Affordable luxury brands are booming in popularity Instead, it's Michael Kors Holdings an American sportswear brand from a sassy former "Project Runway" judge that's roundly predicted to crush Christmas.
The company is what's known as a bridge brand, operating on the low end of luxury. Its handbags generally cost less than kate spade new design $500. But the sector's mix of just high enough prices and accessible yet glamorous design makes brands such as Kors, Kate Spade and Tory Burch like catnip for consumers who are sick of curbing their spending but still wary of an uncertain economy."American consumers have been sitting on their hands for many years," said Bob Shullman, founder of the luxury focused Shullman Research Center. "They're frustrated and they want to treat themselves. But they're also trying to survive, so they have to find something to splurge on that's not going to break the bank."Well before Black Friday, the Kors store at the Citadel Outlets in Los Angeles had a line out the door. The company boasts of trying to "appeal to a younger demographic." The social media savvy brand gained nearly 34,000 new followers in the 18 hours after launching the first ever Instagram ad last month.Kors' stock, which fell 27 cents Thursday to $83.92, is up 64.5% so far this year and 246.8% since its debut nearly two years ago. During the quarter ended Sept. 28, revenue soared 38.9% and earnings per share rocketed up 44.9%.Morgan Stanley analysts expect the company "to deliver the single best sales growth in retail this holiday." Rick Caruso, a real estate katespade us magnate who owns a phalanx of Southern California shopping centers, said Kors' sales on his properties "have just exploded this past year."Michael Kors kills it," Caruso gushes. "He is so relevant."Other upscale brands are taking the hint, targeting kate of spade outlet young shoppers and venturing into e commerce and more affordable product lines.It's not that top line luxury is suffering. Euromonitor expects luxury spending to rise more than 35% globally over the next five years.Another consulting firm, Bain Co., says the gauge will reach roughly $300 billion this year, up from $293 billion last year. is by far the largest luxury market by revenue, drawing more than $86 billion, followed by Japan and kate spade purses online Italy. MasterCard Advisors said that the luxury sector, sans jewelry, enjoyed the biggest revenue spurt last month and was the only category to see a double digit sales increase year over year.But it's Kors and other relatively affordable luxury brands that are booming in popularity. The Kate Spade label posted a 76% increase in net sales in the three months ended Sept. 28."The market for these brands doesn't seem subject to the recession their business is consistently getting better and better," said Ron Friedman, leader of the retail practice at consulting firm Marcum.Take Coach, a bridge luxury brand where a wallet can be purchased for less than $200.The American Affluence Research Center found in a fall study that a third of wealthy respondents had owned Coach products, by far the most out of a group of brands that included Louis Vuitton, Hermes, Gucci, Chanel, Prada and Burberry. A quarter of respondents said they believed that Coach was overrated, less than any of the other brands. More than 48,000 total visitors a month 75% of them under age 35 spend an average of $525 per order. Revenue boomed 169% from September to October, with an 89% average monthly subscriber increase, according to the company.Caruso, who professes to love bridge brands, is hoping to bring more to his properties, which include the Grove in Los Angeles and the Americana at Brand in Glendale."I'm much more comfortable there than in too much full luxury, because in order to drive the volume we want to drive, you've got to appeal to a broader audience," he said. "There's only so many people who are going to spend the kind of money they'd need to in a Dior store."Emboldened by their success, bridge brands are moving into shopping areas normally crowded with couture. Tory Burch and Dsquared2 are heading to Rodeo Drive in Beverly Hills next year."They want to play in the sandbox with the luxury guys and be in the aspirational business," said Robert Cohen, president, Southern California, for RKF.High end retail brands are taking note.
"Whether they like it or not, in order to grow, they need to get some support from mass market consumers," Shullman said. "They're experimenting now with how to do it without tarnishing their brands.".
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