The US is fast becoming world’s largest luxury fashion market with brands opening new stores and staging new events across the country. Recently, Zara’s parent company Inditex declared the US its largest fashion market and Kering credited North America for Balenciaga and Alexander McQueen’s strong sales last month. McQueen also launched its Autumn/Winter 2022 collection in New York, highlights a Business of Fashion report.

Despite it being the world’s largest consumer market, many fashion brands did not focus on the US during the last decade. Instead, China made up about one-third of their global sales, says Bain & Company report.

COVID shifts consumers away from China

However, China’s outlook changed in the last two years as the COVID-19 outbreak dampened prospects. The country’s 2022 GDP growth dipped to its lowest 5.5 per cent in over three decades and is expected to dip further with an unstable property market and strict COVID lockdown measures curbing consumption. China recently announced new lockdowns to curb COVID spread. It closed down Shanghai’s shopping districts though a few stores continue to remain operational.

Government aids boosts US’ prospects

This is attracting fashion brands back to America. Though the country faces rising inflation levels that have reached a four-decade high, its economy continues to grow at a faster than expected rate owing to the stimulus checks sent by the government.

Luxury brands like McQueen, Gucci, Bottega Veneta and Louis Vuitton have been staging high-profile events in the US since the last six months. What’s more, Louis Vuitton plans to host its cruise show in California this May. Also on the anvil are new stores outside the traditional American fashion hubs of New York and Los Angeles.

There has been an influx of wealthy tech workers in Miami and Austin over the last few months. Cities like Charleston, Nashville and Atlanta have also reported a surge in their median income levels. Many brands like Gucci, Hermes and Chanel have opened stores in these cities. In February, Francois-Henri Pinault announced plans to expand operations in these two cities. Prada also announced expansion plans for Austin city. These cities are likely to emerge as future shopping destinations for luxury consumers in the US.

High oil prices and limited spending may curb growth

However, the boom in the US luxury market may prove to be short-lived as luxury spending by lower-income Americans may not continue, as per the Bank of America. High gasoline prices may also prevent consumers from spending more in malls with February retail sales expected to remain low at 0.3 per cent. For the first time since 2018, the Federal Reserve is expected to raise interest rates to counter rising inflation rates and slowing economic growth.

Second, China will continue to be a dominant force with luxury sales rising 36 per cent to 471 billion yuan ($73.59 billion) last year, says Bain and Company, though growth is expected to slow in 2022. The country will continue to witness a rise in travel retail sales as there would be massive growth in duty-free shops in Hainan.

The upheaval of the last two years has warned fashion brands against depending on a single sourcing destination. Many brands are diversifying their supply chains by focusing on multiple markets. This prevents their operations from being impacted from disruptions in one country. In future, more American cities will step up investments in fashion, believe brands.