The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
Record numbers of young adults living at home with their parents are helping drive the boom for luxury goods in the US and UK, according to Morgan Stanley.
Recent US Census data shows that nearly half of all young adults ages 18 to 29 are living with their parents — the highest level since 1940.
Analysts led by Edouard Aubin at Morgan Stanley said the trend benefits discretionary spending and is partly responsible for the surge in popularity of handbags, watches and jewellery.
“When young adults free up their budget for daily necessities (e.g. rent and grocery), they simply have more disposable income to be allocated to discretionary spending,” the Morgan Stanley report said.
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The US overtook China last year as the top destination for luxury Swiss watches as Americans rediscovered a passion for mechanical timepieces. The US market has also driven higher sales for luxury producers including Cartier owner Richemont as well as Tiffany and Bulgari-owner LVMH.
More young people are living at home to save money as rental costs increase, as well as enrolling in higher eduction programs and delaying getting married, keeping them with their parents for longer.
“We see it as fundamentally positive for the industry,” the Morgan Stanley analysts wrote in the report.
Morgan Stanley sees a similar trend in the UK where the share of 15 to 34-year-olds living with their parents has climbed to 42 percent from about 35 percent in 1999.
Richemont, which in addition to Cartier, owns watch brands Vacheron Constantin and IWC, reported a 22 percent increase in sales growth in the Americas in the first half of the year. Even higher growth in Europe was driven, in part, by US tourists taking advantage of the strong dollar against the euro and British pound.
By Eamon Akil Farhat and Andy Hoffman
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The luxury goods maker is seeking pricing harmonisation across the globe, and adjusts prices in different markets to ensure that the company is”fair to all [its] clients everywhere,” CEO Leena Nair said.
Hermes saw Chinese buyers snap up its luxury products as the Kelly bag maker showed its resilience amid a broader slowdown in demand for the sector.
The group’s flagship Prada brand grew more slowly but remained resilient in the face of a sector-wide slowdown, with retail sales up 7 percent.
The guidance was issued as the French group released first-quarter sales that confirmed forecasts for a slowdown. Weak demand in China and poor performance at flagship Gucci are weighing on the group.