while try­ing on shoes. Rec­og­niz­ing the grow­ing pop­u­lar­ity of se­cond-hand sites, Neiman Mar­cus is rolling out shops where cus­tomers can sell their de­signer be­long­ings as part of a part­ner­ship with Fash­ion­phile, an on­line resale ac­ces­sories com­pany. And as part of a $250 mil­lion ren­o­va­tion of its flag­ship store in Man­hat­tan, Saks Fifth Av­enue has ded­i­cated its main floor to lux­ury hand­bags that’s staffed with 50 hand­bag style ad­vis­ers, in ad­di­tion to sales as­so­ciates.

Mean­while, brands like Gucci and Louis Vuit­ton are open­ing more of their own stores and ex­pand­ing on­line. Robert Burke, a lux­ury con­sul­tant, says they are try­ing to con­trol their fu­ture as they watch their prod­ucts get dis­counted on resale sites.

Joseph Aquino, pres­i­dent of real es­tate ser­vices firm JAACRES, sees lux­ury’s fu­ture with fewer stores that fo­cus on “less prod­uct” and “higher prices.”

In one sense, tra­di­tional lux­ury stores are no dif­fer­ent than other brick-and-mor­tar re­tail­ers that must now fiercely com­pete with on­line ri­vals. But the ex­clu­siv­ity they used to com­mand by cater­ing to a niche mar­ket of wealthy spenders is be­gin­ning to erode, es­pe­cially among the new-mon­eyed set of shop­pers in their 20s through their 40s who can af­ford high-end mer­chan­dise but may still be look­ing for a deal.

Mil­len­ni­als and Gen­er­a­tion Z ac­counted for 47% of lux­ury con­sumers in 2018 and for 33% of all lux­ury sales world­wide in 2018, ac­cord­ing to a study by con­sult­ing firm Bain & Co. To­gether, how­ever, they con­trib­uted to vir­tu­ally all of the mar­ket’s growth, com­pared with 85% in 2017.

Over­all, the global mar­ket for per­sonal lux­ury goods is healthy, buoyed by a strong econ­omy and the spend­ing power of China. The sec­tor reached a record high of $286.53 bil­lion in 2018 — a 6% in­crease from the year be­fore, ac­cord­ing to Bain. Jew­elry in par­tic­u­lar has been one of the top lux­ury growth cat­e­gories.

In the U.S., lux­ury sales ex­clud­ing jew­elry have fallen 1.9 % through Novem­ber com­pared to a 3.4% in­crease in over­all re­tail sales ex­clud­ing au­tos and gas, says Master­Card Spend­ingPulse, which tracks sales across all types of pay­ments. That’s in part be­cause of store clo­sures and a drop in in­ter­na­tional tourists.

Lux­ury shop­pers like Sabina Gill pre­sent chal­lenges to lux­ury depart­ment stores.

The 42-year-old banker from Man­hat­tan says she’s dou­bled her an­nual spend­ing on jew­elry and cloth­ing to $20,000 in the last few years. But while she used to shop at places like Saks and Bergdorf Good­man, now she’s spend­ing most of the money on sites like The RealReal or Ne­ta­porter. If she buys at Saks, she uses the re­tailer’s on­line per­sonal shop­ping ser­vice.

As­so­ci­ated Press

This photo taken Novem­ber 26, shows ap­pe­tiz­ers and drinks ready to be served at the Bistro Verde restau­rant at the Nord­strom NYC Flag­ship in New York.

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