Three of the world’s largest luxury conglomerates opened just 29 stores in Europe last year, down 20% on 2023 in the latest evidence of a slowdown in the sector.
Bloomberg
LVMH Moët Hennessy Louis Vuitton SE, which owns Christian Dior and Tiffany & Co., opened 15 stores ahead of Richemont at 11 and Kering at only three, said real estate broker Cushman & Wakefield. By contrast, the three companies opened 36 stores in total in 2023.
The slowdown reflects the luxury industry’s choppy recovery from an extraordinary surge in demand after the pandemic, followed by a slump in spending, particularly among Chinese shoppers.
LVMH saw its profit sink last year and Kering’s annual recurring operating income fell by almost half to €2.55 billion ($2.6 billion) — its lowest since 2016. Richemont is faring better recording a double-digit jump in sales in the fourth quarter, amid resilient demand for “hard luxury,” like jewelry among its wealthiest clients.
Luxury precincts
Overall, across all high-end brands, only 83 stores were opened in 12 European countries last year, down from 107 in 2023, although this was also driven by a lack of prime space on the best streets, said Robert Travers, head of EMEA retail at Cushman & Wakefield.
“Luxury retail is arguably the most locationally sensitive of all real estate asset classes,” said Travers.
The 20 main luxury shopping streets surveyed — such as Avenue des Champs-Élysées in Paris and Bond Street, London — had fewer than 10% empty stores last year. Six of them had no vacant space at all. Luxury rents continue to surge and were up 3.6% on average in 2024.
“Retailers have continued to double down on key luxury precincts,” said Travers, but only when they can find the right store on the most exclusive streets, with bigger stores particularly in demand.
Larger shops allow brands to incorporate features like private VIP areas for their richest customers.
There has been a significant increase in high-end retailers asking for bigger stores on London’s Sloane Street, including LVMH’s Dior and Kering’s Bottega Veneta, according to Hugh Seaborn, chief executive officer of Cadogan Estates, which owns a large chunk of the UK capital’s exclusive Chelsea district.
Cadogan Estates completed a £46 million ($58 million) redevelopment of Sloane Street last month, with the vacancy along the road falling from 11% in 2023 to 8% in 2024, according to Cushman & Wakefield’s report.
The important thing for luxury houses is to have their stores in the best locations where consumers can “see a broad, curated mix of complementary brands,” he told Bloomberg News on a call.
