Luxury Retailing

After struggling in recent years, many mass-market retailers are seeing increased profits these days. While a certain amount of that can be attributed to a healthier job market and increasing wages, they're not taking chances, so they're taking cues from a portion of the retail industry that was strong while mass-market floundered: the luxury retailers. With Target offering designer goods on the cheap, Wal-Mart selling plasma televisions, and Costco pushing a $99,999 diamond ring on their website, these retailers are clearly courting shoppers from higher tax brackets.

Retailers that sell luxury goods, meanwhile, may not have target markets as large as do the Wal-Marts and Kmarts of the world, but they do have target markets that are less price-sensitive. Because they don't face the same downward price pressures as their mass-market peers, high-end retailers these days typically enjoy higher profit margins. Whether the Costcos and Targets will be able to carve out a chunk of this success for themselves remains to be seen.
- Contributed by Nithin Narayanan