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Key data about Luxury (Bain x Altagamma, Nov. 2021) .... and some personal questions.

Here's what to take away from the luxury market as we approach the end of a year that is still extraordinary in many ways (source : Bain & Company x Altagamma, November 11 2021 update) : - The luxury personal goods market is estimated at € 283 billion in 2021 (+ 1% vs. 2019). The disastrous effects of the pandemic and of 2020 have indeed been erased... - Growth projected for the coming years: between 6% and 8%.

NB : Patrizio Bertelli, CEO of the Prada group goes even further: "The world of luxury will emerge strengthened from the Covid crisis with a growth forecast of 30%". (Fashion Global Summit in Milan 2021).


And to add: "Many SMEs have great capacities and good products but do not have the possibility of asserting themselves because the costs (digital, e-commerce ...) have become too important. Small companies will have always more problems to find an identity and will have to rely on the greatest." - Luxury has recruited: + 25% new customers, with Millennials and Gen Z who today account for 36% and 17% of luxury purchases

Credit : https://www.simplifield.com/blog/the-new-retail-luxury-buyer-is-younger-than-ever


- No surprise: China; e-commerce are driving forces: the latter's share in luxury purchases has almost doubled... from 11% to more than 20% (with a projection of 30% by 2025). - Second-hand luxury already weighs more than 30 billion euros. You can download a one-pager on the subject in the "resources" section of this site:


If I may allow myself a last very personal note here, there are three striking or at least notable things, which few journalists have spoken about in the last 48 hours when the announcement of the report's release by Bain x Altagamma was announced, no doubt reassured. and excited by the hopeful prospects of such a report (let's face it, it feels good to hear).


The first is the slowdown in the Chinese economy and, ultimately, the Chinese political context. The information was brought up 3 weeks ago in the financial media, but has since taken a bit of a back seat. At the same time, who really wants to be the “Debbie Downer” of the industry when is everyone happy to live in a bubble just a few months after experiencing one of the most depressing episodes in the modern world? There will be plenty of time to worry later. "China's slowing growth and fears global inflation could blow headwinds on risky assets like equities", according to Citi strategists, who added a few weeks ago that "global equities should be under pressure in the coming months ”. This is without even talking about the political context. You only need to look at the immediate effect on the price of the large luxury groups with each statement by Xi Jinping to understand that the balance remains fragile in the current context of dependence.


The second is that economic bubble in which we are today. The French CAC40 index has just passed the historic level of 7000 points. When will the fall happen? The first signs of feverishness in the CAC40 should be watched closely.... If we look at the last major high and low episodes of that index (August 2000 vs May 2002 / July 2007 vs February 2009, with a more particular observation of the beginning of the 2000's - which was the last big economic "bubble") the fall could follow between 1 and 2 years after the very first signs. To be followed closely then. Keeping in mind that luxury consumers putting luxury purchases on standby and a crashing stock price are two VERY different things for a company, no matter what...)


The third is the Gucci slowdown. Certainly, nothing to cry about, the brand is still making progress, it is also still an extraordinary benchmark for the entire industry - but seems to have reached a plateau. The brand is not the powerhouse it was some time ago. The group attributes this to the Covid pandemic for now, to the new waves, to the store closings... But for a brand that has driven and inspired the digital transformation within the industry, that seems a little light to me. Would this be a way to save time, to avoid the real questions? After the year 2020 that they have made - quite simply extraordinary - who could blame them?.... They have done so much, been on all fronts, fatigue must weigh. But Covid cannot be used as an excuse ad vitam eternam. French media Les Echos mentioned it a few weeks ago, but apart from that.... few people were moved by it. However, this is not trivial, Gucci being the emblematic brand of this new generation of luxury customers. Is this generation changing? Are we already witnessing the beginnings of the next tidal wave? Are we witnessing the very first signs of a tiredness, a lassitude of the new generations? Swipe? Next? To be continued then.


 

Additional reading on the topic:

Interview de Patrizio Bertelli par The Fashion Network

Hermes maintient sa croissance exceptionnelle

L'activité luxe de Coty en forte croissance

Le CAC 40 passe le cap des 7000 points, boosté par le luxe

La croissance du groupe Kering freinée par Gucci

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