For decades, globalization has been the driving force behind the luxury industry’s expansion. However, this long-standing framework is now under pressure as nationalist sentiment gains momentum across major markets, including the U.S. and China. According to analysts at Bernstein, this shift could slow the progress of luxury brands already navigating a fragile economic landscape in the context of rising geopolitical and trade tensions.
U.S. tariffs shake up the luxury industry – Ph Caleb Woods – Unsplash
Luxury has long relied on globalization to fuel its growth, steadily reaching new markets across the world. So far, the sector has proven resilient—even amid the war in Ukraine and resulting European sanctions against Russia, which once served as a key market. Wealthy Russian consumers continued to access luxury products through alternative destinations such as the Gulf, Israel, Switzerland, or London. But with tariffs on global exports to the U.S. now increasing, the landscape is shifting.
“If tariffs rise to 20–25%, it could hinder China’s economic recovery and weaken American consumer demand. If they reach 200%—as former President Donald Trump suggested for spirits—it would effectively shut the U.S. market to European alcohol producers,” Bernstein stated. In its recent “State of Luxury” report, McKinsey estimated that import tariffs could slash U.S. luxury spending by $46 billion to $78 billion annually.
Luxury brands are already exploring ways to adapt, with geographical rebalancing emerging as a key strategy. While China has yet to impose major tariffs on luxury goods, many brands have scaled back their presence in the market since the pandemic. A combination of COVID-19-related restrictions, a more nationalistic tone, and slowing economic growth has prompted several players to reduce investment in what was once among their most profitable markets.
At the same time, brands have expanded their footprint in the United States, opening stores in cities beyond traditional hubs like New York and Los Angeles. Locations such as Detroit, St. Louis, Nashville, and Austin are now part of its growth strategy. Looking ahead, companies must focus on generating revenue from a more diverse and balanced mix of national markets. Some, including Bulgari, are already exploring new destinations, such as India, to support long-term growth.
Schiaparelli launched a high-impact pop-up in Shanghai at the end of 2024. – DR
Another strategy Bernstein recommends is stronger local engagement, particularly through storytelling and globally resonant partnerships. Sports offer a powerful universal language that luxury brands are actively leveraging. Notable examples include LVMH‘s sponsorship of the Paris 2024 Olympic Games and its decade-long global partnership with Formula 1.
Offshoring could also become a solution. To mitigate the impact of high U.S. tariffs, some companies may consider producing locally—especially if supported by federal or state incentives.
Louis Vuitton is a notable case: In 2019, the brand opened a factory near Dallas, Texas, to manufacture handbags and leather goods exclusively for the American market. However, this approach risks weakening a major selling point—the prestige of “made in France” or “made in Italy.”
With the United States remaining the top market for luxury brands—and luxury spending in China dropping 18–20% in 2024, according to Bain & Company—the current year may be more turbulent than anticipated, despite earlier hopes of a rebound in the second quarter.
“Results for fiscal 2024 confirmed an improvement in cyclical demand,” Bernstein analysts concluded. “But recent political decisions in the United States have made the outlook far more uncertain.”
Boux Avenue’s relationship with Liverpool One has been so positive, the lingerie brand is upgrading to a permanent new store at the major retail and leisure destination.
Boux Avenue
The new store is set to open on 17 April on the venue’s Lower South John Street.
Key ranges include signature lace and exclusively embroidered lingerie collections alongside style/comfort ranges for nightwear and swimwear.
With summer next on the agenda, Boux Avenue said it continues to also be the “one-stop destination for holiday essentials. And its bra-fitting service (spanning A-G cup sizes) advises on the best size and style for bust shape, can be either a walk-in or bookable service.
To celebrate the opening day afternoon, Boux Avenue will be offering a goody bag worth £24 for the first 50 shoppers who spend £40-plus, while the store will also be hiding Golden Tickets to win Boux Avenue gift cards worth up to £100. Early evening celebrations will include a live DJ set, drinks and free embroidery to personalise a purchase.
Further celebrations between 18-20 April will include the free embroidery service to personalise purchases.
The news comes after we heard that digital fashion brand Arne is moving into permanent physical retail territory for the first time and has chosen Liverpool One for its debut.
The mall has also enhanced its premium retail watch line-up with the arrival of Breitling making its city debut.
But it’s not all about openings as Harvey Nichols is also closing its long-established three-storey Beauty Bazaar store there.
Britain’s Frasers Group announced on Wednesday that it had made another strategic investment in German high-end fashion giant Hugo Boss AG through the further sale of ‘put options’ over Hugo Boss’s shares.
David Beckham is one of Hugo Boss’s recent celebrity signings – Boss
A put option is a financial contract in which the holder has the right to sell an asset at a predetermined price on or before a specific date (in this case June 2027).
It means Frasers Group holds over 13.5 million shares of the German firm’s common stock, raising its stake to 19.2% of its total share capital. And the stake could be raised to up to 16.7 million shares of common stock through the sale of put options, or up to 23.7% of the total share capital of Hugo Boss.
The company said its “maximum aggregate exposure in connection with its net acquired interests” in Hugo Boss, at the closing share price on Wednesday is approximately €1.02 billion or around £850 million, covering over 30.2 million shares if the put options were exercised in full.
Reuters
The company stressed — as it has said before — that it makes “strategic investments in the ordinary course of its business to develop relationships and partnerships with other retailers and to build relationships with key suppliers and brands”. In other words, this isn’t a general move towards a takeover attempt.
It added that it “remains a long-term investor in Hugo Boss and the board of directors of Frasers Group”believes that the HB Strategic Investment will create value for the company’s shareholders, as its strategic investments in Hugo Boss have done in the past”.
Hugo Boss shares closed Wednesday at €35.43 each. That gave the company a value of €2.56 billion. But the share price — and market value — is down almost 33% in the past year, although it’s up 62% in five years.
Frasers CEO Michael Murray has been nominated for election to the Supervisory Board of Hugo Boss in May.
We know Mother’s Day was a big draw for physical retail with footfall and sales ahead of last year, but The Perfume Shop looks to have taken performance to a different level.
Claiming the top spot as the UK’s largest specialist perfume retailer, its sales in the lead up to Mother’s Day on 30 March “went above and beyond” with 280,916 bottles sold across the wider 9-30 March trading period.
What’s more, the week leading up to the day was up 56% on a year ago. That helped push overall sales up 14% on 2024.
Top 10 sellers were led by Lancôme La Vie Est Belle, followed by Chanel Coco Mademoiselle, Yves Saint Laurent Libre, Prada Paradoxe, Carolina Herrera Good Girl, Mugler Alien, Yves Saint Laurent Black Opium, Chanel No5, Dior Miss Dior and Mugler Angel.
Digging deeper, The Perfume Shop said sales were driven by a 30% increase in sales of classic perfumes, 3% in new and trending perfumes and a 2% increase in gift sets compared to 2024.
Promotional deals also proved popular with the website’s busiest day on Tuesday (25 March) seeing a 69% increase in perfume purchases compared to last year. Some 35% of all orders last week were customers making the most of the next-day delivery service.
Also, the retailer’s personalisation services were in demand, delivering over 43,688 ribbons (21,500 of these being sold last week) and 1,091 engraved bottles in the three weeks running up to Mother’s Day.
Karen Harris, Customer director from The Perfume Shop said: “Perfume is such a personal and lasting gift, and this year’s sales have truly reflected that, with a remarkable uplift in both classic and trending scents. Our personalisation services have also been more popular than ever, showing just how much thought goes into selecting the perfect perfume.”