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> Self-proclaimed "luxury brands" have a dwindling market. There's no evidence that supports that as a comprehensive statement. It very much varies from brand
by adventured 7y ago
> Self-proclaimed "luxury brands" have a dwindling market.
There's no evidence that supports that as a comprehensive statement. It very much varies from brand to brand and situation to situation.
The king of luxury, Bernard Arnault (LVMH), recently became one of the richest people on the planet (current net worth of $76 billion) because luxury has been massively expansive over the past decade. His wealth increased four fold over eight years up to the pandemic.
Another person in the same luxury boat as Arnault is Francois Pinault. $31 billion net worth. His wealth also increased four fold in roughly eight years, from $11b to $43b, up to the pandemic. Don't tell these people luxury is dwindling - their outcomes indicate it has boomed.
Ferrari's business has doubled in size and they have a market cap higher than Ford or GM because luxury has done so extraordinarily well over the last decade. Their stock hasn't crashed during the pandemic, unlike most auto stocks. Do you know why? The luxury buyers are not hurting like everyone else is (thus far). Times are good for Ferrari.
So what situations are causing this? China for one. And more broadly, the emergence of greater wealth all around the world, rather than it mostly being contained to the well-established developed nations of the post WW2 era. That global wealth increase is not matched by there being a lot more high-end luxury goods makers like Ferrari or LVMH, so the result is they've spent most of the past decade dealing with more business than they can easily keep up with.
- notyourday 7y agoWhile NM sold the likes of LVMH here it mostly made money by selling comfortable middle market rather than the top tier luxury because of the buying agreements: The way the buying is structured, retailers cannot complete with flagships of the luxury brands they carry within a certain distance which means that the stored NYC, LA, Boston, SF, Miami which should be the most profitable can't carry the hot items of the seasons if the flagships carry them. Since flagships are not just retail but marketing and demo stores flagships always carry all the hot items. The mid-tier market outsourced manufacturing to the same factories that at best create wear it a couple of times before it falls apart products while charging 3x-10x of the likes of Zara. That market has been shrinking for years as the likes of Zara, H&M and others cleaned up the lower end and started moving up. Also the lion's share of luxury growth is coming from outside of the US, namely from Asia which is not accessible to NM.
- _bxg1 7y ago> So what situations are causing this? China for one. I think this is a key point. I was really just talking about America, where many people have rebounded from that sort of thing after embracing it 20-30 years ago. For China, traditional signals of wealth are still new and novel. People aren't sick of it yet.
- ypzhang2 7y agoNot sure the numbers bear that out: https://www.prnewswire.com/news-releases/porsche-posts-record-us-retail-sales-in-2019-300981004.html https://www.prnewswire.com/news-releases/porsche-posts-recor... https://www.cnbc.com/2020/01/13/lamborghinis-2019-sales-jump-43percent-driven-by-its-urus-suv.html https://www.cnbc.com/2020/01/13/lamborghinis-2019-sales-jump... Anecdotally as well, Hermes does VERY brisk business by where I live (midwest), pre-COVID