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United States, luxury does not stop and is on the hunt for new cities

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United States, luxury does not stop and is on the hunt for new cities

The key points

  • According to Bain Altagamma this year the Americas will generate 113 billion euros in purchases of luxury goods
  • More than half of global wealth growth was generated in North America, according to Credit Suisse Global Wealth Report 2022
  • Luxury is looking for new capitals in the USA: from Texas to Louisiana

A century later, i roaring twenties are back: the decade that at the beginning of the twentieth century marked a golden moment for the United States seems to be repeating itself in the country also in this new millennium. At least, in luxury consumption: according to the recent Worldwide Luxury Market Monitor by Bain-Altagamma, the Americas (which actually also includes the growth markets of Mexico and Brazil) will generate 113 billion euros in purchases of luxury goods this year high range, compared to 94 in Europe and 48 in Asia (but excluding China), an increase of 25% in the last year and 35% between 2019 and 2022, the highest on the planet.

Record stock index, generous helicopter money, i.e. direct subsidies, from Washington, fruitful investments in cryptocurrencies that enrich Gen Z of which the United States is populated by almost 21% and which by 2030 will do 30% of shopping, are all factors that explain how The United States is today the most promising market for luxury goods. Added to this are the data from the Credit Suisse Global Wealth Report 2022, according to which more than half of the world‘s wealth growth (amounting to 463 trillion dollars) was generated in North America, +15.5% compared to 2021, the highest value (China stops at 15%).

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Second priority for years, they are confirmed as a key square

«I believe that in the past twenty years there has been a problem of priorities – notes Luca Solca, managing director and head of the Luxury goods sector of Bernstein -: the luxury companies have concentrated very much on China, given that that market was in explosive growth. Other large markets, such as the United States, remained in second priority. The opportunity to grow more in the US is there and it can be seen: the ratio between luxury sales and GDP is lower than in Japan or China, and it doesn’t necessarily have to be like this». A growth that will no longer pass only through the classic industrial destinations, concentrated on both coasts, but which will be increasingly widespread in cities and areas that we could define as second and even third level, a direct consequence of the pandemic: remote working and staycation imposed by travel restrictions have brought purchases not only within the borders of the country, but also within those of their own city.

Change the geography of purchases

«In the United States, the phenomenon of commuting was much more significant than in Europe, so remote working had significant repercussions both in terms of time availability and people’s area of ​​gravitation – confirms Emanuele Pedrotti, Partner of McKinsey-. People buy locally and are even willing to pay a premium to buy products in shops that are close to their neighborhoods. While rents on 5th Avenue in New York have dropped about 20% compared to before the pandemic, cities that were previously considered secondary by big brands, such as Phoenix, Atlanta and Miami, are now subject to great attention from the brands, both in terms of direct sales and presence in multi-brand stores».

From Austin to New Orleans: the new capitals

The geography of the new openings confirms this, and which affects Austin, Texas, and other southern cities such as Charleston, Atlanta, but also St. Louis and New Orleans. Givenchy (which has only 8 stores in the States) is about to open in Philadelphia, Breitling has inaugurated a store in Detroit, and Cartier, as noted by the Financial Times, has not only doubled the surface area of ​​its stores in the country in the last five years , but is eyeing new locations in Fort Worth, Texas, and Seattle with interest. Also to be observed are places in rapid development, such as Augusta, in Missouri, considered the new Napa Valley of the Midwest; Nashville, Tennessee, where Oracle is building a campus that will attract young tech talent, and even Fargo, North Dakota, famous for the Coen brothers’ film and now a favorite destination for the more sophisticated Gen Z. «Christian Louboutin and Dolce & Gabbana are some examples of brands that we find in previously unexplored cities, or Louis Vuitton in Phoenix. Alongside these brands, retailers such as Now or Never, also in Phoenix, as well as better-known brands such as Comme des Garçons and Maison Margiela, offer niche brands that also attract new consumers – continues Pedrotti -. In this context, the combination of “local shopping” and affordability has influenced purchases in the more accessible categories of luxury, including caps, T-shirts and slippers».

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