The luxury end of the retail spectrum might be one area of the industry performing consistently, but even this sector is worried about the stock market. In fact, they might be even more worried than lower-end retailers, given luxury shoppers’ habit of spending more or less in direct proportion to the health of their portfolios.
Even though luxury sales excluding jewelry were up 11.6% in July over the year before, it was the high-end designer side of retail that was hurt the most after the initial market crash in 2008. And as the stock market wavers again, some retailers are starting to worry about their customer base. As always, they’re wondering whether any reluctance to buy is a hiccup, or a harbinger of a prolonged confidence slide.
The Los Angeles Times quoted Mike Berry, director of industry research at MasterCard Advisors SpendingPulse, who pointed out that when it comes to luxury shoppers: “There’s both a buying-power issue and there’s also a confidence issue, both of which have been pretty well shaken in the last week.”
While it would be easy to crack a world’s-tiniest-violin joke about rich shoppers tightening their belts when it comes to four-digit watches, when the wealthiest 20% of households account for 40% of U.S. consumer spending, that consumer confidence — up or down — will have pretty wide-ranging effects.