Persistent inflation and higher interest rates might be worrying to consumers. But that hasn’t stopped many from making big-ticket retail purchases this year. Need proof? JLL says that the U.S. luxury retail sector recorded more than $75 billion in sales last year.
And this year? JLL says that 2024 should be another stellar year for luxury retailers.
Luxury retailers, as the name suggests, are those brands that specialize in high-price items. Think Louis Vuitton, Versace and Dior.
In its 2024 luxury retail report, JLL said that from 2020 to 2023, luxury retail sales in the United States saw a compounded annual growth rate of 8.6%.
The future looks bright for this segment, too. Citing statistics from Statista, JLL predicts that U.S. luxury retail sales will hit $77.3 billion in 2024 before rising to $83.3 billion in 2028.
With numbers like that, it’s not surprising that many luxury retailers saw notable revenue gains last year.
JLL pointed to LVMH, the company behind brands such as Louis Vuitton, Dior, Fendi and Tiffany and Co., which saw $85.483 billion in revenue in 2022. That figure jumped to $95.095 billion last year. The brand also boosted its number of stores to 6,097 in 2023, a increase of 7% from a year earlier.
Richemont, the company behind Cartier, Van Cleef and Piaget, saw its 2023 revenue jump 6% from 2022, hitting $22.755 billion last year. Prada Group revenues jumped 13% to $5.2 billion in 2023.
Of course, some markets are more likely to attract luxury retailers. JLL said that New York City and Los Angeles remain preferred U.S. destinations for such high-end brands. Both markets accounted for a combined 36.9% of new luxury openings from July of 2023 through the same month this year.
And while headlines consistently state that large indoor malls are struggling – and it’s true that many are – these retail centers remain coveted destinations for luxury brands. These malls must be of the high-end variety, but those that are see a steady stream of new luxury retailers.
According to JLL’s research, malls accounted for nearly half of all new luxury store openings from July of 2023 to July of 2024. Class-A malls also boast higher occupancy rates, with an average vacancy rate of 5.8% in the second quarter of 2024.
Luxury retailers are similar to others when it comes to success today. Those that are thriving are focusing on the omnichannel approach, putting money into both their online presence and physical storefronts. Many luxury brands use their storefronts as ways to entice consumers to later make a purchase at their online store.
Just consider this stat from JLL’s report: E-commerce’s share of total retail sales rose to 16% in the second quarter of this year. That, though, is below the pandemic high of 16.4% in the second quarter of 2020. More than 80% of retail sales, then, still occur in physical stores.
JLL also cites another interesting trend: Because of a lack of desirable retail space, luxury brands are reinvesting in their existing flagships to personalize the in-store experience. For example, retailers are taking advantage of rising consumer travel by partnering with hospitality operators to improve the in-person experience.
JLL points to Louis Vuitton, which will open its first Louis Vuitton hotel in 2026 on the Champs-Elysées in Paris, marking a significant hospitality investment that will offer consumers a personalized travel and retail experience.
