Over the past year, we have written about luxury brands expanding their U.S. footprints and the transfer of luxury consumption by U.S. consumers to Europe as international vacations became a thing again. This week, we looked at the difference between visitors in 2019 compared to the last twelve months for the prestige luxury brands and the department stores, as shown below. (An important caveat to this analysis is that we are only looking at stores included in Placer, and we have excluded stores which may be located within dense areas, multistory buildings, or other such locations where visitation is not fully processed.) How to read the table is as follows: (1) between the time periods, visitors to Cartier increased by 121K, or +203%, due to both opening more venues and an +82% increase in visitors per venue; (2) those visitors that also visited a Macy’s at least 2 times were up +150% both due to additional Cartier stores in new markets and a +50% increase in consumers going into a Cartier; and (3) on an apples-to-apples basis, Cartier enjoyed a greater increase (+82%) than the Cartier visitor shopping Macy’s (+50%).
When we total the luxury brand visitors from our sample group, the increase was +21% all-in, or +1% on a per location basis, with that more subdued increase resulting from the large decline at Louis Vuitton. We suspect that visitors are down for Louis Vuitton due to a pullback by the aspirational luxury consumer (where the brand is more exposed), more cannibalization due to a large number of new locations, and more degradation from its customers vacationing internationally (versus buying luggage and other categories at a U.S.-based Louis Vuitton store). This same dynamic also appears to be a large weight on Macy’s luxury shopper. If the Louis Vuitton customer is removed from Macy’s luxury shopper mix, the remainder is flat on a per location basis, which is a slightly lower rate than the remainder of the luxury brands (+6%).
Unsurprisingly, the prestige luxury shopper is a more resilient one. This can be seen by comparing Macy’s -10% decline in prestige luxury shoppers (or flat excluding Louis Vuitton) versus the -22% decline among non-prestige luxury shoppers. As we would expect this shopper to be a much bigger spender at Macy’s than its average shopper, that helps bridge the gap between the -22% decline in shoppers and only a -8% decrease in sales during the first half of 2023 (additionally, less discounting and favorable product/customer mix are also meaningful contributors). Over the periods, comparable-store ticket was up +22.5%, and that demonstrates a shift in the business mix to bigger spenders.
Over the past two years, we have been monitoring Dillard’s outperformance relative to Macy’s. (Dillard's comparable-stores sales have increased +11% versus 2019, compared to an -8% decline at Macy’s). Dillard’s has been able to grow its prestige luxury shopper by +1%, or +12% excluding Louis Vuitton. And so that 12-point difference between Dillard's and Macy's prestige shopper counts likely goes a long way in explaining the 19-point difference between their comparable-store sales. However, looking at Census 2019, Mosaic, and Spatial.ai PersonaLive, we don’t see much support for this hypothesis. The table below shows the change in the shopper mix between the periods. The number of overall visitors fell by -15% since 2019, and as shown, segments that may hold prestige luxury shoppers (as defined by PersonaLive) like Suburban Sophisticates, Fast Track Couples, and American Royalty were down similarly. We often characterize Dillard’s as an idiosyncratic retail brand as its results generally are better than expected, and yet, hard to explain. We would point to this analysis as one more example of its idiosyncrasy.
