The luxury market will grow by an average of 15% by 2022 and will be worth 353 billion dollars according to Bain & Company.
Is luxury on the decline ?
For the past 6 years, we have seen unprecedented growth in the luxury world, even surpassing the stock markets. Luxury is an economy that runs parallel to the way we consume. According to the Financial Times, luxury will grow by another 60% by the end of 2030.
It resists everything ! Before the crisis of the coronavirus, the turnover of the LVMH group for example, was 59 billion in 2019 against 64 billion in 2021. Luxury has not suffered the covid, on the contrary, it has benefited !
How do you explain such figures ?
Although the year 2023 looks to be economically complicated, luxury forecasts are still on the rise. This is explained by the fact that 40% of the sales in this sector are made by 2% of the richest consumers in the world. These are people who can continue to spend lavishly. These are star customers who are pampered by the luxury houses who see in them the jackpot !
Another growth factor is the inflation of these luxury products. The price of a high-end bag has increased by 20% in recent years. The barrier of the 10 000 euros bag is being crossed by many big houses. The resale of these luxury bags is a parallel market. The reason : the demand is enormous compared to the supply.
Some important figures to remember
In the third quarter of 2022, the revenues of the French group LVMH increased by 19%, the French leather goods brand Louis Vuitton is the top 1. Gucci, the brand of the Kering group, is number 1 with an annual revenue of 9.7 billion in 2022, representing 3 billion in profits. The independent French house Hermes has seen a 24% increase in the third quarter of 2022. Knowing that margins on luxury goods can be as high as 42%, it’s easy to see why prices are sky high !
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