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Luxury Spending Slump Raises Risks for High-End Retail Properties
Article originally posted on Globe St on Oct 8 2026
Luxury retailers have been counting on wealthy Americans to offset weakness elsewhere. Now those shoppers are pulling back, raising a warning for investors in high-end stores and shopping centers whose performance depends on their spending.
U.S. credit card spending on luxury goods fell 6% year-over-year in September, following 4% declines in both July and August, according to Citi data reported by Reuters. The deepening decline challenges a source of strength for luxury-focused retail properties earlier this year. It also highlights a broader economic vulnerability: Consumer spending has become heavily concentrated among the highest earners.
A Weakening Source of Growth
Luxury brands had hoped wealthy U.S. shoppers would help offset weakness in China and economic pressure from the Iran war. September’s results suggest that demand is providing less support than retailers had anticipated.
Citi identified Tapestry, the owner of Coach and Kate Spade; LVMH, whose brands include Louis Vuitton and Tiffany and Ferragamo among the companies most exposed to changes in U.S. spending.
For their landlords, the concern is whether a sustained slowdown in purchases will weaken the retailers supporting their properties. The credit card figures do not establish that rents, occupancy or leasing demand have declined, but they offer a reason to watch tenant performance more closely.
Not All Luxury Spending Is Alike
The slowdown was not uniform. Spending on leather goods and ready-to-wear improved in September, while watches and luxury jewelry weakened further.
Citi also distinguished between brands serving the wealthiest consumers and those with a broader customer base.
“Brands with greater exposure to higher-end consumers should remain relatively resilient, supported by equity-market wealth effects,” the bank said.
The latest spending figures contrast with the strength reported earlier this year. In March, shopping centers with luxury brands, open-air layouts and a new generation of shoppers pulled ahead in sales productivity. Three consecutive months of declining luxury spending now raise questions about how durable that momentum will prove.
Affluent Shoppers Carry Outsized Weight
The stakes extend beyond luxury storefronts because higher-income households account for a disproportionate share of consumer purchases.
Bank of America economists reported in July that the top 10% of earners spend as much on discretionary items as the bottom 70% combined. Separately, Moody’s Analytics, analyzing Federal Reserve figures, found that households earning about $250,000 or more accounted for 49.7% of all consumer spending, up from roughly 36% three decades earlier.
Those measures cover different spending categories, but both point to the same vulnerability: A relatively small group of households supplies a large share of demand.
With consumer spending accounting for 69% of GDP, a broader pullback among affluent households would have consequences well beyond the luxury sector. September’s luxury figures do not establish that such a retreat is underway across all purchases, but they show weakness in one market that depends on those consumers.
Confidence Adds to the Concern
The spending decline comes amid signs of growing economic unease. Reuters cited Conference Board and University of Michigan surveys showing increasing consumer concern ahead of the midterm elections.
The OECD’s U.S. consumer confidence measure, available through the Federal Reserve Bank of St. Louis, adds a longer-term perspective. Despite substantial volatility, the series has trended downward since March 2024. In May 2026, it reached its lowest level since January 1960.
For commercial real estate investors, the immediate question is whether the luxury spending decline persists and how it varies across tenants. The broader question is whether affluent consumers continue to support retail demand as confidence weakens. Properties that benefited from their spending earlier this year now face a less reassuring picture.