Tuesday, March 7, 2017

Luxury Retail Hits The Wall

Luxury retail is in decline.The most common explanations for faltering performance of luxury retailers have been the strong dollar's impact on foreign tourism and a weak oil market. To be sure, these factors have not been helpful. But the problems in the luxury market go deeper, particularly among the department store players. Even an improvement in foreign tourism or the oil market are unlikely to return the sector to its former glory. Here's why:

Little new customer growth. Other than through e-commerce, luxury retailers have had a tough time with customer acquisition for many years. With e-commerce maturing--and most recent reported gains merely channel shift--unfavorable demographics (see below) and very few new store openings, luxury brands are struggling to replace the customers they are losing.. . . more

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