Formerly free-spending shoppers who were "trading up" to high-end goods are now less likely to treat themselves to that Gucci bagIs the "mass luxury movement" dead?
It certainly looks that way. Executives at luxury retailers such as Saks (SKS), and high-end brands ranging from Coach (COH) to Karl Lagerfeld, are bemoaning the disappearance of free-spending shoppers. "You're seeing more pressure on that aspirational luxury consumer at our entry-price points," says Steve Sadove, chief executive officer at Saks. The New York luxury department store reported that sales at stores open for a year or more slowed to a miniscule 0.8% gain in December, compared with a 25.7% increase in the previous month.
"Entry prices" are, of course, a relative concept for outfits like these. Still, in the last few years, many retailers had posted phenomenal growth rates thanks to middle-income shoppers who were able to trade up in an era of easy money. Gas was cheap, as was credit. And there was a ton of cash left over after taking out home equity loans or refinancing mortgages. With more green in their pockets than ever before, consumers ratcheted up their tastes accordingly and bought goods from designer and luxury-brand names that previously were reserved for the rich.
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