Mayor Bloomberg said in 2003 that “if New York City is a business, it isn’t Wal-Mart. It isn’t trying to be the lowest-priced product in the market. It’s a high-end product, maybe even a luxury product.”
If so, then the latest figures on luxury spending don’t bode well for consumers’ continued “demand” for New York City in the face of a global economic slowdown.According to the Financial Times, spending at flagship luxury retailers plummeted in September from the same period a year earlier. Neiman Marcus and Bergdorf Goodman same-store sales fell 15.8 percent, while Saks Fifth Avenue sales fell 10 percent and Nordstrom sales fell 9.6 percent.
Basic-goods stores, while not unscathed, fared better. Wal-Mart eked out a 2.4 percent same-store sales gain, Target saw sales drop 3 percent, Kohls saw sales drop 5.5 percent, and CostCo saw sales increase 6 percent. (JCPenney was the outlier of middle-market stores, with a 12.4 percent decline.)
“US consumers continued to seek out low cost discounters and to focus on shopping for basics … amid the growing financial turmoil,” the article determined.
As people of all incomes cut back sharply on luxuries, being a “luxury city” may not be such a good business plan.
Just as ominous for New York, Reuters notes that in America in general, “the rising U.S. dollar curbed spending by foreign tourists.” Over the past two years, as the dollar has sunk, New York has grown accustomed to selling foreign tourists lots of silly throwaway items at cheap prices for them, like bright green foam Statue-of-Liberty hats and $800,000 studio apartments.