During the pandemic, sales at luxury brands skyrocketed. But much like in the U.S. housing market, those sales are now experiencing a dip.
Several luxury brands saw their sales drop in the second quarter of 2023, The Wall Street Journal reported on Friday. Kering, which owns brands such as Gucci and Balenciaga, saw North American sales plummet a whopping 23 percent. Burberry saw a decrease of 8 percent, while Prada was down 6 percent. And even jewelers like Cartier and Van Cleef & Arpels have been dealing with weak demand recently.
The downturn is an about-face from what occurred at the height of the pandemic. In 2022, Americans contributed to 33 percent of global luxury sales, up from 22 percent in 2019, according to Bain & Company data cited by the WSJ. The U.S. luxury market in particular almost doubled in three years, adding up to $128 billion in 2022.
Now, though, consumers are changing their shopping habits, and people who had saved up money during the pandemic—which they then spent on luxury goods—may not have as many dollars in the bank, or they may be holding out due to the vicissitudes of the economy. Brands have been experiencing lessening demand for entry-level luxury products such as sneakers, The Wall Street Journal noted, and Americans on a whole love a good deal.
That may be true for shoppers at the lower end of the luxury scale. But what about the wealthiest among us? Four in 10 of the world’s millionaires live in the United States, according to Credit Suisse data cited in the WSJ. Many of those ultra-rich are still buying luxury goods: Hermès, for example, saw sales in the Americas rise 21 percent in the second quarter of the year. And Brunello Cucinelli is also growing in the U.S.
Plus, shoppers across the wealth spectrum continue to spend about one-tenth more on luxury goods than they did in 2019, according to credit-card spending data. So while some brands may have experienced a rocky start to the year, the luxury market isn’t in total free fall—especially where Birkin bags are involved.