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The development of mid-sized cities in the United States and repeated confinements in China have provided fertile ground for luxury brands to establish themselves.
Many brands have taken the gamble of setting up or relocating to medium-sized cities in the United States, like Gucci, which was one of the first stores in the Columbus City Center shopping mall in Ohio when it opened in 1989, but only stayed there a few years. At the end of 2021, Hermès will open a new store in Florida, between Miami and Fort Lauderdale, in the Aventura Mall, the largest shopping center in the state. “We are delighted to expand and strengthen Hermès’ ties to South Florida,” said Robert B. Chavez, President of Hermes USA.
Expanding wealth
Indeed, after years of expanding in China through digital, retail operations and by establishing local boutiques in large and medium-sized cities, luxury brands are rediscovering the United States, opening boutiques in cities where they had never set foot before.
Household wealth, previously concentrated in a handful of large cities, has spread to new regions of the United States in recent years. Cities like Atlanta and Austin, Texas are emerging and the development of these new pockets of wealth is influencing the strategy of luxury brands, which are not hesitating to venture far from their traditional bases like New York and California.
As an example, Kering said it plans to capitalize on the rapid growth in U.S. demand by opening more than 30 new stores in the country over the next two years. “These cities have changed structurally, it’s not just a fashion effect,” François-Henri Pinault, the group’s chairman and CEO, explained to journalists in early 2022.
The LVMH group is pursuing a similar strategy, with openings planned for Givenchy in Atlanta and Philadelphia in the near future. Louis Vuitton, which already has a significant network in the United States, is launching new types of stores, including a first store dedicated to men in California.
A stronger appetite for the United States
Since the pandemic, China has become an unstable market, due to the zero covid policy and restrictions, especially earlier this year in Shanghai. This has repercussions for luxury brands, because while China has lagged behind, they have been able to make up for the shortfall thanks to a recovery in consumption in Europe and the US. And for good reason, since 2019, the major luxury groups have delivered significantly more growth in the United States than in other parts of the world. For example, Kering’s sales in North America nearly doubled in the first half of 2022 compared to the same period in 2019.
“Growth in China has been the priority for so long that luxury brands have been slow to spot new opportunities emerging in the US,” comments Erwan Rambourg, head of consumer and retail research at HSBC. “Luxury used to be very correlated with Chinese consumption. Now it’s much more balanced, with American consumers at the forefront” he adds. He says the global pandemic has freed up affluent U.S. consumers who might previously have felt guilty about spending large amounts of money on luxury items.
But for luxury groups, the expense of opening a new store remains higher in the U.S. than in Europe or Asia, due in part to relatively high construction costs. Finding staff is also a challenge, when many U.S. companies are struggling to recruit.
By pursuing ambitious expansion programs in the U.S., luxury brands are ignoring warnings from traditional retailers that households will cut back on spending in the face of inflation. But they remain optimistic because affluent consumers are relatively unaffected by these problems and are less likely to change their spending habits, according to industry executives.
Read also > The United States, the new El Dorado of the luxury sector?
Featured photo : © Brian Berkowitz/ Gucci[/vc_column_text][/vc_column][/vc_row][vc_row njt-role=”not-logged-in”][vc_column][vc_column_text]
The development of mid-sized cities in the United States and repeated confinements in China have provided fertile ground for luxury brands to establish themselves.
Many brands have taken the gamble of setting up or relocating to medium-sized cities in the United States, like Gucci, which was one of the first stores in the Columbus City Center shopping mall in Ohio when it opened in 1989, but only stayed there a few years. At the end of 2021, Hermès will open a new store in Florida, between Miami and Fort Lauderdale, in the Aventura Mall, the largest shopping center in the state. “We are delighted to expand and strengthen Hermès’ ties to South Florida,” said Robert B. Chavez, President of Hermes USA.
Expanding wealth
Indeed, after years of expanding in China through digital, retail operations and by establishing local boutiques in large and medium-sized cities, luxury brands are rediscovering the United States, opening boutiques in cities where they had never set foot before.
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The development of mid-sized cities in the United States and repeated confinements in China have provided fertile ground for luxury brands to establish themselves.
Many brands have taken the gamble of setting up or relocating to medium-sized cities in the United States, like Gucci, which was one of the first stores in the Columbus City Center shopping mall in Ohio when it opened in 1989, but only stayed there a few years. At the end of 2021, Hermès will open a new store in Florida, between Miami and Fort Lauderdale, in the Aventura Mall, the largest shopping center in the state. “We are delighted to expand and strengthen Hermès’ ties to South Florida,” said Robert B. Chavez, President of Hermes USA.
Expanding wealth
Indeed, after years of expanding in China through digital, retail operations and by establishing local boutiques in large and medium-sized cities, luxury brands are rediscovering the United States, opening boutiques in cities where they had never set foot before.
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