What: Luxury brands have been looking to Europe with renewed interest as some key cities move up the luxury agenda while smaller but fast-growing gateway markets are on the rise.

Why it is important: While new store activity has typically followed Chinese luxury consumers, luxury brands are looking towards emerging markets with redevelopment opportunities and global cities with prime rents.

In 2022, there was an 11% increase in new luxury store openings compared to the previous year.

Europe saw a 77% increase in luxury store openings and now accounts for 23% of all new openings globally. Cities such as Amsterdam, Madrid, and Milan benefitted from domestic and international tourist figures, with London being one of the most active luxury markets in Europe and maintaining the top spot for new store openings.

In Asia (excluding China), the global share of new store openings increased to 12%, the Middle East rose to 6%, and North America remained flat at 14%.

China saw the most significant decline in new openings with 41% of the global share compared to 55% in 2021. While brands agree that it remains an important market, they have also realized the need to diversify their portfolios.

While there may be fewer store openings in 2023, demand is expected to remain sturdy as reduced rents in key luxury destinations offer brands the opportunity to secure new, more attractive spaces.

Rental costs are at least 10% lower than levels seen in 2019 in a number of key luxury cities such as Toronto, Hong Kong, and London.

Ultra-luxury brands accounted for 68% of all new store openings in 2022, while the three biggest luxury groups, LVMH, Kering, and Richemont, prioritized relocating and upsizing existing sites. This was driven by increased availability and rebased rent due to the pandemic.

Thanks to elevated hospitality offerings and modern retail developments, smaller “alpha” cities such as Amsterdam, Milan, Madrid, and Toronto are seeing success.

In North America, New York, LA, and Miami are still a priority, but luxury brands are increasingly looking towards regional cities that are experiencing significant growth in wealthy households.

Southeast Asia has drawn the attention of luxury brands over the past year with standout markets including Singapore, Thailand, and Vietnam as they all are experiencing growing economies and expanding HNWI populations.

Where to next? Mapping luxury’s retail hotspots in 2023