The luxury segment’s 180-degrees turn. The industry is getting back on its feet: less focused on the (few) ultra-rich and more geared toward (the many) aspirational consumers. Bain’s Claudia D’Arpizio argues this after analyzing the latest fashion weeks. The strategy of becoming increasingly exclusive ran up against the numbers and boomeranged. But going back also means taking risks.
A boomerang
On the catwalks in Paris and Milan, Claudia D’Arpizio has noticed less “elevation” from the designer labels. In other words, there are fewer superproducts to sell at super high prices. Quiet luxury, after the spread of recent seasons, is also taking back its place: another sign of how the industry is implementing a strategic repositioning. Bain’s analyst calls it a “strategic mistake” to raise prices to woo the wealthier classes. At first the tactic worked, but then “evidently, they went too far as, from a certain point on, demand began to fall”.
A More Inclusive Approach
In the analysis shared with Il Foglio, D’Arpizio says the luxury sector will close 2024 with a growth contained between zero and +4%, better than the first half of the year, when production volumes in supply chains fell 10-15%. Not only that. According to the analyst, luxury cannot afford to neglect the rising middle class in China. That’s 100 million people who will have high-level incomes by 2030. But the industry must have “a more inclusive approach“. However, all of this, D’Arpizio warns again, carries risks. The first is being less protected from economic crises, thus more dependent on people’s income and less on their wealth. The second is to expand geographically, focusing on the emerging markets. For example, getting to India and the Philippines means embracing the challenge of adapting collections to these new markets. With management elements becoming even more complicated than it is now.
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