Can anyone outside of Europe compete in the luxury market?
During this year’s holiday parties, luxury brands may be less generous with the champagne. The industry has experienced a decline in the past six months, as affluent consumers worldwide have become more restrained in their spending. The S&P global luxury index, which measures the industry’s performance, has dropped by 9% since mid-year. However, luxury brands can still find reasons to celebrate. According to Bain, a consultancy, the global market for personal luxury goods, including handbags, haute couture, and horology, has grown by 4% this year. While this is lower than the 20% growth seen last year, it is still a positive outcome considering concerns about a slowing global economy.
The past two decades have been extraordinary for the luxury industry, with global sales nearly tripling to almost $400bn. This growth can largely be attributed to the increasing number of wealthy individuals in Asia. European companies have been the biggest beneficiaries of this boom, accounting for around two-thirds of luxury goods sales, as reported by Deloitte, another consultancy. Additionally, nine out of the top ten most valuable luxury brands in the world are European, according to Kantar, a market research firm. Bernard Arnault of LVMH, a European luxury giant, is currently the second-richest person in the world. The luxury industry remains a shining star for Europe, especially at a time when the continent faces economic and technological challenges. So, why has Europe been able to maintain its dominance in the face of foreign competition?
One explanation is heritage. European luxury brands have capitalized on the world’s enduring fascination with the continent’s rich history. Europe is home to seven of the top ten most visited countries globally. Tourists flock to Europe’s historic cities to admire its artworks, savor its local delicacies, and indulge in its fine wines. The rich and famous also gather on the Riviera for extravagant summer parties. In his book, “Selling Europe to the World,” business historian Pierre Yves Donzé argues that the rise of European luxury can be attributed to…
2023-12-20 08:42:15
Post from www.economist.com
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