US consumers said to be regaining a taste for luxury

By Michelle Yeomans

- Last updated on GMT

Related tags: Luxury goods, Lvmh

US consumers said to be regaining a taste for luxury
With the US said to be bouncing back from the recession of late, certain consumers appear to be spending more freely again, particularly in the area of luxury cosmetics.

According to the Wall Street Journal, although various market analysts have been keeping a watchful eye on growth in terms of luxury goods in China, the US has been quietly reinforcing the business of high-end goods purveyors.

"Trends in luxury consumption in the US. have continued to outperform overall consumer tre​nds," says HSBC luxury-goods analyst Antoine Belge.

It reported that although consumer-confidence levels are still wobbly, the biggest spenders are shrugging off any uncertainty, and that despite the economic crisis dampening luxury goods sales in the US, it has now taken the lead in sales growth as China cools down.

"Double-digit sales increases became harder to attain for companies such as LVMH which had operated in China for more than 20 years, [but] are experiencing strong U.S. sales."

Making a comeback

The news publication further notes that most luxury-goods brands were present in the States before venturing into China. Before pointing out luxury giant LVMH, parent of brands such as the Sephora cosmetics chain's announcement last month that "the US was its strongest region in 2012."

"Excluding currency effects and acquisitions, sales rose 12 percent, outstripping 10 percent growth in Asia excluding Japan​."

Meanwhile; the US head of L’Oreal, Frédéric Rozé acknowledged the country as being a major source for growth for the company.

Demographic trends are also noted as playing in favor of the luxury-goods industry with Hispanic-Americans and Asian-Americans highlighted as being bigger consumers of luxury goods fashion and cosmetics than the average American.

"At L'Oréal, for instance, Asian-Americans spend heavily on skin-care products. L'Oréal makes high-end perfumes and cosmetics under labels such as Lancôme and Giorgio Armani, but also has many mass-market brands​."

Still remaining realistic

Although it's good news that the segment is recovering, the news publication notes that whilst executives are enthusiastic about US growth, they are also realistic about its limits.

"As recently as 2007, luxury brands were opening dozens of stores in smaller cities from Seattle to Nashville. But analysts say luxury-goods sales haven't lived up to expectations in some of those places​."

"Where some have gone too far is in thinking Middle America is going to be buying luxury​," explains HSBC's Mr. Belge.

 

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