Insight Flash: US Luxury Market Remains Weak, But High-Ticket Brands and Trendy Newcomers Stand Out

The US luxury market remained weak during the first quarter of 2024, as stubborn inflation, retrenchment among aspirational buyers, and sticker shock continued to plague the industry. Dependence on high income shoppers separated the winners and losers, but a shift in wealthy shopper behavior could spell more trouble ahead. Several relative newcomers stood out on the upside amid a challenging environment. 

Investors can leverage CE transaction data and demographic cuts to assess the state of the US luxury consumer, uncovering winners and losers among both public and private players. Merchants can use the data to gain a real-time view into the competitive landscape and discover new partnership opportunities.

The State of the US Luxury Industry

The US direct-to-consumer luxury industry struggled in 2023 amid sticky inflation, retrenchment among aspirational buyers, a growing threat from luxury resale marketplaces, and pushback against sharp price increases. CE data shows that trends remained weak through the first quarter of 2024, with all three luxury sub-industries posting negative and worsening growth.

US Luxury Performance Year-Over-Year Spend Growth

Single brand luxury growth ticked down to -9% from -8% in Q4, breaking its two quarter streak of moderating losses. Yves Saint Laurent, Gucci, and Burberry were among the key names driving weakness. Notable gainers included the occasionwear fashion-design house Sachin & Babi, the bohemian-chic boutique Ulla Johnson, and the sleek handbag brand Polene.

Multi-brand luxury spend growth declined -14%, matching its Q2 2023 low point, driven by companies like Yoox Net-A-Porter and Fartech. Higher ticket Mytheresa and relative US newcomer Cettire stood out on the upside.

The luxury jewelry sub-industry continued to hold up better, although growth turned negative again after a stronger Q4. Contemporary jewelry merchant Gorjana was a positive highlight, as its accessible price point and focus on layering appealed to US shoppers.

*Consumer Edge Transact USA1+2 eMax panel; US cardholders only; sales through wholesale channels not included

Dependence on High Income Shoppers Leads to Outperformance

As stubborn inflation continues to squeeze real incomes and aspirational shoppers pull back on expensive items, luxury merchants that cater to wealthy clientele have been outperforming. Leveraging CE demographic cuts, we can split out luxury spend between brands that are over-indexed vs. under-indexed to high-income ($150k+) shoppers. The data shows that dependence on high-income shoppers was a key factor in relative performance across luxury in Q1, as brands over-indexed to that group outperformed by 4% in single brand, 17% in multi-brand, and 10% in jewelry. 

In multi-brand, Ssense (under-indexed) was among the worst performers, while Mytheresa (over-indexed) was near the top of the list. In jewelry, aspirational watch retailer Breitling lagged, while high ticket Van Cleef & Arpels posted strong y/y growth.

*Consumer Edge Transact USA1+2 eMax panel; US cardholders only; sales through wholesale channels not included. Overindexed = compared to overall luxury industry, company derived at least 2% more of sales from $150k+ cardholders in TTM. Underindexed = compared to overall luxury industry, company derived at least 2% less of sales from $150k+ cardholders in TTM.

Falling Purchase Frequency for High Income Individuals

Monitoring high-income shopper behavior will be key in the coming months, given the importance of that group for the luxury industry’s fortunes. Notably, while purchase frequency tends to follow a seasonal pattern with a Q4 increase, the lift in the most recent holiday season was much milder than the prior two years, and Q1’s purchase frequency fell to its lowest point in almost 3 years. Could this be a sign of continued trouble for luxury in the coming year?

*Consumer Edge Transact Cohort panel; US cardholders only; sales through wholesale channels not included.

Consumer Edge is the leading provider of alternative data for consumer spending behavior, and the only provider of global revenue signals. If you’d like to benefit from using Transact US or other products for luxury, retail in general, and other industry data year-round to track trends and market hits like these, schedule a demo.

About the Authors

Michael Gunther is the VP Head of Insights for the CEIC. Explore more of his insights here and follow him on LinkedIn.

Alex Breslin-Johnson is a Senior Insights Analyst for the CEIC. Follow him on LinkedIn.