Last week, luxury’s slowdown continued. In response, some luxury brands may start turning to lower price points. Don’t forget to subscribe to the Glossy Podcast for interviews with fashion industry leaders and Week in Review episodes, and the Glossy Beauty Podcast for interviews from the beauty industry. –Danny Parisi, sr. fashion reporter
Luxury slowdown continues into 2024
In the latest iteration of the great luxury slowdown, Neiman Marcus reported that holiday sales at the end of 2023 were below expectations. On Wednesday, CEO Geoffroy van Raemdonck said in a statement that the luxury retailer’s holiday sales in 2023 were low-single-digit percentage points below the year before.
The season marked the first time Neiman Marcus’s holiday sales were lower than the year before since 2020. Following the height of the pandemic, luxury sales across the industry skyrocketed, particularly in 2022. But over the course of 2023, that trajectory reversed itself, leading to the slowdown that has hit every major luxury player, even LVMH.
Neiman Marcus’s competitors aren’t doing any better. Saks Fifth Avenue has reportedly been unable to pay its vendors on time, and Farfetch was sold for pennies on the dollar at the end of last year. These retailers have struggled as luxury shoppers around the globe have curtailed their spending.
Among brands, Burberry had a particularly rough week last week, cutting its profit forecast from around $850 million to around $520 million for the 12 months ending in March. The drastic drop in the company’s revenue was clear late last year when it too failed to see its typical level of holiday sales growth.
It could be a while before luxury brands and retailers alike can adjust to the new reality. But there are signs of some stabilization. After over a year of declines, prices of used Rolex watches finally began to flatten out in December, according to Bloomberg’s Subdial Watch Index which monitors prices.
Glossy’s colleagues at Modern Retail wrote last week that luxury brands may begin to turn toward lower price point items — the opposite approach of their usual ever-increasing pricing strategy — to win back consumers whose budgets are stretched thin. Whether those brands can strike that balance without devaluing the prestige images they’ve cultivated will be a major question for the luxury sector throughout this year.