According to consulting firm Bain & Company, luxury companies in the United States that target wealthier consumers are doing better than those that target aspirational consumers on lower incomes who are put off by the current economic climate.

Bain boosted its annual sales forecasts for the worldwide market for personal luxury goods, which includes apparel, accessories, and beauty items, in its twice-yearly study and now anticipates growth of between 5% and 12% this year, up from earlier projections of between 3% and 8%.

Now that COVID lockdowns have been lifted, China is considered as a major driver of development; nevertheless, Bain identified additional evidence that the United States’ once-victorious post-pandemic spending spree is diminishing.

“There is an overall slowdown mostly driven by the aspiration side of the customer and more entry prices, so categories like streetwear and sneakers are a bit underperforming as we speak,” partner Federica Levato told Reuters.

“Brands that are able to cater to the needs of the top customers … are the ones that perform better than others,” she added, noting a divergence between better-peforming labels and less successful ones in that market.

Since younger consumers are more impacted by rising prices than older generations with higher incomes, many high end labels are changing their merchandising methods or moving uptown to cater to their wealthiest customers, who are perceived as being more impervious to economic headwinds.

For instance, luxury clothing retailer Hugo Boss last week increased its sales and profit forecasts for 2025 and stated that it was anticipating revenue growth in the Asia-Pacific area as well as sustained good growth in the U.S.

Although there were “some questions marks” regarding China and perhaps a halt in the rise of middle-class sales, according to Lovato, there was still demand there.

According to Bain, luxury sales totaled 345 billion euros in 2017.

(Adapted from Reuters.com)

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