Designer handbags and other leather products, luxury jewelry, watches and apparel are leading the luxury industry’s post pandemic growth. The premium quality materials, superior craftsmanship, and high-value aesthetics continue to drive clients back to the shops, as luxury items with their easily recognizable shapes or brand signifiers are known to provide uniqueness and status. Last year, the luxury industry sales exceeded the pre pandemic levels despite the several crises the world has experienced.
A recent study revealed that among luxury buyers, half are ready to consider that accessible luxury is real luxury and not use high price as a marker of true luxury, whereas the other half do not consider that accessible luxury is real luxury, writes eToro analyst for Romania, Bogdan Maioreanu.
Among this latter group, Chinese luxury buyers are most prone to declaring that luxury means expensiveness. Their ability to afford luxury’s high prices acts as a measure of their own personal value and success. In 2022, the largest market for personal luxury goods was the US (98 billion euro turnover) with the main city New York. It is followed by mainland China (59 billion euro) and Beijing. Far behind we have Japan (Tokyo), Italy (Milan), South Korea (Seoul) and France (Paris) in the range 24 to 20 billion euro.
In 2022, shoppers were not afraid of the thousand dollar price tags of designer clothes and bags pushing the market to another estimated record year, with a growth of 22%. The market for personal luxury goods is the heart of the entire luxury industry. All personal luxury goods categories performed well with double-digit growth rates across the board. Hard luxury, leather goods, and apparel are leading the resurgence following the pandemic. Iconic models and new hero products were the most desirable items, according to Bain & Co. Recognizable brand signifiers (whether a shape, a piece of metalware, a material, or a monogram) remained popular. Small leather goods gained further traction. As for shoppers, females are more likely to visit online luxury stores than men. Both genders are most represented in the 25–34 age bracket — 10.5% of all visitors are women, and 9.8% are men from this age group, shows a study.
In a top of the most popular luxury brands in 2023, Gucci belonging to the Kering (KER.PA) conglomerate was nominated to be number one, loved by both women and men. It is followed by Dior belonging to LVMH, Chanel – a privately owned company -, Louis Vuitton – LVMH (MC.PA) and Hermes (RMS.PA).
Gucci is the flagship brand for Kering, accounting for half of the group’s revenue and three quarters of its profit. But its sales fell by 14% in the fourth quarter, due to China, resulting in a 7% decline in group revenues, a rare occurrence for a luxury brand. Fortunately, Kering can count on Saint Laurent (+31%), which passed the 3 billion mark in revenues, on Balenciaga, which is also seeing double-digit revenue growth, and, to a lesser extent, on Bottega Veneta.
Its direct competitor LVMH, the largest luxury company in the world, has again published record results for 2022, with a net profit of 14 billion euros, two billion more than in 2021. The turnover is 79 billion euro, up 23%. It was the Fashion & Leather Goods division, with the brands Louis Vuitton, Dior, Céline, etc, that drove sales, which rose by 25% to 38 billion euros. In a rare move, the luxury giant, which traditionally does not give any figures for its brands, revealed that its flagship brand, Louis Vuitton, had exceeded 20 billion euros in sales for the first time, representing about a quarter of total revenues.
In Europe, the industry is recovering with strong local demand helped to a lesser degree by tourism. Worldwide, monobrand stores were boosted by the willingness of customers to return to in-person shopping. Online sales rose 20% from 2021 to 2022 to reach an estimated 75 billion euro. The online channel’s market share remained in line with 2021. Analysts see growth perspectives continuing with China well positioned to regain its dominant position after the end of Zero Covid policy. By 2030 the industry is forecasted to have 5 to 7% annual growth rates, says Bain & Co.