Julia Tiseo / Oct 19, 2023
Gucci / Creator: Godisable Jacob / Credit: Photo by Godisable Jacob
This year, sales of infamously known high-end products are weakening as US and European consumers experience financial tightness with money saved from the 2020 pandemic.
Luxury retailers have flourished in the past due to a consumer spending spree while stuck at home. But as the masks come off, their wallets seem to be doing the same as more people tend to pull back on ultra-high-end purchases.
Louis Vuitton bag
The fact is not hidden that people were generally bored during the global isolation. This caused the online market to skyrocket, as consumers eagerly blew through their savings on high-end products. According to Laura Sherman, fashion correspondent at Puck News, “2021 and 2022 were blockbuster years for the luxury industry.”
But what goes up, must come down. Experts warn that consumer spending habits are likely to reverse, and as student loan payments restart, resilient online shoppers are looking to save more than they spend. Earlier this year, The San Francisco Fed predicted that the average US consumer would run out of savings by the end of last quarter.
Chanel / Creator: Aleksandar Pasaric / Credit: Photo by Aleksandar Pasaric
According to Bank of America card data, US spending on luxury fashion has declined 16% year-over-year in the past quarter; making it difficult for these brands to rely on high-income consumers to continue making their profits. Several luxury brands have watched their sales drop in the second quarter of 2023. And the previously marked “recession-proof” reputation of these brands is slowly coming to an end.
