While reading Billy Gray’s article of his conversation with Cushman’s Matt Winn on the state of luxury retail, I couldn’t help hearing Pete Seeger, The Letterman and Peter, Paul & Mary singing “Where have all the flowers gone.” Is the middle class dwindling? It seems that Matt is describing just that, at least when it comes to retail luxury.
“Lux,” as Faith Hope Consolo describes it, is actually booming, and Matt seems to agree to some extent. Faith specializes in placing lux retail, particularly international retailers and Matt confirms that “in New York it seems like a new international retailer opens every week.” So what’s not to like about “boom”?
Well, if you drill down into it, not everyone is feeling the boom and many are still feeling the bust, particularly the middle class.
Matt describes the “barbel of prosperity,” or as I would like to describe it, “the rich get richer and the poor get poorer.” In Billy’s article, Matt goes on to say:
We describe it in general as the following: a couple of years ago we created a graphic. If you can imagine this—it’s taller on the ends in terms of growth, which would be luxury or discount, and then flat or dropping in the middle. We call it the barbell of prosperity. And the reason we say that is the middle class has to push in order to eliminate the sagging middle. The economy has to be lifted up to see the growth in all sectors.
If “lux” is booming, why would Women’s Wear Daily report a slow-down in luxury retail to an expected 4 or 5 percent growth this year, compared to 11 or 12 percent in the past couple of years?
Matt explains that luxury retail is going from an era of mass luxury—catching as many customers as possible—to true luxury, which is making a product specifically for a luxury market. That may mean slower growth, but higher profit. A lot of the luxury houses have raised prices lately, which is part of the trend of getting back to true luxury. You can’t straddle the middle anymore.
What a great time to remake The Great Gatsby.