luxury goods; dollar; demand; baby-boomers

While Wal-Mart and other mass retailers have struggled this holiday season, the high-end luxury market has flourished. Bergdorf Goodman's, Nieman-Marcus, Nordstrom's and a variety of high-end boutique retailers are seeing huge sales increases this season.

Part of the increase in luxury goods purchases comes from foreign travelers. Given the continued decline in the value of the dollar, foreign nationals shopping in the U.S. are seeing huge bargains. Three Burberry shirts that now cost $200 in Manhattan would have sold for three times that in London.

Part of the increase in luxury good sales also results from the vast array of such goods now on the market. Sunglasses for $200, face cream for $50, handbags for $400; the price doesn't matter as long as the name brand is there. And the name-brand manufacturers are willingly supplying those goods. Rather than buying a $5,000 Pucci print suit, consumers can buy the $200 Pucci printed hat; instead of the $3,000 for a Louis Vuitton bag, consumers can buy the $300 Coach handbag.

Finally, a variety of U.S. consumers' incomes are rising. Retirees are beginning to spend their retirement funds, swelled from the big increases in asset value in the 80s and 90s. Individuals are receiving larger and large inheritances, as the baby boomer generation begins to die.

(Updated February, 2005)