Mid-tier retail chains face headwinds — as off-price and luxury apparel retailers appear to be gaining ground in an increasingly bifurcated consumer spending environment. Off-price brands are winning budget-conscious shoppers, while luxury brands are attracting affluent customers who are less sensitive to economic headwinds, according to a Placer.ai analysis.
Foot traffic at both off-price and luxury chains is up this year, outperforming the broader apparel market. Off-price foot traffic has been trending up for several years, aided by economic uncertainty. Meanwhile, the luxury apparel sector underperformed for much of last year, but has gained ground in 2025. Between the two categories, off-price chains have the edge, with significantly stronger traffic growth, while luxury visits are stabilizing with flat traffic between June and August.
“This contrast underscores the greater growth potential of value-oriented retailers in the current environment, with middle-income shoppers far more likely to trade down into off-price than to stretch into luxury,” said the report.
“So although affluent spending appears to be holding steady, luxury’s room for further expansion may be limited.”
Luxury retailers have benefited from a handful of headwinds over the past several years, including pandemic-era stimulus checks that may have briefly given middle-income shoppers an opportunity to splurge. In addition, social media is fueling brand awareness and making luxury more visible than ever, according to Placer.ai.
But the data suggests the luxury audience is actually narrowing, Placer.ai countered. Luxury chains are drawing more heavily from affluent areas despite trying to broaden their appeal to a wider audience. The median household income for luxury shoppers climbed from $115,000 to $118,000 between 2022 and 2025, while the median earnings for off-price apparel shoppers held steady at $75,000.
Placer.ai predicts bifurcation to continue in the apparel market, with luxury remaining resilient among high-income households while off-price chains are in a good position to capture continued traffic gains from both value-driven shoppers and affluent consumers trading down.
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