Dive Brief:
- Streetwear brands could offer younger generations a gateway into luxury, and are positioning their stores near high-end spaces, according to a new report from real estate and investment management firm JLL.
- The report examines trends in the luxury retail sector, and notes that over the past year, multiple streetwear brands have rolled out locations in luxury corridors, including A Bathing Ape, which opened a store in Chicago’s Gold Coast; Kith, which opened in Malibu; and Palm Angels, which opened in New York’s SoHo neighborhood.
- Younger and more diverse consumers will drive the redefinition of luxury spending, the report stated, citing Bain & Co., which estimates that Generation Z and millennials will account for more than 70% of global luxury spending by 2030.
Dive Insight:
The connection between streetwear and high-end brands can serve brands in both sectors. For example, luxury eyewear company EssilorLuxottica’s acquisition of the Supreme brand “reflects the importance of streetwear’s direct link to the younger and more diverse consumer base that present new opportunities for growth,” JLL said in the report.
In addition, collaborations, marketing and store designs will become more important for luxury brands when it comes to forming connections with younger consumers, per the report. Luxury companies are additionally seeing the importance of in-store experiences. But prices still remain 21% above pre-COVID-19 levels, which JLL said impacts the purchasing power of aspirational consumers to the luxury industry.
“[A]s the scarcity of desirable retail space continues to impact the growth of luxury retail stores in the U.S., luxury brands with an established presence in major markets will find it crucial to reinvest in their existing flagships,” the report stated, noting brands could aim to personalize their in-store experiences for consumers.
JLL’s data shows that retail space deliveries — or the amount of retail space being constructed and released to the market — remain at a historic low, and demand for desirable locations exceeds supply. Because of this, some luxury brands have opened boutiques away from traditional prime urban corridors, according to the report, yet 68% of new store openings were still in prime retail corridors between July 2023 and July 2024.
Meanwhile, recent financial results in the luxury fashion industry have been a mixed bag. While brands like Prada and Hermès have recently seen double-digit revenue jumps, others including Burberry and Lanvin, have seen steep declines.
A recent report from HSBC said the luxury goods market is expected to see persistent struggles for the rest of the year.
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