NEW YORK, June 9 (Reuters) – A chasm in spending habits between affluent Americans and so-called “aspiring” shoppers is pushing luxury retailers to seek new sources of revenue and, in some cases, to change their marketing strategies. merchandise, several retailers said.
Jewelry company Signet (SIG.N), which owns brands including Kay, Jared and Zales, was the latest retailer to link lagging sales to lower spending by so-called ‘ambitious’ customers, who shop occasionally. products priced between $300 and $800. , but are more sensitive to the cost of essentials.
Signet noticed a drop in sales of costume jewelry priced below $5,000 in April, a trend that continued into June. Sales of items priced over $5,000, however, remained strong, Signet chief financial officer Joan Hilson said in an interview Friday.
Signet is expanding its services to boost spending and is counting on more sales of warranty and protection plans for watches and jewelry, Hilson said. A $3,200 tennis bracelet protection plan at Kay, for example, adds $315 to the price.
Signet lowered its full-year revenue outlook on Thursday after the company reported a deteriorating consumer environment.
Retailers need to make up for lost sales due to lower demand from people who can’t afford expensive purchases on a regular basis.
Inflation, food and other costs are taking money away from so-called ambitious buyers, said Oliver Chen, an analyst at Cowen and Company. Their desire to splurge in previous years represented a growth segment for luxury goods.
Macys (MN) noted that the drop in sales was most pronounced in its eponymous department store chain, where 85% of customer households earn $150,000 a year or less, CEO Jeff Gennette said June 1. Some customers in the company’s Bloomingdale’s unit, which attracts a more affluent clientele, have also come under pressure from inflation, but “not at the same pace or intensity as Macy’s,” according to Gennette.
In recent weeks, Ralph Lauren (RL.N) and Capri (CPRI.N), owner of Versace, Michael Kors and Jimmy Choo, have revealed they are doubling down on high-end customers as sales from ambitious shoppers were lagging behind.
Ralph Lauren CEO Patrice Louvet said on May 31 that the company saw growth in full-price stores, while sales at outlets declined.
In North America in particular, there is a continued divergence between our core high-value consumers and this more value-oriented subset of consumers, he said. The company sources staples including Oxford shirts, blazers and dresses, betting that luxury consumers will be drawn to staples that can outlast seasonal fashion trends.
Capri CEO John Idol told investors May 25 that it was cutting inventory in department stores and other wholesale channels, which currently account for more than 20% of its sales. Idol said the company is able to sell at higher prices in its own stores than in department stores, where consumers seem resistant to recent price increases.
As part of its continued elevation strategy for the brands, he said the company is phasing out Versace-branded t-shirts, pool slides, sneakers and other items that aren’t really going to give a perception. luxury to customers.”
Reporting by Katherine Masters in New York Editing by Nick Zieminski
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