- Business Insider/Jessica Tyler
- Online luxury fashion spending is on the rise, according to a new report from The NPD Group.
- This is being driven by fashionable millennials who are splurging on high-end apparel and footwear.
- Experts say there has been a major shift in retail as the middle class dies out. Increasingly, the most successful businesses in the sector have become more distinctly split into two sections: luxury and budget stores.
Luxury fashion is having a moment.
According to a recent report from The NPD Group, dollar sales of luxury fashion in the United States have increased by 50% in recent years, with substantial growth in sales of expensive apparel and footwear.
“The luxury market is evolving, new brands are getting attention, and online retailer platforms are elevating the competitive landscape,” Marshal Cohen, chief industry advisor for NPD, said in a statement accompanying the report.
He continued: “The younger, multi-ethnic demographic that is more attracted to purchasing designer products online – even more than the average online accessories, footwear, or apparel buyer – is a major contributor to this evolution.”
High-end brands such as Gucci have exploded in popularity in recent years. In the first half of 2018, its sales almost doubled. And recent survey results show that millennial and teen shoppers can’t get enough of it: It was ranked the second-hottest brand on a recent survey by Lyst and was the 10th most popular apparel brand.
Experts say that there is more significance behind the recent boom in luxury fashion than first meets the eye.
A recent report released by Deloitte titled “The Great Retail Bifurcation: Why the retail ‘apocalypse’ is really a renaissance” argued that consumers’ shifting attitudes towards finances and social issues are driving a massive shift in retail.
“Households have diverged along economic lines and now people’s respective income levels are steering their behaviors and dictating the success of retail segments,” Robert Stephens, senior manager at DeloitteConsulting LLP and co-author of the study, wrote in March 2018.
He continued: “More affluent shoppers have fueled high-end retail as their income and net worth have grown, while lower-earning consumers, faced with growing expenses and dramatically less disposable income, have turned toward price-conscious stores.”
Increasingly, this has meant that the most successful businesses in the retail sector have become more distinctly split into two sections: luxury and budget stores.
“The middle is disappearing – low- and middle-income customers increasingly shop at discounters and dollar stores, forcing retailers that once served these customers .. .to close shop,” analysts from intelligence firm Gartner L2 wrote in a recent report on department stores.