Luxury Item Sales Growth Slows

After falling off dramatically in the recession that began in late 2007, luxury goods sales began to rebound in 2010. Double digit growth was seen from 2010 through 2012. For 2015, Bain & Co. cut its forecast of global luxury spending from a rise of 2% to 4% to just 1%, or $280 billion, from 2014. High-end retailers such as Louis Vuitton and Burberry are facing tougher markets in China due to its slowing economy and the government’s anti-extravagance and anti-corruption initiatives (luxury sales in China in 2015 are expected to fall for the second straight year). In the U.S., luxury good sales are being hurt by stock market volatility, along with a strong dollar that curbs purchases by tourists.

During the recession, luxury retailers began offering new merchandise at discounted prices in innovative and discreet ways. This practice continues, since even upscale shoppers demand competitive prices. Rather than post glaring “Sale” signs that may be perceived at odds with upscale images, retailers including Tiffany, Saks Fifth Avenue and Neiman Marcus are sometimes offering discounts at the time of purchase in innovative ways. For example, special discount offers may include something along the lines of a $100 store credit earned when making at least a $500 purchase. This is a practice long held at some chains for customers who purchase tens of thousands of dollars in merchandise at a given time. However, during the global recession, customers who made more modest purchases at a few national chains suddenly found themselves on favored customer lists.

For example, Neiman Marcus offers special promotions called “Midday Dash” sales in which e-mails are sent to preferred customers regarding one-day-only sale prices on specific merchandise. E-mails are sent early in the morning of the sale (which usually begins at 11:30 a.m. Eastern Standard Time). At the appointed hour, customers click on the link in the e-mail and view a limited access page on the Neiman Marcus site where around two dozen recently-stocked items are offered at as much as 50% off. A limited number of each item is available and are marked with “Sold Out” graphics on the web page once all have been purchased. Neiman Marcus also offers this kind of sale during evening hours.

Also, luxury brands have recently allowed e-commerce firms to offer last year’s fashions at greatly reduced prices. Sites active in this market include Europe’s yoox.com and gilt.com.

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