Luxury retail in France: An unexpected boom in a post-Covid world
The luxury market is thriving in France, according to our latest report. Attractiveness of the French market, the position of Paris, the flagship phenomenon, the digitalization of the sector ... an overview of the components of the 2022 market to read below.
The COVID-19 pandemic has drastically changed all economic forecasts of the past two years. With the closure of international borders and shops, and the isolation of people at home, the pandemic has not only forced many sectors to re-evaluate their economic strategy for the future but has also forced consumers to abruptly change their consumption habits.
The luxury sector is no exception to the rule as we've been able to see great changes in the way people shop and buy. Even though the pandemic hit hard most businesses, it seems like the luxury retail market has been able to get a new start and increase their sales. The brands already present have shown great reactivity in the face of this brutal change of paradigm and have taken advantage of this period of transition to capture new, more local and younger customers (millennials), but also to renovate their already-existing stores and rethink their offer and their development strategies. Indeed, whether it’s through its long history of luxury retail, the craftmanship in its ateliers or the promise of authentic goods rather than the fake goods rife in many other countries, Paris is a favorite with well-heeled shoppers – and in particular with growing numbers of affluent Asian and Arab tourists.
This strong challenge has led to a recovery in activity in terms of openings and signatures with 22 openings and 24 signatures in 2021, performances up on 2020 (+22% and +4% respectively).
The pandemic reshaped the way people consume luxury goods
While it’s too early to quantify COVID-19’s total financial toll on the luxury sector, the pandemic has certainly shaken some of the foundational aspects of the luxury industry—and some of these changes could be permanent. Contrary to what one might assume, customers will not stop consuming “experiential” luxury in 2020 and the years to come. Indeed, globally, 40% say they are more likely to spend on “experiential” luxury, and less on products than before.
In addition to the worldwide reputation of the “Maison France”, the prospect of the 2024 Olympic Games is a new factor of attraction for international brands which could take advantage of this showcase to strengthen their presence on the French market. The enthusiasm of the major luxury retailers is also supported by a significant recovery in the turnover of the main luxury groups on a global scale with a French presence that is maintained in the international rankings.
Flagships, popups, new openings: Luxury boutiques are booming
While the popup format is still present and offers great flexibility for retailers to approach a new market or sector with innovative concepts, it is the flagship format that is now chosen by the luxury "houses" which are turning them into “trophy” flagship stores for their most emblematic brands. Flagship stores are luxury retailers' most prestigious market entry method and serve as impressive representations of their brand image.
The arrival of luxury brands is doing more than just changing the look and feel of these new locations. Growing demand for units combined with a limited supply is increasing retail rents too with prices increasing. There has been a lot of renovations and installations of big size units on the Champs-Elysées avenue, which is evolving towards a high-end positioning, but also on exclusively luxury areas such as the very posh rue de la Paix, rue Saint-Honoré or avenue Montaigne. The luxury market therefore benefits from solid fundamentals which offer it good days ahead, as shown by the first estimates for 2022 which announce a significant upturn in openings with a high proportion of creations.