Last year, three major luxury conglomerates launched only 29 stores across Europe, marking a 20% decline from 2023, indicating a slowdown in the luxury market.
LVMH Moët Hennessy Louis Vuitton SE, which owns brands like Christian Dior and Tiffany & Co., led with 15 new stores, followed by Richemont with 11 and Kering with just three, according to Cushman & Wakefield. In contrast, these companies had opened 36 stores in total in 2023.
This decline highlights the luxury sector’s uneven recovery following a surge in demand post-pandemic, which has since been followed by reduced spending, particularly among Chinese consumers.
LVMH reported a drop in profit last year, while Kering’s annual recurring operating income nearly halved to €2.55 billion ($2.6 billion), its lowest since 2016. Conversely, Richemont saw a double-digit sales increase in the fourth quarter, driven by strong demand for “hard luxury” items like jewelry among affluent clients.
Luxury Precincts
In total, only 83 stores were opened by various high-end brands across 12 European countries last year, down from 107 in 2023. This reduction is partly attributed to a shortage of prime retail space in desirable locations, according to Robert Travers, head of EMEA retail at Cushman & Wakefield.
“Luxury retail is arguably the most locationally sensitive of all real estate asset classes,” Travers noted.
The primary luxury shopping streets surveyed, including Avenue des Champs-Élysées in Paris and Bond Street in London, reported less than 10% vacancy last year, with six streets having no empty stores. Luxury rental prices surged, averaging a 3.6% increase in 2024.
“Retailers are focused on securing key luxury precincts,” Travers stated, though this is contingent on finding the right store in the most prestigious locations, with demand for larger spaces particularly high.
Such larger retail spaces enable brands to offer exclusive features, such as private VIP areas for their wealthiest clientele.
There has been a notable rise in requests for larger stores on London’s Sloane Street, including from LVMH’s Dior and Kering’s Bottega Veneta, as noted by Hugh Seaborn, CEO of Cadogan Estates, which owns a significant portion of Chelsea, a high-end area in London.
Cadogan Estates recently completed a £46 million ($58 million) redevelopment of Sloane Street, resulting in a decrease in vacancy from 11% in 2023 to 8% in 2024, according to Cushman & Wakefield’s findings.
For luxury brands, securing prime locations is essential to ensure consumers can experience a well-curated mix of complementary brands, Seaborn mentioned during a call with Bloomberg News.
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This article was written by Jennifer Creery from Bloomberg and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.
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