Luxury Retail in 2026: Where Opportunity Lies

Article originally posted on Commercial Property Executive on March 16, 2026

The K-shaped economy, spending patterns and aspirational shoppers will be vital to both brands and landlords.

Luxury retail entered 2026 with a sense of cautious optimism. While luxury spending isn’t as robust as 2023, the market contraction of the past two years has slowed, and landlords and retailers are seeing a period of evolution influenced by a K-shaped consumer landscape.

While affluent buyers continue to drive demand, tighter budgets for middle-income consumers mean that luxury retailers will need to compete for a narrower and more selective share of the market.

Success for brands and landlords alike will hinge on balancing exclusivity with accessibility, leveraging data and AI for operational insight and offering experiences that resonate with both high-end and aspirational shoppers. It will also require a rebalancing of the landlord-tenant relationship.

A K-shaped consumer landscape

According to data from JLL’s fourth-quarter retail dynamics report, the U.S. luxury goods market is expected to reach $196.2 billion by 2033, with a compound annual growth rate of 6.1 percent.

However, the source of that growth is a smaller, more affluent customer base. Over the past 20 years, households in the top 20 percent income bracket have gained wealth share due to asset appreciation while buyers in the broad 20 to 80 percent, middle-income bracket have seen their share decline due to inflationary pressures and a tighter job market.

With wealth more concentrated at the top, consumers in the highest brackets have disproportionate purchasing power, particularly for luxury goods, experiences and premium services. At the same time, middle-income aspirational luxury buyers are likely to be more selective in how and where they spend.

Rents are moving up in newly affluent areas such as Charlotte, N.C., and Nashville, Tenn., where demand is running into space shortages. Meanwhile, cities with more established luxury retail markets, such as Los Angeles, are seeing lower or negative overall growth.

“With few net new luxury store openings expected nationally due to the limited number of deals signed in the last 12 to 18 months, the brands that are expanding are choosing only the strongest locations,” said Colin Shaughnessy, executive vice president of leasing with Unibail-Rodamco-Westfield U.S.
“Our recent commitments from some of the world’s most influential brands reinforce that confidence.”

The industry expects continued same-store sales growth at the top of the market, and an increasing focus on long-term brand building rather than short-term cycles.

A shifting landlord-tenant relationship

In a market with uneven demand and a more selective audience, landlord flexibility has become a critical differentiator. Instead of traditional long-term leases with fixed rent, retailers and landlords are aligning on the strategies best positioned to capitalize on affluent consumer demand without exposing themselves to undue risk.

Some trends include more flexible leases with renewal options, percentage rent and revenue sharing between brands and landlords. Arrangements also include smaller, flexible format concepts in affluent suburban nodes and core business districts, as well as pop-up and limited-term activations in emerging markets to build buzz and test demand.

Landlords and retailers are also collaborating to curate their brands more selectively, pairing luxury flagships with smaller complementary retailers, food and beverage, hospitality, wellness, culture and service offerings that increase foot traffic and dwell time.

Another trend, which has grown over the last few years, is luxury retailers purchasing real estate and becoming their own landlords. “Luxury retailers are among the most well-capitalized retailers,” observed Ebere Anokute, head of Americas retail research at CBRE. “We’ve seen the trend emerging over the last five to six years, and while it’s something we’re keeping an eye on, I wouldn’t be surprised if that’s a trend that continues.”

For luxury retailers, owning properties provides them with greater control over how they use and share their space. As owners of mixed-use properties, they can maintain their storefront and brand identity while sharing their retail space and creating partnerships with complementary luxury brands. At the same time, being able to collect rents from office space, hotels and other tenants creates a steady revenue stream and a hedge against shifts in the retail market.

Prestige vs. price: Cultivating the aspirational shopper

For luxury brands seeking to develop new audiences, the “aspirational market” has become a critical growth engine. Gen Z and Gen Alpha consumers are drawn to premium labels but remain price-conscious, seeking experiences, curated collections and entry points into aspirational luxury.

Retailers are responding with strategies including tiered product offerings that preserve brand cachet while engaging aspirational buyers.

“Hyper-personalization has become a strategy to prioritize the sustainability of a lot of these brands,” according to Erika Schanke, executive vice president of global retail business development at JLL. “AI-powered CRMs are analyzing a customer’s purchase history, preferences and engagement signals while AI-powered stylists are providing recommendations. The goal is to create a bespoke service that seamlessly integrates the at-home and in-store experience. Everything is built on creating unbreakable customer loyalty.”

Luxury resale—or recommerce—is also growing into a professionally, data-driven retail segment. What was once perceived as secondary-market consignment is now a curated, authenticated and often digitally integrated experience. This includes luxury resale, rental and repair services. This trend is particularly appealing to younger eco-conscious consumers who want to take advantage of luxury goods while maintaining a lower carbon footprint.

An evolving luxury retail market

Luxury retail is no longer about opulence alone, it is about relevance, experience and adaptability. As 2026 unfolds, the luxury retail market won’t be defined by contraction or expansion, but by strategic refinement.

“While it’s easy to look at recent bankruptcies and think luxury is gone, that isn’t the case. Unlike 20 years ago, when luxury had to be through the wholesale model,” noted Schanke, “luxury brands have taken control over their own image and their own customer experience. The direct-to-consumer shift allows them to create their own narrative, stores and customer experience.”