Dive Brief:
- Luxury spending fell 10% during the holiday season, which could indicate that shoppers were seeking “attainable value” in 2023, according to a Wednesday report from Earnest Analytics.
- The decline in luxury spending also hit resale, with spending at The RealReal and Farfetch falling 18% and 15% year over year, respectively. This shows “consumers eschewed luxury across the board, regardless of resale or retail,” per the report.
- Overall holiday spending grew 1.7% year over year, but that increase represented a slowdown from 2022 numbers. Online marketplaces and off-price department stores were the top categories for holiday spending.
Dive Insight:
Sales at online marketplaces, which include Amazon and Temu, grew 7% according to Earnest’s data, which is based on credit card transactions. Earnest defines the holiday season as Nov. 1 to Jan. 2.
During that period, spending at off-price stores grew 5%, and the fast fashion category grew 2%.
“The fact that three of the five fastest growers largely include discounters, while luxury and large ticket home categories retreated YoY suggests that shoppers were looking for attainable value in 2023,” Earnest said in the report.
Earnest’s preliminary holiday data, which measured spending in early November 2023, hinted at a luxury slump and a fast fashion rise. The analytics company said at the time that stagnation of luxury apparel was due to “aspirational shoppers” holding back their spending on expensive purchases.
The holiday numbers reflect sales declines in the luxury industry. The slowdown, after years of pandemic-fueled shopping, may be more of a normalization than a retraction.
Earnest’s current report shows that fast fashion giant Shein saw sales jump the most during the holiday period, with a 29% year-over-year boost. Abercrombie & Fitch and Lululemon followed, with 10% and 8% growth, respectively.
Shein’s competitor Temu, however, grew 910% from 2022, per the data. Temu gained popularity in February 2023 after its Super Bowl advertisement debuted with the tagline “shop like a millionaire.”
Temu had twice as many active users as Shein in December 2023, according to Earnest.
“Temu could be the retailer to watch during the 2024 holiday season,” it stated in the report.
Shein and Temu are competing not only for customers, but also in court. In December 2023, Temu sued Shein, accusing it of making Temu the target of a multi-faceted scheme to eliminate it as a competitive threat. Shein is due to respond to the complaint on Feb. 12.
