Global luxury sales, weighed down in particular by the sluggish Chinese market, are expected to decline by 1 to 3% this year, according to the study published Tuesday, carried out in partnership with the Altagamma Foundation which brings together the big names in Italian luxury. Sales of personal luxury items (fashion and leather goods, jewelry, watches), which represent a quarter of luxury sales, are expected to decline by 2%. A decline already felt in the latest results published by large groups such as LVMH, Kering, Richemont. “Apart from the Covid effect, we are in the first decline since 2009, it has been more than 15 years since we have seen something like this in luxury”, underlines to AFP Joëlle de Montgolfier , director of the luxury division at Bain and Company. “We draw the attention of luxury players to the corrective measures that will have to be considered and which do not consist only of taking care of margins and increasingly reducing the quality of products,” she warns. “2% decline is not the sign of a market in cataclysm either, but we have small alarm signals sent to luxury players to tell them that after two extremely prosperous years, we are starting to see that “We must stick to the fundamental promise of luxury which is a promise of excellence and exception at prices that are not totally stratospheric,” she adds. According to the Bain and Company study, 40% of customers say luxury prices are too high.
If the rise in prices did not scare away the wealthiest customers, it caused brands to lose young customers, the “millennials” or generation Y (born between the beginning of the 80s and the mid-90s) and “Generation Z” (born between the late 1990s and early 2010s). “We cannot create a luxury market with only the 2% of very privileged customers” to whom all brands address and who today represent 45% of the market (compared to 35% in 2021), estimates Joëlle de Montgolfier . “It's an interesting year. We're talking about reinvention by going back to basics. We may have been a little greedy the last two years, we lost sight of our customers a little by trying to make everyone happy, including shareholders,” she analyzes. Brands will have to win back this clientele and the fact that they are venturing more onto sports fields is no stranger to this.
Investing in sports partnerships
Chanel announced at the end of October that it would become a sponsor of the rowing race between Oxford and Cambridge, but the most obvious example comes from the world number one in the sector, LVMH. After being a partner of the Paris Olympic Games, Bernard Arnault's group announced that it was investing in a partnership with Formula 1. The Arnault family, for its part, announced the acquisition of the Paris FC football team. “When you look for places where there is a huge audience and new customers to seek out, sport is a factor in traffic and audience,” remarks Joëlle de Montgolfier. “Before we took elitist sports (sailing, golf, etc.), today the lines are moving towards more popular sports” such as football which attract a diverse clientele and remains “a factor of attraction for new generations “, according to her. “In other recruitment factors (…), there is also the fact of betting on new emerging classes,” she adds. Bain and Company estimates that over the next ten years 500 million people will acquire “middle class” status, including 150 million in China, 20 million in Latin America and 15 million in India.
