I would like to tell you a story about love.
Not love of a person, but of the Louis Vuitton Pochette Métis bag. From the moment it launched in 2012 in the classic monogram canvas, I have desperately wanted this beautiful cross-body piece of art.
After nearly a decade of expecting it to come to me through the magical ways of the universe, I finally put a plan in place to save and work and save some more for this spectacular piece. During maternity leave and throughout furlough I put money away into my ‘Luxe Fund’. It was my ‘push present’ to myself after a challenging period of my life and it felt like saving kept me sane at times. It took me well over a year (and two price hikes) to save for the Pochette Métis.
I now call it ‘Gaston-Louis’ and it is a proud member of my little collection. I am the (often green-eyed) ‘middle-class consumer’, one of many who sustained the luxury market throughout 2021.
However, due to the cost-of-living crisis, I suspect I am now one of many whose ‘Luxe Fund’ has to be allocated elsewhere. Worrying economic headwinds means uncertainty for all of us, including the luxury market. Interestingly, this is not what is being reported by the big luxury groups for the first half of 2022.
V.I.Cs
According to The Business of Fashion, big luxury groups are thriving. Driving this growth are who Chanel has referred to as V.I.Cs (Very Important Clients). These clients are less likely to be impacted by the cost-of-living crisis and have blown ‘middle-class’ demand out of the water. Chanel is now building bespoke and private stores to entice and host their V.I.Cs. These “core” luxury consumers are now being treated as business critical for brands such as Chanel. It’s now all about exclusive and prestigious experiences for consumers and that means top dollar.
Hermès recorded its highest ever operating margins at 42%. Across Europe, due to a ‘cheap’ euro, covid restrictions lifting and travel opening up, sales are through the roof. In the US, LVMH, Prada, Hermès and Chanel have all announced plans to open new stores in new locations due to significant sales growth.
All of this global acceleration is amazing news for the luxury industry. However, figures are not as positive in China, most likely due to the impact of the current lockdown measures. According to Business of Fashion, ‘Richemont and Burberry disclosed sales growth figures in Mainland China for the quarter ending June 2022, posting declines of 37 percent and 35 percent respectively. LVMH confirmed this trend stating that sales in mainland China were down by heavy double-digits during the first half.’
Despite the decline of the ‘middle-class consumer’, for whom luxury purchases are methodically planned and carefully calculated, the luxury industry continues to thrive and it is thanks to the industry’s big spenders. In such an uncertain and scary world, people are craving luxury to an even bigger extent. Whoever says ‘money can’t buy you happiness’ has clearly never shopped with me.
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