Luxury, the US market's hot autumn between elections and Fed moves

The Fed's decision of a maxi interest rate cut was just the first of the key appointments awaiting the US in this hot autumn that will culminate on Tuesday 5 November when Americans will be called to the polls to try out the (or the?) next president. Although the eyes of the world are on the challenge between Kamala Harris and Donald Trump, many experts believe that the winner or winner of the election will not be the swing vote for Americans' fashion and luxury consumption. Which, after the post-Covid boom, have slowed down with rising inflation and, indeed, rising interest rates. In October last year, Consensus Altagamma estimated a +2.5% for the North American market; the June 2024 update pointed out that the US continues to face macroeconomic pressures despite signs of gradual improvement in GDP and consumer confidence.

A number of unknowns weigh on the immediate future: "As we approach the fourth quarter of 2024, the US luxury market is facing a complex scenario. Although the country has not yet entered recession, consumers are increasingly acting as if it has, having reduced spending over the past 12-18 months due to inflation, rising interest rates and the end of Covid-19-related support measures. In addition, inbound international tourism, particularly from China, is still far from pre-pandemic levels, with a negative impact on sales of major luxury brands," explain Filippo Bianchi, managing director and senior partner at BCG, and Pierre Dupreelle, managing director and partner at Bcg. They estimate, with "a shorter Christmas season in 2024", "a difficult scenario for the US market". In this context, according to Bianchi and Dupreelle, "the luxury companies that will be able to resist best will be those able to rely on 'Beyond Money' clients, ultra-high net worth individuals less affected by macroeconomic slowdowns".

Focus on the super-rich to be intercepted in the territory

That the super-rich are a trump card for companies that know how to court them and stimulate them in the right way emerges from some recent case histories - one above all, that of the ecommerce platform Mytheresa.com - on condition that, as Claudia D'Arpizio, senior partner at Bain&Co. emphasises, "brands understand that in the USA it is necessary to intercept consumers in the places where they live". Even before Covid, we were already talking about the "ruralisation of wealth", highlighting, let's say, secondary areas as a basin of reference for luxury consumers,' continues D'Arpizio. 'Today, Texas cities such as Austin and Dallas continue to be strong, but there are also new destinations, such as Denver or Pittsburgh, which have also attracted young couples. In the United States there is a migration for economic reasons but also political and social ones'.

D'Arpizio has a more positive outlook on the US market in the fourth quarter of 2024: 'We expect data to improve,' he says. 'New York is also recovering due to the fact that tourism has returned to the city. During and after Covid there was a theme of prohibitive rental costs when the shops were empty'. Today, however, the desire to reinvest in the Big Apple is there: this is demonstrated by the openings of Luisaviaroma and Casa Zegna and, in a few weeks, the grand reopening of the Armani store at 761 Madison Avenue, which will also bring to the city the fashion show event for S/S 2025, exceptionally 'snatched' from Milan.