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“ A lot of people do not want branded goods because brand dilution is real and we are seeing this play out with old-school European brands that have been around for centuries ,” Kelly Cutrone , author and founder of People ’ s Revolution , a fashion publicity company based in New York City , told Inside Retail .
“ There is a belief that wearing a luxury brand will automatically give you status and that belief changes from market to market . In the United States , the demand for over-the-top , outward-facing luxury brands is waning . That seems to be the case in China and with the lower price-point items .”
Cutrone noted that the rise of counterfeits – specifically for a luxury handbag in a popular style or pattern – has led to consumers stepping away from ‘ it bags ’ and wanting something older , vintage and nostalgic . “ There is an idea that something that shouts , ‘ Hey , this bag is $ 5,000 ,’ in this economic environment feels out of style . The aspirational customer isn ’ t suffering , she wants something that reflects the multilayered person she is .”
The resilience of the luxury customer – even if , in some ways , she is changing – can be seen in the demand for brick-and-mortar space . Jeff Roseman , vice chair of Newmark Knight Frank , a commercial real-estate company in New York City , said the luxury retail sector has had its best year yet . “ We are going through an incredible boom on the retail side , and it ’ s all over the city . Rents are creeping back to pre-pandemic prices , specifically on Madison and 5th avenues . Everyone wants to be back in New York City ,” he told Inside Retail .
CBRE reported that in Q2 , Manhattan retail rents rose for the fourth straight quarter , generating a “ subdued optimism ” due in part to a rebound in international tourism , and strong consumer demand for the luxury and food and beverage sectors .
Above : Coach has been working to refresh its brand image for a younger generation .
Left : Dancer and actor Lil Buck models items from Coach ’ s Spring 2024 collection .
Brand dilution is real and we are seeing this play out with old-school European brands that have been around for centuries .
Playing by Gen Z ’ s rules It ’ s clear that the Gen Z luxury shopper operates by a different set of rules , and brands that can play by those rules are prime targets for M & A activity , whether in the US or overseas .
McKinsey & Co observed five key characteristics of the APAC customer in its report , What Makes Asia-Pacific ’ s Generation Z So Different ? They rely on social media but are thoughtful about how they engage with it , they prefer brands that show their personality and uniqueness but are also well known enough to be recognized , they are greatly influenced in their brand selection by video content , and they want to be seen as environmentally conscious , but they don ’ t want to pay for this .
Lastly , these shoppers are also willing to embrace new forms of media to purchase items ; for example , they shop via the metaverse and use interactive AI to submerge themselves in branded worlds .
“ Gen Z in China are rather spoiled by the efficiency , speed and increasing quality of retail . As such , brands have had to raise the bar significantly to stun , delight and capture the attention of this customer segment ,” said Angela Chan , global investment lead at Swire properties . ►
September 2023 www . insideretail . us 17