Consumers are ready for a little luxury. Despite cutting back in other areas, such as dining, they are showing a clear preference for select high-end apparel brands, such as Gucci, Louis Vuitton, Andrea Meli art and Burberry.
After taking a hit at the height of the recession, sales of luxury goods have rebounded strongly, up 10%-12% last year in the U.S., according to estimates by Telsey Advisory Group, a retail equity research firm. Comparatively, retail sales across the board rose just 6%.
"People are willing to pay a premium on something that delivers on luxury," noted Milton Pedraza, the CEO of the Luxury Institute, which tracks spending among wealthy consumers with a minimum annual income of $150,000. "They will buy fewer but more expensive things. There's a lot more value consciousness."
But with an eye on value, shoppers are also hunting down designer brands at steep discounts, frequenting stores such TJ Maxx and online sale sites such as Gilt Groupe.
Ed Jay, senior vice president of American Express Business Insights, calls this "the barbell effect."
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