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3 big luxury retail trends for 2023

3 big luxury retail trends for 2023

Last year, about half of all adults between the ages of 18-29 were living at home, according to data from the US Census Bureau.

Between the paychecks from their day jobs, and the stimulus checks some states offered to beat inflation in the summer, the influx of cash fueled a boom in purchases of Louis Vuitton bags, Versace belts, and Gucci sneakers among young adults.

This year, without those stimulus checks, and amid a possibly pending recession, there will be a shift in who is buying luxury items, according to Oliver Chen, a managing director in the retail and luxury section for investment bank Cowen.

"That middle-income consumer is under a lot more pressure," he said, "there are fewer dollars for all discretionary items."

Still, the personal luxury market is projected to grow between 3%-8% over the course of 2023, according to Bain & Co.

During times of financial stress, Chen suggested that the customers who continue to buy luxury — like ultra-rich — will gravitate toward major designers like Chanel, Dior, and Louis Vuitton over smaller designers.

"It's just intensification of the bigger getting better," Chen said.

According to four experts, from former merchandisers to retail analysts, to understand how the luxury retail market is bound to change in 2023. Here are the top 3 trends they expect to see:

Resale will be bigger than ever

Luxury resale has long fallen under the domain of vintage boutiques, thrift stores, and more recently, online marketplaces like The RealReal and Vestiaire Collective.

Next year, experts expect to see more luxury brands taking control of their own second-hand markets. Rolex, for example, already launched a certified pre-owned program for its watches in early December 2022.

Olivia Steele, the CEO of a virtual retail sales company called Conversation Couture, linked the interest in resale to a growing focus on sustainability among luxury brands.

Two experts predicted that in the coming years, designer boutiques will be outfitted with their own resale section.

Customers want to return to basics

Over the past year, luxury fashion has revolved around "Zoom tops," ruffles, and over-the-top designs, said Brooke Cundiff, a former buyer for Saks Fifth Avenue who's a co-founder of the e-commerce platform Cortina.

Cundiff contended that customers have grown tired of walking into a luxury department store and seeing extravagant items, like a sweatshirt, for $1,000.

Alessandro Michele's November departure from Gucci was evidence of that, Cundiff said. In his seven years as the brand's creative director, Michele had made a name for himself through maximalist designs.

Now, customers — even the most high-flying ones — are looking for simpler, more tailored pieces they can wear repeatedly.

Mid-tier luxury might take a hit

Three experts noted that designers at the high end of the price spectrum will continue to see strong demand, especially from the 1%. These are brands like Hermes — known for its Birkin bags which range in price from tens of thousands to hundreds of thousands dollars. Or Chanel, where a pair of ballerina flats retails for more than $1,000.

But the "aspirational luxury customer" who may have used their discretionary income last year to buy a $500 pair of shoes from a mid-priced designer might pull back, two experts noted.

Accessories are still likely to perform better than ready-to-wear items like apparel in a recessionary environment because of their longevity, said Cundiff.

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