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The luxury goods market is holding up — for now — in an economy that’s increasingly bifurcating between the wealthy and everyone else.
Industry leaders at Semafor’s Business of Luxury gathering Wednesday said tariffs are crimping margins and mucking up supply chains, but high-end consumers still crave an edge, sentiment confirmed in numbers out this week from Moody’s: The top 10% of earners accounted for 49.2% of total spending, the highest level on record. The economy is increasingly “two-speed,” The Wall Street Journal wrote this week; it still feels robust for big spenders, even as growth slows for lower-income Americans.
“Being in the luxury tier definitely protects, to a point, compared to the lower price point,” José Andrés Group Global CEO Sam Bakhshandehpour said at the event, hosted at Genesis House in New York. He hopes “the tariff noise is just that, it’s noise, and it’s a negotiating tactic.”
Fashion brand Veronica Beard, which once relied on China for 60% of its production, has already brought that number down to 30% for new styles debuting in November, and aims to as low as 10% by the spring, President Stephanie Unwin said. “We have seen no slowdown at this point,” she said.
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Global trade turbulence has had a relatively muted impact on the luxury sector in part because firms have room to maneuver, business leaders suggested. Making small adjustments won’t necessarily alienate customers who care more about exclusivity and access than prices.
Veronica Beard can pause price hikes for $500 cotton dresses, Unwin said, while increasing prices for evening gowns, where customers are willing to pay more.
Even if tariffs make it harder to sell a European watch on consignment in the US, buyers who want to purchase a watch on auction from Europe will “just figure it out,” Sotheby’s Global Head of Watches Geoff Hess said.
And Bakhshandehpour joked that he “may have to find a substitute for the Spanish baby squid.”