Luxury firms Chanel and LVMH are reportedly competing to become the new owner of a building on Manhattan’s Fifth Avenue.
Both companies have been in talks to buy the location on the luxury shopping corridor, Bloomberg reported Monday (April 8).
Global luxury retailers have been competing to buy buildings on Fifth Avenue for months, according to the report.
Kering bought one for $963 million earlier this year, Prada-affiliated entities bought two buildings for $835 million, and Rolex is constructing a headquarters building on the avenue, the report said.
The race for properties extends globally as well, with luxury retailers buying spots in Milan, Tokyo and Paris, per the report.
It was reported in April that luxury brands are spending billions to purchase their flagship stores at high-profile addresses because they are worried that if they don’t, one of their competitors will purchase the property and evict them.
Retailers are also taking advantage of rare properties becoming available due to a downturn in commercial real estate.
Luxury brands are also acquiring properties to help them create direct relationships with their customers and support the brands’ direct-to-consumer (D2C) efforts.
Ralph Lauren President and CEO Patrice Louvet said during a February earnings call that “the [D2C] channels are really where the world of Ralph Lauren comes to life most powerfully, where we engage most directly with the consumer and have the most ability to impact the consumer experience.”
These moves come at a time when retailers looking to drive loyalty with high-income consumers are focusing on apparel and accessories.
PYMNTS Intelligence has found that the highest earners are willing to carve out a significant portion of their paycheck for clothing and other fashion-related items.
While the entire population spends 7.2% of their personal incomes on clothing, accessories and personal care items, those who earn more than $200,000 per year spend 8.5%, according to “New Reality Check: The Paycheck-to-Paycheck Report: Why One-Third of High Earners Live Paycheck to Paycheck.”
Many brands that operate across luxury and mass-market categories are turning their focus to the higher end of their offerings, aiming to serve the shoppers who still have cash to burn at a time when the lower and middle classes’ budgets are being squeezed by economic pressures.
Source: https://www.pymnts.com/