Luxury Goods Prices Surge, Wealthy Spend More Despite Tariff Woes
Luxury goods prices, particularly mid-tier handbags and denim, have been surging. Despite this, wealthier households continue to spend more on high-end items. Meanwhile, lower-income households and retailers catering to them are grappling with tariff-related price hikes, especially as the holiday season approaches.
Throughout 2025, retailers and brands have been raising prices to offset tariff impacts. Target CEO Brian Cornell admitted in May that these increases were a 'last resort'. Meanwhile, Walmart is holding off on price hikes for as long as possible. However, consumer spending growth is expected to remain subdued through 2025.
US retailers like Walmart and Macy's are worried about price increases during the holiday season affecting low-income consumers. They anticipate cautious holiday sales growth this year. Executives from major off-price companies are keeping a close eye on mainstream retailers' pricing strategies. Tariff-related price increases and employment concerns have eroded consumer confidence and spending.
As the holiday season approaches, retailers are navigating a complex landscape of rising prices and cautious consumer spending. While wealthier households continue to splurge on luxury goods, lower-income consumers and retailers catering to them face challenges due to tariff-related price increases.
