The “sober” quarter of LVMH is only one of the hints. Another is recognized by the Financial Times, as it cites the disappointing performances of auctions in Hong Kong: if the wealthy spend less for art, significant niche within the luxury segment, it means priorities are changing for them. The pleasure goods being bought after the pandemic are clearly slowing. The British financial newspaper has no doubts: the so-called “roaring years of the luxury segment are over”. Exchange rates growing towards the double-digits should stop just barely below 10%, and investors have taken note, punishing luxury stocks. The big players are dealing with it.
The wealthy are spending less
Reasons behind this trend for the luxury market can be found “even inside luxury department stores – says FT -, as people believe some handbags have become too expensive”. But this isn’t the main reason. The more relevant is one on which luxury brands cannot take action: there is a change in the public’s “mood”. The “post-pandemic euphoria is over – said Luca Solca of Bernstein -, a time when the wealthy decided it was better to enjoy life than dying wealthy”. The context has changed: it’s darker and less hopeful. The joy from the pandemic’s end has been crushed by the war in Ukraine, and then the one in the Middle East. The news call for moderation: “Luxury clients are simply refocusing their spending pattern towards more sober endeavors”.
Soft landing
As far as revenues for brands go, aspirational customers are relevant, but the wealthy are the ones making a difference: when top-spenders reduce their purchases, the consequences are felt rights away. LVMH, the largest corporation of the segment and the main character behind the roaring years, believes it can transition towards a period of sustainable growth without issues. FT hopes the landing will be soft for all, but luxury brands cannot ignore the context: “When the mood changes, you must change with it”.
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