Over the past few years, the luxury market has outperformed the overall retail holiday shopping market. But this year, luxury retailers, like discount and mass retailers, are bracing for a slowdown.
“Luxury tends to grow generally faster than [regular] spending, and will continue to be the case,” said Michael Niemira, vice president and chief economist for the International Council of Shopping Centers. But this season will bring a “little more choppiness” to the market, causing it to be weaker than it has been in previous years, he said.
Spending on luxuries is growing about 5.5 to 6 percent. Though this is down from the roughly 8.5 percent growth a year ago, according to Niemira, it is still higher than the ICSC’s overall holiday retail projections of about 4.3 percent.
A study by research firm Unity Marketing, which releases the Luxury Consumption Index, found that in the third quarter of 2007, the confidence of luxury consumers fell to its lowest point since 2004. About 1,000 consumers with an average income of $150,200 were surveyed.
Some analysts predict that different parts of the luxury market will be hit at varying degrees. “You have the super-rich and those well off. Those stores who cater to well-off are getting nervous because of October sales,” said Tom Saquella, president of the Maryland Retailers Association. The well-off are “feeling the decrease in the value of their homes,” he said.
This is not stopping the growth of the luxury market in the metro area. De Beers Diamond Jewellers will open a new store in Tysons Corner at Tysons Galleria just in time for the holidays, Wednesday, Nov. 21.
The Tysons Corner area is a “great diamond market,” and Tysons Galleria is a luxury mall, said Hamida Belkadi, chief operating officer for De Beers. “The combination of the two made it an attractive location.”
Still, Belkadi is hedging her bets for holiday shopping. “I think people will be a little more cautious,” she said. People will always buy diamonds for special occasions, but they may not spend as much. “If we don’t sell million-dollar pieces, we will sell small gifts very well,” she said. Prices in the store, the company’s fifth in the United States, start at $400.
