It isn’t every day you see a sign boasting 40 percent off in the window of a luxury shop. But as real estate executive Andy Graiser walked past one of Prada’s New York City boutiques a week before Christmas, that’s exactly what he encountered.
Though the design house is working through some internal issues (namely, products that have fallen flat with their target demographic), Graiser, founder of A&G Realty, said such deep discounting at a luxury shop is indicative of broader woes across the luxury space — troubles that could result in the segment being next in line to trim its store fleet.
The problems that luxury firms are battling are twofold. For one, they’re facing macroeconomic pressures including a sinking stock market, stalled global growth and a stronger dollar, all of which discourage the high-end consumer from spending. For another, they’re trying to sell their wares to a group of shoppers who have become less focused on material goods, and are instead more interested in dining out or travel — a trend that could have long-term implications for the industry.
Due to these factors and an overall glut of retail space in the U.S., Graiser predicts luxury retailers will be next in line to close some stores, as they try to compete in a country that has more than two times the retail space per capita than the United Kingdom, France, Brazil and Germany combined.
“There are real issues with some of these luxury players,” Graiser said. “There’s going to be a lot more closures that are going to be occurring.”