Sluggish European markets changing the face of American fashion

By now it is no secret that the European luxury goods market is struggling. With brands like Hugo Boss, Hermès, and Prada reporting losses due to the less than stellar financial situation in the EU and volatile currency exchanges things are pretty tough right now. Let’s not forget the cherry on top of the designer cake, the political climate in Russia, where the luxury goods market has taken a severe blow. While that is just the nature of economics with markets going up and down all the time, for something like the luxury goods market, which is a huge global commodity, brands aren’t just going to sit by and wait for the markets to pick up.

The next logical business decision, of course, is to figure out where to put your resources next. For a while the Asian markets were showing the most promise, with luxury goods becoming such a must have in East Asian countries, particularly China. Recently, the Asian markets have also begun to look more sluggish, although there is still promise and plenty of reason for luxury goods to expand their presence in the Asian markets. With two continents down for the count, luxury goods makers had to ask themselves where they could possibly look to make a real profit next.

The answer was simple: The U.S. While the U.S. is arguably still in a state of economic recovery the luxury goods market is doing fairly well. Globe Newswire has already reported that the North American market for luxury goods is clearly doing better than Europe where per capita expenditure on luxury goods has decreased. While luxury goods makers want to invest more in emerging markets they know that they’ve already got a market right here in the United States, and customers who know good taste.

In Houston, Texas, Chanel opened a new 5,000 square foot galleria styled after Coco Chanel’s baroque inspired apartment. In downtown Manhattan, Hermès, Salvatore Ferragamo, and Paul Smith all have their sights set on opening locations at the 300 million dollar redevelopment of the luxurious World Financial Center which will include a glass a pavilion and European themed gourmet market, the New York Times reported earlier this month. Luxury goods are going after the markets where they already know they have a clientele base and proven success.

New Yorker’s spent 25.5 billion dollars on luxury goods in 2014

Of course it doesn’t just happen to be NYC that they are targeting. With the recent boom of the tech and energy sectors in California and Texas the luxury goods market is finding a whole new world of clientele in America. Cities like Houston, Dallas, and San Jose having becoming enclaves for the wealthy, and where the wealthy go the luxury goods are sure to follow. Luxury retailers have begun to see America’s growing wealthy population as the perfect antidote to solve their revenue problem caused by sluggish markets in other countries.

This means that the face of the luxury goods market is changing forever. Gone are the days when posh goods were just restricted to the coasts, with the likes of the top boutiques being restricted to cities like New York, Miami, and Los Angeles. Luxury goods have their eyes set on every city with a growing millionaire population. Cities that have large international tourist populations have also become targets for luxury goods makers, so California and Texas are major targets.

Of course, the bread and butter of all American luxury goods will always be Manhattan. Take a walk down Madison Avenue and it’s no secret that high-end luxury goods are right at home in NYC. Last year, New Yorkers spent a breathtaking 25.5 billion dollars on personal luxury goods in 2014, more than the entire country of Japan, the second largest purveyors of luxury goods. It’s no secret why America has become a top target for luxury retailers looking to expand. “If you look in the past year, the United States has been at the top of our investment plans,” Michele Norsa, chief executive of Salvatore Ferragamo was quoted saying in The New York Times.

It’s a different era for America and the luxury goods market now. The expansion of luxury goods stores into Texas is just the beginning, and this could change the entire American fashion scene making many more cities enclaves for the fashion elite. While the markets in Europe and Asia being sluggish all eyes are on America to be a retail super power.